What Does Life Insurance Consider as High Risk?

Wondering what life insurance companies consider high risk? Learn why a life insurance company could deny you or increase the cost of your life insurance policy because they define you as high risk. Once a life insurance company defines you to be high risk, your application process and rates will be impacted, and can possibly result in your application being denied. But, being high risk doesn’t mean you can’t get life insurance, it just means you need to look in different places for the right plan for you. 

In this Article:

• Can I get life insurance if I am considered high risk?
• Application process for life insurance
• What defines high risk?
• Life Insurance for High Risk individuals
• Frequently asked questions (FAQ)

Can I get life insurance if I am considered high risk? 

When our clients reach out to us after being diagnosed with a medical condition, working a dangerous job, or anything that can make them high-risk, a concern that they have is how they will be able to secure their family’s finances. They are often worried that it may be too hard to apply for life insurance and that they won’t qualify. A common question we get is “Can I get life insurance if I am considered high risk?”

Yes! If you are someone who is considered high-risk you can definitely get a life insurance policy with fair and even affordable rates.

Application process for life insurance

When applying for life insurance, the company you apply to will send your application to the underwriting department to then assess the risk you are to do business with them by grading you on their risk scale. Note that each company has their own unique guidelines for determining your risk that the underwriting must follow when reviewing applications – so, one company could deny you for the same reason you wouldn’t be denied life insurance from a different company. This is typically common with health or medical conditions – where for example, one company wouldn’t deny you for your diabetes while another company could deny you the severity of your diabetes. The best thing to do when shopping for life insurance is getting quotes from multiple companies because each company evaluates your risk differently, each company will respond to your application differently. The best way to apply for life insurance if you are considered high risk is to contact our team of life insurance brokers who can help you find out your life insurance options.

See below for a photo describing the three general steps when applying for a life insurance policy:

What defines high risk?

High risk is a term used by life insurance companies to describe the risk someone has to dying before a certain age. Each company has unique ways in determining the risk of every individual, but generally, life insurance companies will use your personal information generally regarding your health and lifestyle. View the photo below for information that the life insurance underwriting considers when you apply and how it contributes to your risk factor.

Age

The older you are, the more likely you are to die. So, a life insurance company will consider your risk to increase as you age. Your life insurance policy cost will also increase the cost of your life insurance as you get older. It is also important to note that many life insurance policies can have an age limit like 85 years of age when applying to policies like term life insurance.

Gender

Since females have a higher life expectancy, females will generally pay less money for life insurance. For example, see below for the difference between a 40-year old female or male comparison seeking a 20-year term life insurance policy with $500,000 in coverage. The difference between male and female in a monthly premium for the same policy is over $6 per month, adding up to a difference of over $75 a month. Which may not be a large difference, but it is something life insurance companies take into considerations having an effect on your life insurance premium.

Health

Your health plays a big role when getting a life insurance policy. Generally the better condition your health is in, the cheaper your life insurance premium will be. For the cheapest policies, usually traditional life insurance policies including term and permanent life insurance, a medical exam is required. The company wants to see how healthy you are now and how you maintain your health whether you have any medical conditions or not, and based on these results, your life insurance policy premium changes. 

When considering the condition of your health, this includes if you smoke or not, as smoking affects not only your health but will affect the cost of your life insurance premium as well, if you are a smoker you will pay more for your life insurance policy. If you have any medical conditions, this will be taken into account in your application process and may either increase your premium or even deny you a life insurance policy. So generally, the more severe medical conditions you have the more likely your premium will increase or the more likely you will be denied as your risk increases the more severe your medical conditions are. But, just because you were denied life insurance before doesn’t mean you cannot get the life insurance policy you need, contact us today to help you find the life insurance policy you need. For more information about medical conditions and life insurance, please read our blog about getting life insurance with medical conditions. 

Driving or Criminal Record

Having any kind of record like a driving record or criminal record will affect your grading on the risk scale. By having a record, it indicates to the life insurance company that you may be a risk based on your choices and behavior that gave you the record. It is possible that if a life insurance company incorporates your record into their database, this may increase the cost for life insurance or they may even possibly deny you. When it comes to getting a life insurance policy, the underwriting may review your application on a case-by-case basis depending on what and why you have the record. Feel free to read our blogs about getting life insurance with a DUI or life insurance with a criminal record.

Dangerous Job

The type of job you have is considered by the underwriters when you apply for life insurance. You may be considered high risk if your occupation requires any potentially hazardous activities, such as: 

• Work high off the ground
• Work underground
• Work with explosives
• Are exposed to dangerous chemicals
• Use or are exposed to firearms
• Are in the military
• Travel to dangerous areas for work

Risky Hobbies

Similar to having a risky job, participating in risky activities could consider you as high risk to a life insurance company. A risky activity is considered an activity or hobby that can put your life in danger. Some companies may even have exclusions to specific hazardous activities on your policy, meaning if you pass away due to participating in an excluded activity, your beneficiary will not receive a death benefit which defeats the purpose of your life insurance policy. So, it is very important you understand your policy and make sure the policy suits your needs to protect you and your family. A list of possible hazardous activities is shown below. If you participate in any of these activities, be sure to include that information on your application.

In the end, after applying to a life insurance policy, the underwriting department will grade you on their risk scale which will determine the approval and cost of the policy. View below to see the various life insurance ratings that describe you to the company based off of the risk you present to that company.

As the life insurance rating increases, as seen above, the cost for your policy decreases. Which is achieved by having excellent health with little to no risk from your lifestyle factors outlined above. But as you become a higher risk to the life insurance company, your life insurance rating will decrease giving you substandard and standard life insurance ratings having not ideal health or other factors increasing your risk.

Life Insurance for High Risk individuals

If a life insurance company has considered you to be high risk, finding life insurance policies may be a little more difficult but it is not impossible. Mainly it will be more difficult and more expensive to get a fully underwritten (also known as traditional) life insurance policy – including term life and permanent life insurance. Where fully underwritten policies ask for the most information, including a medical exam, but can offer you the best prices unless you are deemed high risk for various reasons. If you do not qualify for a fully underwritten policy, then simplified life insurance or guaranteed or no medical life insurance will be the best options for you. See below for a table describing the differences between fully underwritten, simplified, and guaranteed issue life insurance policies. 

As a great rule of thumb, if you cannot achieve a fully underwritten life insurance policy like term life or permanent life insurance, then try to achieve a simplified life insurance policy. Getting a guaranteed issue life insurance policy should be your last resort as it requires no medical questions or exam but has the least amount of coverage compared to any other life insurance policy, which may not be enough for the coverage amount you need. For any assistance, contact Protect Your Wealth for free to have help in creating your personalized life insurance package for you. 

In the end, your personal cheapest price for a life insurance policy depends on a lot of things in your life like your health and wellbeing, lifestyle, as well as the amount of coverage you need. Although you have limited coverage based on if you can get high coverage from traditional or simplified life insurance policies due to severity in the factors listed above like severe health conditions, such as: asthma, cancer, or many other medical conditions. Therefore, the cheapest life insurance starts with if you are able to get traditional life insurance like term life or whole life insurance, since those tend to offer the best premiums and most coverage amount, secondly simplified life insurance can offer up to one million dollars coverage amount, but the prices begin to increase being more lenient on different risk factors you may have, then finally guaranteed issue and no medical life insurance will give almost anybody life insurance, disregarding many to all medical conditions. But, will offer the least amount of coverage ranging from $25,000 to $50,000 in coverage. Depending on the type of life insurance you are eligible for will determine the price you pay for a life insurance policy.

Frequently Asked Questions (FAQs) about Life Insurance

Find a solution for what you’re looking for

If a company defines you as a high risk individual, just know that you can still get a life insurance policy. You can even get free professional advice from an award winning broker from Protect Your Wealth to help you identify and secure the right life insurance coverage you need to create financial stability and protect your family and assets.

To schedule a consultation about your income protection goals, or if you have any questions about life insurance in Alberta, British Columbia, or Ontario, please contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Alberta, B.C., or Ontario, including areas such as Edmonton, Victoria, Toronto, and Oakville.