How to Find Affordable High-Risk Life Insurance – ValuePenguin
High risk life insurance is a class of life insurance for people who are considered higher risk to insure. you could be considered high risk if you have a profession or hobby that puts you in life-threatening situations. Also, insurance companies may consider you high risk if you are in below average health.
how does being classified as high risk affect life insurance?
High-risk status to insure can have some effect on the cost of a life insurance policy. You may also find coverage options limited with respect to the size of policy available, as some insurers deny applications for specific types of risk. For example, if you are over the age of 81, many insurers will not offer coverage unless you have no health problems.
Reading: What is high risk life insurance
Can I get life insurance if I’m considered high risk?
You can buy life insurance if you’re considered high risk, but your coverage options may be limited and you may have to pay higher rates. Also known as impaired risk insurance, your high-risk status will be determined by several factors, including your health, lifestyle, profession, habits, and hobbies. exact classifications may differ between insurance providers, but these factors help insurers decide if an applicant is considered high risk.
The biggest difference between high-risk life insurance and normal life insurance is in the cost of coverage. if you are classified as high risk, then the insurer’s projected life expectancy for you will be shorter. therefore, it poses a greater financial risk to the insurance company, as it may be required to pay the death benefit sooner than someone without high-risk factors would.
life insurance for high-risk occupations
Some examples of high-risk professions include:
It is important to note that not all life insurance companies have the same definition of hazardous occupations. During the underwriting process, an insurer will ask you questions about the daily activities that she performs at her job, along with the work environment. this allows the company to assess the key risks of your occupation.
what if my employer offers a group insurance plan?
Employers often offer group life insurance plans to their employees. this is very common in high-risk occupations, as employers want to provide protection for their employees who may have difficulty obtaining individual coverage.
If your employer offers a certain amount of life insurance at no additional cost, also called basic coverage, we recommend that you take advantage of the policy. however, basic group plans often have restricted coverage, with maximum limits of $50,000 or the employee’s annual salary. therefore, we recommend that you purchase supplemental life insurance coverage if a basic policy does not meet your financial obligations. this can be purchased as a supplemental plan through your employer or as an individual life insurance policy.
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Compare rates and options between employer coverage and what you find through your own research so you can receive the best policy for your situation.
life insurance for people with high-risk diseases and habits
If you have health problems or a pre-existing medical condition, the severity will determine if you are designated as high risk. certain diseases tend to reduce life expectancy and therefore increase the overall risk to insurance companies.
You may also be considered high risk if you have habits that shorten your life expectancy. For example, if you regularly smoke cigarettes or cigars, you may be considered high risk, although not all smokers fall directly into this classification. if you have quit smoking for a period of time or only smoke occasionally, you may be eligible for the preferred or standard tobacco health ratings.
Examples of high-risk diseases and habits include:
life insurance for high-risk hobbies
Your personal hobbies could also make you considered high risk when applying for life insurance. this mainly depends on the type of hobby and how often you engage in it. For example, if bungee jumping is a hobby of yours and you jump 10 or more times a year, then Ameritas life insurance will charge you an additional $5 for every $1,000 in coverage. but if you jump less than 10 times a year, you won’t incur this additional fee and will even be eligible for standard health rates.
High-risk hobbies life insurance companies often ask about include:
You would not be considered high risk for insurance if you wanted to try an activity once. For example, if you are skydiving for the first time this year, then a life insurance company would not normally determine that you are high risk. As mentioned, the frequency of these hobbies significantly determines the cost of life insurance and whether a provider will accept your application.
How are high risk life insurance rates determined?
When you apply for term or permanent life insurance, the insurer will ask you a variety of questions about your lifestyle, medical history, and family history before offering you coverage. whether you qualify for a policy and the rates you would pay will depend directly on your assigned risk level and health rating. these are determined during the underwriting process and, if necessary, a medical exam.
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Each life insurance company has a similar rating system, although the names of each category may vary. In general, the higher the category you qualify for, the lower the premium you’ll pay.
For subprime life insurance, rates are typically determined using the table rating system. these ratings are known as underinsured and have the highest coverage costs.
With table ratings, the applicant gets a letter (a-p) or a number (1-16) indicating the percentage above the standard premium amount they would have to pay. each letter or number in the table adds 25% to the standard premium. For example, if the standard premium is $100, then with a table classification of b, you would pay 50% above the standard rate, or a premium of $150. if you have a rating of 7, you would pay 175% above the standard rate or a premium of $275.
Although table ratings are the usual rate determination method for high-risk applicants, each insurance company has its own way of assessing your level of risk. For example, one insurer may rate someone with high cholesterol as a table qualification, but another insurer may offer that same person standard life insurance rates. This may be because the second provider is a specialist in policies for people with high cholesterol.
choosing the best high-risk life insurance policy
If you want to purchase affordable high-risk insurance, we recommend that you compare quotes and policies from as many insurers as possible before purchasing coverage. this requires researching insurance company underwriting policies to determine which companies match your high-risk situation.
As we mentioned earlier, insurance companies tend to accept your application and offer you affordable rates if they specialize in the type of high-risk life insurance that applies to your situation. conducting your own research is invaluable, as the difference between a standard rating and a table rating could significantly increase your annual premium by 25% or more.
If you’re having trouble finding a life insurance company that offers the policy you’re looking for, we recommend contacting an independent insurance broker. Experienced brokers and agents can provide information on what risks insurers will underwrite and can answer your questions. Also, some high-risk insurance brokers may know exactly which insurance companies accept applicants with your risk profile.
guaranteed acceptance life insurance
If you can’t get standard underwritten coverage but need a policy, you should consider guaranteed acceptance life insurance. These life insurance policies require no medical exams or lifestyle questions, and rates are based entirely on your age, location, and gender.
Because they cannot determine an appropriate price based on your risk profile, life insurance providers offer quotes that are more expensive than standard life insurance and typically limit the death benefit to $25,000 . however, you will not be denied coverage.