High-Risk Life Insurance

Life insurance can be an integral part of most any complete financial plan. One reason for this is because the proceeds from a life insurance policy can be used for a variety of needs by one’s survivors. These could include paying off large debts – including a mortgage balance – as well as for continuing…
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Life insurance can be an integral part of most any complete financial plan. One reason for this is because the proceeds from a life insurance policy can be used for a variety of needs by one’s survivors. These could include paying off large debts – including a mortgage balance – as well as for continuing to pay living expenses so that loved ones do not have to drastically change their lives (at an already difficult time for them).

While some people can easily qualify for life insurance protection due to being in good health, this is not always the case for others. Depending on one’s medical and health condition, it may be that they are charged a higher amount of premium. In other instances, a “high risk” individual may even be turned down for coverage altogether – at least for a medically underwritten policy.

There is good news, though, for those who have a pre-existing or a higher risk health condition – as well as for those who work in a high-risk occupation – in that you could be able to secure the coverage that you need through a high-risk life insurance policy.

What is High-Risk Life Insurance?

High-risk life insurance, which is oftentimes referred to as guaranteed issue life insurance, is a type of policy that is issued to those who have serious medical conditions, or who work in high-risk occupations such as firefighting.

These policies do not require the applicant for coverage to undergo a medical exam – and in some cases, there are only just a few questions to answer on the application. In fact, with a guaranteed issue policy, as long as the premium is paid, the individual will be approved for the coverage.

When applying for a high-risk life insurance policy, there may be certain things that the insurance company will want to know about the applicant. Typically, an application for coverage will be required. This provides information about the applicant in general, such as their age and gender, as well as their date of birth.

Depending on the policy and the insurance company, the application may also ask for more specific details regarding the health condition of the applicant – and, if he or she has been diagnosed with certain conditions, additional questions may be asked, such as:

  • When he or she received their initial diagnosis
  • What symptoms they have experienced
  • What medications they have been prescribed (as well as the dosage)
  • What other methods are being used to manage or control the condition
  • How often a medical professional is seen with regards to the condition
  • Whether or not the applicant has been hospitalized within the past 12 months because of the condition
  • Whether or not the individual has had any relevant testing performed (and if so, what these tests showed).

How High-Risk Life Insurance Works

High-risk life insurance works like other types of life insurance coverage in that, in return for a payment of the premium, a named beneficiary will be paid out a certain amount of proceeds if the insured dies while the policy is in force.

Depending on the policy, it may be required that if the insured passes away within the first year or two that the coverage is in force, the beneficiary will only receive back the premiums that were paid in or a percentage of the stated death benefit. (If however, the insured lives past the allotted period, then at death – provided that the policy is still in force – the beneficiary will receive the full amount of the death benefit proceeds).

Because of the higher risk that the insurance company takes on with these types of policies, the death benefit coverage is typically quite low. Likewise, the amount of the premium is usually relatively high. That being said, a high-risk life insurance policy may be the last resort for someone who has exhausted all other life insurance coverage options.

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Types of High-Risk Life Insurance Available

High-risk life insurance may be either term or permanent coverage. With term insurance, there is death benefit only coverage, without any cash value or savings build up. Term life insurance policies are sold for a set amount of time, such as five years, ten years, twenty years, or even thirty years.

A permanent policy will provide death benefit coverage and cash value. Unlike term insurance, permanent life insurance will not have a time length, but rather is designed to remain in force for the rest of the insured’s lifetime, provided that the premium is paid.

Permanent policies also offer a cash value component where the funds that are inside of the policy are allowed to grow tax-deferred. This means that there is no tax due on the gain each year, but rather the money is taxed only if or when it is withdrawn by the policyholder. (This can allow the cash value to grow and compound exponentially over time).

How Much Does High-Risk Life Insurance Coverage Cost

As with other types of life insurance coverage, there are several factors that will come into play when determining the premium price of a high-risk life insurance policy. These include the applicant’s age and gender, as well as the type and amount of coverage that is being applied for.

In addition, the health condition of the applicant is also considered. In this case, the severity of the condition is taken into consideration, as well as the various treatment options and/or medications that have been used.

Typically, high-risk life insurance will cost more than a regular life insurance policy – with all other factors being equal. This is because those who apply for high-risk life insurance will usually pose more of a risk to the insurance carrier for having to pay out a claim. Therefore, the insurer will do what it can to help in compensating for these added risk factors.

When shopping for a high-risk life insurance plan, it is important to work with a professional who is familiar with this type of coverage. This will help you to ascertain a more realistic premium quote, as well as to help ensure that all of the appropriate paperwork and information has been submitted.

Is High-Risk Life Insurance Coverage Right for You?

High-risk life insurance is not right for everyone – even if you have certain types of pre-existing medical conditions. However, you could be a candidate for this type of coverage if you have had surgeries and/or treatments for more severe health issues, such as certain forms of cancer, high blood pressure, heart attack, diabetes, and/or stroke.

It could also be that those who are considered to be overweight or obese should consider a high-risk life insurance policy. This is because it could prove challenging to qualify for a fully underwritten plan.

In some cases, an individual may be in good health, but he or she is fearful of needles, and therefore does not want to take part in a medical examination for underwriting purposes. Here, too, could be a good candidate for a guaranteed issue or high-risk life insurance policy.

It is important to keep in mind, though, that while the chances of getting approved for high risk or guaranteed issue life insurance may be good, the premium that you pay for this coverage can be substantially higher than a medically underwritten policy. 


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About Ryan Guina

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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