What Makes a Life Insurance Applicant High-Risk?
A high-risk applicant is an individual that presents a higher risk to a life insurance company due to their health conditions, job, lifestyle, and more. A prominent example of this is that you’re automatically placed in a higher-risk category if you smoke. While this may feel unfair if you’re otherwise healthy, statistically, smoking is the leading U.S. cause of preventable death. If you smoke, you’re more likely to die, and the insurance company is more likely to pay your death benefit, leading to higher rates.
A high-risk applicant has other factors at play that may be considered risky, including:
- Advanced age
- Certain health conditions, medical history, and family health history
- Certain occupations
- Dangerous hobbies
All of these impact your eligibility for different life insurance plans, and can make it more difficult to find a policy. However, there are options for high-risk individuals.
Table of Contents
Ensuring Coverage For Your Family’s Future
If you are considered high risk, your life insurance options may be more limited. So, when you look at types of life insurance, be sure to compare the following policy types:
- Term life insurance
- Guaranteed issue life insurance
- Final expense life insurance
- Accidental death and dismemberment
Life insurance is vital because your death benefits — the life insurance amount given to your beneficiaries after death — can cover your funeral and burial costs and help your family manage daily expenses after you’ve passed. Any benefits from your policy go to the beneficiaries you name, such as your spouse or children.
However, a life insurance company can refuse to sell you a policy or charge a much higher premium (annual cost for the insurance) if it considers you a high-risk applicant. You may not feel that you should be considered a high-risk applicant, but the insurance company may disagree based on research drawn from people with similar characteristics.
What Factors in to a High-Risk Designation?
Insurance companies look at many factors when determining whether or not someone is high risk. Those factors include health conditions, lifestyles, occupations, and hobbies. The insurance company will take in all of those factors and then give the applicant a rating. This rating will determine premium costs, available policy types, and whether or not they will even issue that person a policy at all.
High-Risk Health Conditions
Life insurance tends to be the most restrictive around health-related conditions and lifestyles. You may be high risk if you’ve been treated or diagnosed in the past 5 years for the following:
- A terminal illness
- An organ transplant
- A positive HIV test or AIDS
- Stroke or heart disease/disorder
- Cancer/tumor
- Diabetes requiring insulin
- Specific neurological and mental health conditions
- Lungs, liver or kidney disease, or disorder including kidney dialysis
- Blood, digestive, intestinal, or immune system disease or disorder
- Untreated health conditions
- Disability limiting your ability to work
More specific follow-up questionnaires may be sent to you for additional information if you have any of the above conditions. For example, the insurance company may ask for your diabetes diagnosis date and your current treatment and medications.
High-Risk Lifestyles
An insurer may be concerned about offering a policy if you take more risks than the average applicant. These may include:
- Conviction or pending charges for a felony
- Being declined for health insurance in the past
- Illegal drug use or drinking 6 or more alcoholic beverages per week
- DUI conviction, auto accidents, or moving violations
- Driver’s license suspension or revocation
- Living overseas
- Bankruptcy or creditor protection
High-Risk Occupations
If your job falls into one of the following categories, insurers are concerned you may have a higher risk of death. While many jobs can be high-risk, not many careers are actually classified as such by life insurance policies, such as these:
- Pilot or student pilots
- Aircraft crew members
- Active military
However, the insurer may ask follow-up questions via a questionnaire to make a more informed decision. For example, pilots might be asked if they have a valid FAA Medical or Airman Certificate and about their primary aircraft. Crewmembers might be asked to describe on-board duties, the aircraft’s make and model, and future flight plans.
It’s essential to read and understand your specific policy. With some policies, the insurer may not pay the death benefit if a death results from military service or even the National Guard or Reserve duties.
High-Risk Hobbies
An insurer may not offer you a life insurance policy if you participate in these hobbies:
- Racing or speeding in an air, land, or water vehicle
- Mountaineering and rock climbing
- Bungee jumping
- Air sports, including hang gliding, skydiving, parachuting, and parasailing
- Scuba diving
- Cave exploration
However, as with flight-related occupations, the insurer might ask additional questions about where and when you scuba or rock-climb, what safety equipment you use, and your incident history. Climbing an indoor artificial rock wall might not be classified in the same way as climbing Mt. Kilimanjaro.
Note: Your insurer may not provide death benefits if your death results from one of the hobbies listed above. Ask your agent or read the policy’s exclusions to ensure you’re covered before signing up.
How Life Insurance Companies Rate Their Applicants
The overall risk classification process is how a company determines whether to offer you insurance and sets your life insurance premium cost. Your cost will differ based on statistical results of standard characteristics such as:
- Age
- Gender
- Health and health habits
- Family health history
- Smoker or non-smoker
Then, the company sorts you into a rating category of either preferred (lowest rates for healthiest people) or standard (less healthy but strong overall life expectancy), with variations based on smoking history.
If you’re found to not fit into either of these categories, a life insurance company may only offer you a policy using a rating to charge more for your policy.
Table Ratings
Table ratings are for those with higher than usual risks, including a poor health history or other factors. Each life insurance company uses company-specific table ratings. Typically, a table rating is on a scale such as 1-16. Lower numbers reflect lower risk and offer cheaper premiums. As table rating numbers increase, pricing increases, usually at a set percentage, such as 25% per step.
Flat Extra
Some life insurance policies will issue policies to applicants with health conditions such as cancer, but only with a “flat extra” premium. This premium is a temporary extra charge for a specified number of years on top of your regular premium. This additional $5-$20 per $1000 in face value may be charged even if your cancer has already been treated and you’re in remission — but typically, it won’t last forever.
What Life Insurance Options Do High-Risk Applicants Have?
High-risk applicants can first attempt to qualify for one of the most popular life insurance types in the U.S. — term life insurance. However, if you aren’t eligible for term life insurance or find the costs prohibitive, compare the additional options below: guaranteed issue life insurance, final expense life insurance, and accidental death and dismemberment life insurance (AD&D).
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Eligibility | Harder eligibility criteria | Guaranteed eligibility | Variable eligibility, depending on underwriting requirements | Easier eligibility criteria |
Length | For a set term | As long as premiums are paid | As long as premiums are paid | As long as premiums are paid |
Cost | Low for first term length | Higher overall | Higher overall | Very low |
Features | Flat rate and high death benefits available | Guaranteed to accept you; Flat rate, lower death benefits | Medical questionnaire; Flat rate, lower death benefits | Covers accidental death only; often a supplement |
Exclusions | Varied but usually more exclusions | Guaranteed policy eligibility, but may still exclude some things like high-risk hobbies | Fewer exclusions but may pay limited benefits in first two years | Excludes health-related death payouts |
Advantages | Lowest cost for temporary coverage | Easier to qualify for most older high-risk applicants | Prices remain the same once locked into the policy | Easier to qualify for across all age groups |
Disadvantages | Costs significantly increase after the term period is over | Lower death benefits | Lower death benefits; health questions asked | Only covers accidental and dismemberment deaths |
Eligibility
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Eligibility | Harder eligibility criteria | Guaranteed eligibility | Variable eligibility, depending on underwriting requirements | Easier eligibility criteria |
Term life insurance is the most strict regarding eligibility, and the insurance company will ask many health, occupation, and hobby questions — and may require a medical exam. Each insurer sets its guidelines, so even a high-risk applicant for one insurer may be eligible with another, as long as they’re otherwise young and healthy.
Guaranteed issue life insurance is typically issued specifically for adults in a narrow age band of 50 to 85 or so. These policies don’t require answering health questions or taking a medical exam.
Final expense life insurance is easier to qualify for than many other plans, with few health questions and no medical exam. Typically, the easiest type of policy to qualify for is accidental death and dismemberment if you’re under 70. Usually, you’ll face zero questions about your health, occupation, or other factors — just your age and gender.
Length
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Length | For a set term | As long as premiums are paid | As long as premiums are paid | As long as premiums are paid |
Your coverage under a term policy continues depending on the duration you choose, which can range from 1 to 30 years. You may be able to renew the policy at the end of the term.
For guaranteed issue life insurance, final expense life insurance, and accidental death and dismemberment, the policy remains active as long as you pay the premiums. However, policies may vary by insurer and your state of residence.
Review the terms and requirements, and ask whether the policy will end if and when you reach a specified age. For example, a guaranteed acceptance policy may only cover people until age 85.
Cost
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Cost | Low for first term length | Higher overall | Higher overall | Very low |
Term insurance can be inexpensive if you’re young, healthy, and low-risk. However, each time you renew the policy, your insurance rate could go up — and the policies tend to be very expensive for older adults.
Guaranteed issue and final expense life insurance may look low at first but are more expensive for the same death benefit amounts with a term policy. Over time, you may pay more in premiums than a funeral would cost, so saving money for a funeral may be more cost-efficient if possible.
Accidental death and dismemberment costs tend to be very low for large coverage amounts (up to $500,000), as the insurance only pays out if you die due to an accident.
Features
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Features | Flat rate and high death benefits available | Guaranteed to accept you; Flat rate, lower death benefits | Medical questionnaire; Flat rate, lower death benefits | Covers accidental death only; often a supplement |
Most term policies are called “level term” and you must go through a more rigorous underwriting process to qualify. You pay a flat premium for a death benefit that remains the same for a set number of years. If you die during the coverage period, your beneficiaries can use the benefit for any purpose.
Guaranteed issue life insurance won’t deny you coverage if you’re eligible due to your age, occupation, or another factor. But average limits are low — around $10,000, up to around $25,000.
A final expense life insurance policy covers your funeral or cremation costs, with benefits paid directly to your beneficiary. The death benefits are typically meager, ranging from $5000 to $25,000.
Accidental death and dismemberment is often available as an insurance supplement or stand-alone policy. This insurance only provides a death benefit that occurs due to an accident. It will not pay a death benefit if you die due to illness.
Exclusions
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Exclusions | Varied but usually more exclusions | Guaranteed policy eligibility, but may still exclude some things like high-risk hobbies | Fewer exclusions but may pay limited benefits in first two years | Excludes health-related death payouts |
Term life insurance is far more detailed, restrictive, and insurer-specific where exclusions are concerned. One insurer may exclude coverage for those with specific health conditions or who participate in particular hobbies, for example.
Guaranteed issue won’t deny you a policy being a high-risk applicant — but the policy’s exclusions may rule out paying on your death benefit if your death results from numerous exclusions. These may include intoxication, racing, rock or mountain climbing, bungee jumping, or air sports such as hang gliding.
Both guaranteed issue and final expense insurance policies may not pay a death benefit in full if you pass away in the first two years after purchasing the policy.
AD&D policies often have a long list of exclusions that lead to no death benefit payout, including dying from any health or medical cause or actively serving in the armed forces or auxiliary units, including the National Guard or Reserve.
Advantages
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Advantages | Lowest cost for temporary coverage | Easier to qualify for most older high-risk applicants | Prices remain the same once locked into the policy | Easier to qualify for across all age groups |
Term insurance usually provides the largest death benefit payout for the lowest cost, but only for the first policy term. In contrast, guaranteed issue insurance can be among the most accessible types of insurance for older, high-risk applicants. Accidental death and dismemberment can be easier to access across all age groups. Final expense life insurance may be easier for some applicants, with a simple health questionnaire to fill out.
However, remember that not all plans pay death benefits if you die due to a risky activity or certain health conditions, so pay attention to all exclusions in the policy paperwork.
Disadvantages
Term Life Insurance | Guaranteed Issue Life Insurance | Final Expense Life Insurance | AD&D | |
|---|---|---|---|---|
Disadvantages | Costs significantly increase after the term period is over | Lower death benefits | Lower death benefits; health questions asked | Only covers accidental and dismemberment deaths |
Term life insurance costs increase significantly if you outlive your initial policy term and must renew or apply for a new term policy. In addition, when you renew, it’s possible that you may go through the process again and get declined for coverage.
Guaranteed issue life and final expense life insurance both tend to pay much lower death benefits than term life insurance — often $25,000 or less. This may be all you need to pay for the funeral, burial, and other last expenses, or it may not be enough. In addition, a final expense policy may require you to answer medical questions.
Accidental death and dismemberment’s primary disadvantage is that it only covers accidental deaths. As we age, health-related deaths are more likely to cause death, including for high-risk applicants. In that case, this policy won’t pay anything to your beneficiaries.
Choosing a Life Insurance Policy as a High-Risk Applicant
When choosing a life insurance policy, compare the following:
- Exclusions: Review any exclusions that would prevent your beneficiaries from receiving a death benefit, whether due to the way you die (accidental versus health-related death) or hobbies you participate in.
- Application process: Compare plans to see whether the plan’s underwriting requires a health questionnaire only, or a medical exam, too.
- Cost: Compare the monthly cost of coverage versus how long it would take you to save the benefit amount in cash. For example, if coverage costs $1,000 a year, but your policy only has a value of $5,000 — could you save for five years instead?
- Length and other terms: Compare how long you can carry the life insurance coverage for a fixed term or how often you must renew the policy. Ask if other terms might apply to the coverage staying in force.
How to Get High-Risk Life Insurance
Getting high-risk life insurance may require more research and outreach than someone young, healthy, or who doesn’t have a high-risk occupation or hobby. Here are some steps to take:
- Research options online. Insurers create their own policies, so one insurer may not accept you as an applicant or charge you far compared to another.
- Call an insurance agent. Suppose you have serious conditions or multiple risk factors (for example, a pilot recovering from cancer). It may be easiest to speak live with a professional who may know of insurers more willing to extend coverage for your risk type.
- Seek out policies designed for your group. For example, life insurance policies designed for licensed pilots may offer better rates or higher death benefits than elsewhere.
- Ask at work. Some workplaces provide low-cost group life insurance policies that don’t rate or exclude applicants based on “risky” criteria.
- Make sure you’re honest on the application. Depending on the policy and state law, the company can refuse to pay your death benefits if you don’t tell the truth about a medical condition, occupation, or other situation. If you told the truth, the company may have denied you coverage. You may also face civil or criminal penalties.
Ways to Improve Your Life Insurance Rates Even When You’re High Risk
Ways you may be able to lower your rates include:
- Get an explanation. Ask the insurer to explain why a rate is high: Is it based on health, lifestyle, hobbies, occupation, or multiple factors? You may be able to provide more information to help lower premiums if based on a misunderstanding.
- Ask about health improvements that could improve rates. These vary by insurer but could include losing weight, quitting smoking, or improving your health.
- Shop around for rates. Don’t accept the first premium and policy you’re offered. Look around and compare your options.
Can Seniors Get High-Risk Life Insurance?
Yes, people 65 and older may qualify for final expense life insurance, accidental death and dismemberment insurance, or guaranteed issue life insurance. However, remember that the death benefit amount from guaranteed issue and final expense insurance may be low and not cover all of your funeral expenses. Accidental death and dismemberment will only pay out death benefits if your death resulted from an accident. In addition, many policies won’t cover seniors after a certain age.
All in All
Everyone needs life insurance, and high-risk applicants, perhaps even more so than the average person.
It’s first essential to determine whether you’re a high-risk applicant. In some situations, the majority of insurers may classify you as high-risk. And in other cases, insurers may offer more leeway. For example, you may qualify for a traditional term life insurance policy if you’re a seasoned scuba diver who doesn’t take risks.
If the worst happens, life insurance’s death benefits can help pay for your family’s mortgage, bills, and education. In the meantime, life insurance provides comfort that those you love will have enough for your burial or other costs without facing financial stress.