Life Insurance For High Risk: How Does It Work?

Life insurance can help you plan for the future and ensure your loved ones are financially secure. However, it may be challenging to qualify for an affordable life insurance policy that suits your needs if you are considered a high-risk applicant.

Life insurance companies generally consider an applicant to be high risk if they have a shorter life expectancy. This could be because of medical or lifestyle risk factors, such as chronic health conditions or a dangerous job.

Understanding high-risk life insurance

In most cases, high-risk life insurance is no different than traditional life insurance, except that it costs more due to added health, age, and lifestyle risks. While some traditional policies can range into the millions for death benefits, high-risk policies are generally for lower amounts.

Insurance companies have a complex rating system for each type of life insurance. It involves several factors that create a rating for an applicant, which determines how much you’ll pay. High-risk candidates are assigned the lowest rating, known as a substandard table rating. This is how life insurance companies standardize their ability to add premiums to a policy based on added risk identified during underwriting.

What makes you a high-risk life insurance applicant?

A high-risk life insurance applicant is someone who has health or lifestyle risks that makes them riskier for life insurance companies to insure. Unlike home and auto insurance, life insurance quotes are based on the applicant’s life expectancy.

To determine your risk, insurers will often conduct a medical examination and consider factors like your job or hobbies. Skydivers who are also smokers will typically pay more than a desk worker who spends most of their downtime reading.

Each insurance company looks at risk differently, so shopping around is a good idea. If an insurer does view you as high-risk, that insurer may refuse to cover you or limit you to buying a guaranteed issue policy, a high-cost no-exam life insurance policy. Those that do allow you to buy a typical term life insurance policy will charge high rates.

Medical risk

Your medical risk is one of the first things that insurers will look at. They’ll ask for medical history and may conduct a medical examination to make sure you’re in good shape and not ill. If you have any of the following conditions, you are likely considered high-risk:

Cancer: A cancer diagnosis will usually put you in the high-risk category. Most insurers will block you from buying a policy until you’ve been cancer-free for a set number of years.
Heart attack: If you have had a heart attack in the past or have been diagnosed with heart disease, it will impact your ability to get life insurance. People who have had one heart attack are often at risk of having another, which poses additional risk for the insurance company.
Stroke: A history of strokes, a recent stroke, or one that has led to complications like paralysis can make it hard to buy life insurance.
Dementia: Because there is no cure for cognitive disorders, people with dementia have to purchase high-risk life insurance. On average, a person with Alzheimer’s lives four to eight years after diagnosis, according to the Alzheimer’s Association.
HIV/AIDS: Even if you’re treating HIV/AIDS, a diagnosis will land you in the high-risk pool because studies have shown that people with these diseases have shorter life expectancies than average.

Other health conditions may not immediately make you a high-risk applicant. For instance, life insurance for diabetics can be pretty cheap, especially for policyholders with well-managed Type 2 Diabetes.

Lifestyle

Your lifestyle can also impact your risk. Some jobs can put you at higher risk of injury and death and many hobbies also involve danger, so insurers will ask questions about how you spend your time.

Occupation: Your job plays a big role in how insurers view your risk of death. Some jobs face a much higher risk than others. In 2021, logging workers saw the highest fatal injury rate at 82.2 per 100,000. Fishing and hunting, roofing, aircraft pilots and flight engineers, and structural iron and steel workers rounded out the top five. The average for all occupations was 3.6 per 100,000 according to the Bureau of Labor Statistics.
Hobbies: If you consider yourself to be a thrill seeker, you are most likely in the high-risk category. Insurance companies want to know if you participate in potentially dangerous hobbies like scuba diving, mountaineering, skydiving, and motorcycle racing.
Nicotine use: Smoking has a number of health risks, and it can lead to other medical issues like certain types of cancer and COPD. If you smoke cigarettes, vape or use chewing tobacco, life insurance companies will likely consider you to be high-risk. If you’re a previous smoker who has quit, you may not be considered high-risk, but may still have to pay high premiums. Importantly, life insurance for smokers is typically available, but you should be prepared to likely pay more.
Alcohol consumption: If you drink more alcohol than what is considered moderate drinking (two drinks per day for men and one for women according to the CDC), life insurance companies may consider you to be high-risk. Overconsumption of alcohol can trigger other health complications such as liver damage.

How do high-risk life insurance rates work?

When determining how much to charge, the largest life insurance companies categorize applicants based on their risk. The lowest-risk applicants will receive the best rates while high-risk people will pay more. Not every company uses the same classes during the underwriting process, but it’s common for life insurance companies to place applicants in one of the following categories:

Preferred select or preferred plus: This category is for the lowest-risk applicants who are in good health, have a safe job and hobbies, and who don’t have bad habits or a family history of genetic disease.
Preferred: Preferred applicants are typically healthy individuals who may have one or two marks against them. For instance, they may have a small medical issue or a slightly risky hobby.
Standard: If you have a few medical issues or a risky lifestyle, you may fit into the standard category, and will likely pay higher rates than those in the preferred plus and preferred groups.
Substandard: Applicants who have a dangerous occupation or hobbies, or who have pre-existing medical conditions, will pay some of the highest insurance rates.
Preferred tobacco: Former smokers will fall into this category. They’ll likely pay less than current smokers.
Standard tobacco: Most current smokers likely fit into the standard tobacco group. Since smoking can cause cancer and other health issues, those in the standard tobacco group will likely pay steep premiums.

Things you need to know about high-risk life insurance

Not every medical condition or lifestyle choice is considered “high-risk”

Clients often ask us if they should try to lose weight before applying for insurance, or if taking blood pressure or cholesterol medications affects their premium rates. The truth is, some issues really do not have an effect on your rates at all. Every life insurance company has a different way of evaluating conditions and lifestyles.

The more options you have, the better your chances of finding a decent rate

This might seem obvious, but one of the keys to finding affordable high-risk life insurance is working with multiple carriers. Because some insurance companies are more lenient with certain medical conditions than others, having a large pool of quotes and policies means you have a better chance of finding the lowest cost for insuring your high-risk situation.

The type of policy you purchase will affect your approval

Generally speaking, the guidelines make it easier to qualify for permanent coverage such as universal life or whole life insurance than with a term life insurance policy. Some carriers offer credits and “table shave programs” for their permanent policies that allow people who actually should qualify for substandard rates to be approved at Standard rates.

High-risk clients are encouraged to begin their life insurance search by looking at employer-sponsored life insurance programs. Many group life plans offer “simplified” underwriting and will be easier to qualify for. Most ask very few disqualifying health questions—some ask just one (do you smoke?), and some ask none at all.

One downside to this option is that few company plans are portable, meaning you can’t take them with you if you leave or are terminated from your job. A lot of these plans offer only a $50K death benefit or 1-2X annual income, which oftentimes isn’t enough, so be sure to call us to discuss your options.

Life insurance options for high-risk applicants

Life insurance companies may limit your policy options if you’re considered a high-risk applicant. You might be able to buy term life insurance but will pay more for a policy than an applicant with lower risk.

Applicants with very high-risk conditions, like certain types of cancer, can have a more challenging time getting life insurance. But policies such as guaranteed-issue life insurance can help high-risk applicants get at least some coverage.

Guaranteed-issue life insurance is a type of policy that doesn’t require a medical exam. These policies function basically the same as a standard life insurance policy, but they cost significantly more than traditional life insurance and the death benefit is often lower.

High-risk life insurance underwriting classes

A life insurance company reviews your application during a process called underwriting when you apply. An underwriter considers your health and lifestyle risk factors to determine your underwriting class, which influences how much you pay for coverage.

Life insurance underwriting classes help life insurance companies determine your premium or the amount you will pay for your life insurance policy. These underwriting classes are based on your health, age, and specific lifestyle considerations.

Overview of life insurance risk classes

Underwriting class	Who belongs in this underwriting class?
Preferred Plus/Super Preferred	Policyholders in this class have an excellent bill of health with no history of family genetic diseases and no risky lifestyle considerations.
Preferred	Policyholders in this class are generally healthy but may have a few slight health issues such as being slightly overweight or taking medication to address a certain health condition.
Standard	Policyholders in this class may be overweight or have a few risky hobbies that bring them out of the Preferred underwriting class.
Substandard	Policyholders in this class may be considered high-risk for any of the following reasons: – Drinks excessively. – Has a medical condition. – Has a risky hobby – Has a risky occupation – Smokes tobacco
Preferred Tobacco	Policyholders in this category would have a Preferred rating but they have smoked in the past 12 months.
Standard Tobacco	Policyholders in this category smoke but are in relatively good health.

Is high-risk life insurance expensive?

High-risk life insurance can be expensive, depending on your individual level of risk and the type of life insurance policy.

Life insurance premiums generally correspond to how much coverage you purchase and how long a life insurance company believes you’re going to live.

If you have risky habits or a high-risk medical condition, an insurance company generally charges you higher premiums.

How to find high-risk insurance

Work with an experienced, independent life insurance agent. An experienced agent will know which companies are most likely to give you the best rate based on your particular health condition or lifestyle factor. An agent can even shop your application around anonymously among a few insurers, so you avoid application denials.

You could also seek out an impaired risk specialist, who is someone who specializes in high-risk life insurance applicants. Don’t assume you’ll be stuck with an expensive guaranteed issue policy that you can buy online before you have explored your other options.

Though every insurer is different, the rates you pay are usually based on the table rating system above. The higher the category you land in, the less you pay. High-risk applicants, such as those with bad medical histories or dangerous jobs, will fall lower on the table and pay higher rates.

In the worst case, insurers might not be willing to give you an insurance policy at all. If that happens, you can consider applying for guaranteed acceptance life insurance. These policies require no medical exams or lifestyle questions, and rates are based on age, gender and location. However, they’re usually very expensive and may have a waiting period before your beneficiaries can access the death benefit. Consider working with a life insurance agent to find a carrier if you’re struggling to find insurance.

Life Insurance For High Risk: How Does It Work?

Understanding high-risk life insurance