The right life insurance policy can provide money for your family to pay your funeral expenses as well as covering ongoing expenses such as a mortgage payment. But what happens if you want to buy life insurance and have a pre-existing medical condition? Is it still possible to get the coverage you need?
At Addition Financial, we want our members to have the information they need to manage their money and achieve their financial goals. Here’s what you need to know about pre-existing conditions, plus seven considerations for purchasing life insurance with pre-existing conditions.
What is Considered a Pre-Existing Condition?
In the world of insurance, a pre-existing condition is any condition affecting your health for which you received treatment prior to buying a policy. For example, if you have high blood pressure and your doctor has prescribed medication to control it, your high blood pressure is a pre-existing condition.
A chronic illness will also be seen as a pre-existing condition for life insurance, even if you’ve had it for decades. Some examples of chronic illnesses include diabetes, arthritis, kidney disease, heart disease and mental health issues such as depression and anxiety.
Historically, having a pre-existing condition has made it difficult to obtain health insurance or life insurance. Insurance companies identify any medical condition as something that could potentially cost them money. From the perspective of a life insurance company, there is a higher probability that they will pay the death benefit sooner rather than later if you have a serious health condition.
Can You Get Life Insurance with a Pre-Existing Condition?
When life insurance underwriters evaluate your application for life insurance, they rate you based on your overall health. Someone in excellent health with no serious pre-existing conditions might be classified as Preferred Plus or Elite and get the lowest rates, while someone with a serious pre-existing condition might be classified as Substandard and get a significantly higher rate for coverage.
The good news is that even if you have a pre-existing condition, you can get some coverage. There are policies that don’t require a medical exam and we’ll talk about what they are and how to apply for them later.
7 Considerations to Get Life Insurance Coverage with a Pre-Existing Medical Condition
If you have a pre-existing condition and don’t yet have life insurance coverage, here are seven considerations to help you navigate the marketplace and find the coverage you need.
#1: Make Your Health a Priority
Life insurance companies want to minimize their risk, especially with term life insurance. You can make yourself a more attractive risk by doing what you can to prioritize your health.
For example, if you have a pre-existing condition, make sure to adhere to your doctor’s recommended treatment plan. Taking your medication as prescribed, eating a healthy diet and getting regular exercise can all show a life insurance company that you are an active participant in your own health and take it seriously.
#2: Work with a Life Insurance Agent or Broker
Our second suggestion is to work with a licensed life insurance agent or broker to find coverage. The reason is that they’re the experts on which companies offer which coverage. They can help direct you to companies that have the most flexible underwriting guidelines and pricing.
Since you want to shop around, your best bet is to choose an independent agent or a broker. Some agents, known as captive agents, work for only one insurance carrier. Independent agents may represent multiple carriers. Insurance brokers are always independent and can approach any insurance company on your behalf. The biggest difference between agents and brokers is that insurance agents can bind coverage while brokers cannot.
#3: Apply at the Right Time
The timing of when you apply for life insurance can impact your success, particularly if you have a health condition that might drive up your rates. What we mean by this is that your chances of getting the coverage you want may not be high if you try to buy a policy immediately after receiving a diagnosis.
The reason is that insurance companies won’t have any way of knowing whether you’ll follow treatment protocols or if the treatment is working. For example, a person with high blood pressure has an elevated risk of a heart attack or stroke. If you apply before your blood pressure is under control, the insurance company may fear that you’ll die soon after buying your policy – and they’ll be out the entire death benefit.
A better option is to wait a little while. You may want to buy an interim policy (we’ll talk about those later) while you wait. If you take your medication, reduce your salt intake and start exercising, you can apply with blood pressure that’s under control. That gives you a better chance of getting the coverage you want at a rate you can afford.
#4: Look for Tailored Life Insurance Options
Some insurance companies cater to people with pre-existing conditions by offering policies designed for those who have specific illnesses. Here are a few examples:
- Guardian offers both term life insurance and whole life insurance for people living with HIV.
- John Hancock has designed its Aspire life insurance program for people living with Type 1 and Type 2 diabetes. In addition to life insurance, it includes discounts on healthy foods and other items.
- Fidelity Life offers a variety of policies for people who have been diagnosed with cancer.
An experienced independent life insurance agent or broker can help you track down policy options that are designed for people with your medical condition. Keep in mind that your policy limits and premiums will be determined by your specific diagnosis and condition.
#5: Don’t Try to Hide Your Diagnosis
If you need life insurance and you’re worried you won’t get it because of a pre-existing condition, you might be tempted to try to hide your condition or medical history from your agent or insurance company. That’s not a good idea.
The first reason is that when the insurance company discovers your deception, they could cancel your policy or – if it happens after you die – decline to pay the death benefit to your family. For obvious reasons, both of these outcomes defeat the purpose of having life insurance in the first place.
The second reason is that you could be charged with insurance fraud. It’s not legal to obtain coverage under false pretenses. Your best bet is to find coverage that you can qualify for while being honest about your medical condition.
#6: Consider No Medical Exam Life Insurance
Depending on what your pre-existing condition is and your age and overall health, you may not be able to obtain term life insurance, which requires a medical exam. However, there are life insurance policies that do not require a medical exam at all. Here are the two primary examples:
- Simplified issue life insurance. Simplified issue life insurance has no requirement for a medical exam but you will need to complete a health questionnaire. It’s important to be honest for the reasons we noted in the previous section. Coverage is often limited to $100,000 although some insurance companies offer higher death benefits on a case-by-case basis. There may be a waiting period of up to two years, so if you die less than two years after you buy the policy, your family may not receive the death benefit.
- Guaranteed issue life insurance. Guaranteed issue life insurance is insurance that requires no medical exam and no health questions. As a result, it offers the smallest death benefit of any type of life insurance, usually only enough to cover “final expenses” such as your funeral and burial. Like simplified issue life insurance, there is sometimes a two-year waiting period before benefits can be paid.
Buying life insurance that doesn’t require a medical exam allows you to purchase some protection for your family. These policies may be used as a gap measure if you have been recently diagnosed and want to do what you can to improve your health before applying for a better policy.
#7: Take Advantage of Employer-Sponsored Life Insurance
Some employers offer basic life insurance to their employees as part of their regular benefits package. With group life insurance, individual health is less important and you may even be guaranteed a policy, depending on how your employer’s plan is set up. You may even already have a policy – some people don’t read the benefits package they received when they were hired.
If you do get coverage through your employer, the death benefit is likely to be limited to one or two times your salary. Even so, this type of policy offers some protection to your family and could be supplemented with one of the no medical exam policies we discussed above.
If you don’t yet have life insurance and you have a pre-existing or chronic illness, there is still a way for you to get life insurance coverage to protect your family and pay their expenses after you die. The seven considerations we have included here will help you understand your options and choose the policy that’s best for you.
Do you need help with financial planning? The Addition Financial MEMBERS Financial Services program can help! Click here to learn more and to view our free webinars.
Posted on Mar 22, 2022
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