The Life Insurance Sale

Guide to Approaching Life Insurance With Pre-Existing Conditions

And how these conditions can affect your chances of qualifying

Amanda Dexter, and, consider the life insurance underwriting process in the COVID-19 environment

Life insurance is an important part of sound financial planning. We all want the best for our family, and if you were to pass away, and were therefore unable to continue to support them, a life insurance policy would provide some much-needed financial security for those dependent on you. It’s an important part of estate planning — creating an overall financial plan for where your wealth and assets should go while you’re alive, as well as upon death.

And even if you don’t have a family of your own, a life insurance policy can still help with settling any remaining debts you may have, as well as with funeral expenses.

However, because of the coronavirus pandemic and the economic recession, life insurance companies have raised their rates, limited coverage, and reduced benefits. And since older adults and those with pre-existing conditions have a higher death rate from COVID-19, some life insurance companies are denying coverage to people in these groups entirely.

Life insurance is based on the relative risk that the insured will pass away during the policy term, and therefore result in a beneficiary making a claim. The higher the risk, the less likely the applicant will be approved for a life insurance policy, or, if they are approved, they are less likely to get favorable rates and policy terms. This can make getting affordable life insurance tricky for those with pre-existing conditions.

How Pre-Existing Conditions Affect Your Life Insurance Policy

A pre-existing condition is a chronic medical injury or illness that you were diagnosed with before purchasing life insurance, such as diabetes, high blood pressure, high cholesterol, heart disease, depression, asthma, cancer, and even sleep apnea. Because pre-existing conditions can affect your longevity, life insurance companies will see you as a higher risk to insure and may, therefore, deny you coverage or charge higher rates.

It’s also important for consumers to keep in mind that any results they may receive from genetic testing could also affect their ability to get life insurance. While the Genetic Information Nondiscrimination Act (GINA) protects applicants when seeking health insurance, this protection does not extend to other types of insurance, including life insurance. Therefore, some life insurance companies may incorporate genetic testing results into their risk assessment calculations when you apply.

Once a risk assessment calculation is made, the life insurance company will then apply a rating to the applicant, and if accepted, the policy offered to you will be based on these ratings. The typical ratings include:

  • Super Preferred (or Preferred Plus): Applicants with this rating are deemed the lowest risk and will, therefore, receive the best rates for life insurance. These applicants are most likely in perfect health with a clean medical history, including immediate family members. They have no history of drug or alcohol abuse, no history of hazardous activities, and have a clean driving history.
  • Preferred: These are often among the lowest rates you can find and are reserved for those in optimum health, but may have slightly elevated cholesterol levels, blood pressure, or weight. The premature death of an immediate family member due to cancer or cardiovascular issues may disqualify you from this rating. You also need to have a safe driving record and no recent history of smoking.
  • Standard (or Regular): Your typical American will fall under this rating. These applicants are generally in good health, but may have a larger issue, such as high blood pressure, or have an immediate family member who died prematurely (before age 60) from cancer or heart disease. This rating may include smokers, but smokers will receive higher rates.
  • Substandard: Applicants who rate below standard are typically patients with complicated and chronic conditions, such as diabetes or heart disease, or a history of drug or alcohol abuse. These applicants may also have hazardous hobbies, like scuba diving or race car driving, or occupations, such as truck driving, roofing, or construction. These people may still receive coverage, but they are further rated depending on the severity or risk of their circumstances.

Cancer and Life Insurance

It is also important to show life insurance providers that you are dedicated to improving your health and lifestyle through efforts like eating a healthy diet, exercising, lowering your cholesterol, and visiting the doctor regularly...

Because the risk of death increases whenever someone is diagnosed with cancer, life insurance companies see these applicants as high risk. The likelihood of receiving coverage can depend on the type of cancer and its mortality rate and life expectancy, as well as the date of diagnosis, treatment plan, and length of remission. For example, someone with stage 1 melanoma with a good prognosis and strong treatment plan is more likely to be insured than someone diagnosed with advanced stage 3 lung cancer with few treatment options available.

Some cancer patients and survivors seeking life insurance will receive a standard rating, but if your cancer has a particularly high mortality rate and short life expectancy, you’re likely to be rated substandard. The lower your rating, the more expensive coverage will be.

As a general rule, most insurers want your cancer to have been in remission for a few years and do not cover people who are currently undergoing cancer treatment. In rare cases, some insurers may issue you a policy, but the premiums will be much higher, and coverage might be limited.

Diabetes and Life Insurance

The type of diabetes you have, as well as its severity, may make getting life insurance more difficult, or cause you to pay higher rates. This is because of diabetes’ many complications and the shorter life expectancy of those diagnosed with it. However, getting life insurance with diabetes is not impossible. Most life insurance companies take into consideration the type of diabetes you have, whether or not you have any comorbid conditions as well, such as obesity or heart disease, and how well your diabetes is being controlled.

Those who have their diabetes well under control are more likely to receive life insurance coverage, as well as those with the less-severe Type 2 diabetes, which can be controlled by simple medication. The more severe or less controlled your diabetes, the less likely you will get affordable (or any) life insurance coverage. Therefore, if you are diagnosed with any type of diabetes, it is crucial that you maintain a healthy lifestyle, lose weight, take all medications, monitor your blood sugar daily, and see a doctor regularly for checkups.

Most diabetics will receive substandard or standard life insurance options and pay higher premiums. Although you have your choice of companies that will possibly provide you with coverage, the American Diabetes Association recommends life insurance through John Hancock, which offers specialty insurance just for people with diabetes.

Cardiovascular Conditions and Life Insurance

Because of the increased risk of death associated with cardiovascular conditions, life insurance providers may be reluctant to issue coverage if you or your family have a history of cardiovascular problems. Heart problems are often hereditary, so providers will typically ask if anyone in your immediate family has experienced heart problems before a certain age, or if any conditions resulted in death. How much a life insurance underwriter will be concerned with your family history varies widely from company to company, but it may result in higher rates or even denial.

Underwriters will also look at the recency and severity of any heart problems you may have experienced. Younger people with congenital heart defects should be able to get life insurance with no problem, although they may have to pay a slightly higher rate, but coverage for anyone with a serious heart condition will be much more costly. For example, those with arrhythmias can expect to pay less than someone who has had atrial fibrillation or heart bypass surgery. Many people with a heart condition will be rated as substandard or standard when it comes to life insurance policies

The Bottom Line

When applying for life insurance, it is important that you are honest and upfront about your medical history. Once providers and agents have this information, they can then research to find the best life insurance options for you.

It is also important to show life insurance providers that you are dedicated to improving your health and lifestyle through efforts like eating a healthy diet, exercising, lowering your cholesterol, and visiting the doctor regularly. The life insurance underwriting process is all about risk assessment, so you need to do everything you can to demonstrate that you’re doing what is necessary to reduce that risk.

Keep in mind there are many different life insurance providers and plans that may be a fit for you, even if you have a pre-existing condition. The key is to research as many options as possible to ensure you find the best provider and coverage for your needs.