What is High Risk Life Insurance?
Generally, “high risk life insurance” means that the insured has a greater likelihood of dying sooner in life than his or her counterparts. This, in turn, means that the insurance company does not receive as many premiums on a high risk life insurance policy as one that is not considered high risk. As a result, life insurance carriers rate high risk individuals.
Ratings are based on individuals who may:
- Suffer from current or historical chronic illnesses such as cancer, heart disease, diabetes, depression, stroke or high blood pressure
- Work in a hazardous occupation such as aviation or racecar driving
- Participate in risky activities such as scuba diving, rock climbing or foreign travel
- Use tobacco products or nicotine-related products such as patches or gum
- Drink alcohol regularly or have a history of alcohol abuse
High Risk Life Insurance Underwriting
High risk life insurance goes through an underwriting process to assess insurability and to determine premium rates. Life underwriting places individuals into general categories depending on specific lifestyle choices and overall health. Each insurance carrier may have slightly different classifications, but all follow a general format.
For example, “preferred” plans relate to individuals in excellent health whereas “standard” plans apply to individuals with health or lifestyle issues. An example of a general classification system used in high risk life insurance underwriting is:
- Preferred Plus Non-Smoker/Non-Tobacco
- Preferred Non-Smoker/Non-Tobacco
- Standard Non-Smoker/Non-Tobacco
- Standard Smoker/Tobacco
If you are considered “high risk,” it does not necessarily mean you are ineligible for life insurance coverage. It does mean, though, that you will most likely be rated for high risk life insurance and may pay higher premiums as a result. However, depending on various factors you may actually qualify for preferred rates.
For example, it is possible for someone who suffers from a mild heart murmur, or diabetes to receive preferred rates for high risk life insurance. Similar cases may include individuals who have had breast cancer and report successful screenings following treatments. On the other hand, as the illness or lifestyle choice increases in severity, the more likely classifications will decline and premiums will rise. This can be very common for individuals who drink alcohol and show signs of organ damage.