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Buying Life Insurance With a Pre-Existing Condition

SmartAsset: Buying Life Insurance With a Pre-Existing Condition

You want to make sure your family is safe and secure. That’s why you’re researching life insurance. But how do you buy life insurance with pre-existing conditions? What are the best types of life insurance to buy if you have pre-existing conditions? How does your health factor into the cost? And are there any extra steps you need to take when applying? This article will help you answer these questions.

A financial advisor can help you compare different life insurance options.

What Is a Pre-Existing Condition?

A pre-existing condition is any medical condition you had before you signed up for insurance coverage. While it’s illegal for medical insurance companies to deny coverage based on a pre-existing condition, it’s not for life insurance companies.

Buying life insurance with a pre-existing condition can be complex. It helps to know what conditions may affect your life insurance application. Here are five additional examples of major factors that could get you denied:

  • HIV
  • Cancer
  • Heart Disease
  • Diabetes
  • Smoking

Cost of Life Insurance and Pre-Existing Conditions

Many life insurance providers will sell you life insurance even if you have pre-existing conditions. With pre-existing conditions, you can expect higher life insurance premiums. Whether you’re applying for term life or permanent life insurance, insurance providers will factor your health into the cost. That’s especially true if you have a large death benefit.

Life insurance providers use risk calculations to determine how soon your death may be, and thus, how high of a premium to charge you. Because pre-existing conditions increase your risk of death, you can expect to face higher premiums. How much extra you will pay depends on the condition and its severity.

So how much will life insurance with pre-existing conditions cost you? You can expect to see an 8 – 10% yearly increase in cost as you get older. But, there are ways to reduce this. Getting in shape, following a plan from your doctor and improving your lifestyle can help you lower your life insurance premiums.

Applying for Life Insurance With a Pre-Existing Condition

SmartAsset: Buying Life Insurance With a Pre-Existing Condition

The steps for applying for life insurance are fairly simple. You will need to research the right type of life insurance for you. The insurance provider will request information and documents, then you will need a medical exam. Here are five general steps to follow:

  1. Get a quote: When you start researching life insurance policies, it helps to use an online tool to get quotes to compare premiums and coverage.
  2. Gather documents: Insurance providers will want to see your pay stubs, bank statements and proof of residency, as well as forms of identification like your driver’s license.
  3. Fill out the application: The application for your life insurance policy will ask you questions about your medical history and your lifestyle. You may also need to grant the life insurance company access to your medical records.
  4. Have a medical exam: You will need to have a short appointment with a medical professional to assess your vitals, such as weight, height and blood pressure. You may also need to have blood drawn, submit a urine sample and/or have additional testing depending on your pre-existing condition.
  5. Sign your policy and make your payment: Once the life insurance company has had time to review your application, they will finalize your policy and send you copies to sign. You should return one copy and keep the other safe for your beneficiaries to use when necessary.

Best Types of Life Insurance for Pre-Existing Conditions

According to the Centers for Medicare and Medicaid Services, pre-existing conditions could affect up to 50% of Americans. Because of that, there are life insurance products out there to help those with pre-existing conditions. Let’s go over a few of them.

  • Guaranteed life insurance: Guaranteed life insurance “guarantees” coverage to most people, but at a higher premium. The exceptions are those that have a serious or terminal illness.
  • Tailored life insurance: Some life insurance providers offer plans tailored to those with specific illnesses, such as diabetes, cancer or HIV/AIDS.
  • Term life insurance: If your pre-existing condition is under control, term life insurance might be your best option. You can typically sign up for a 10- to 30-year term that will payout if you die in that time.
  • Group life insurance through an employer: Many employers offer group life insurance plans that don’t require a medical exam. If you have this option, it could be another way for you to protect your family.

What Should You Do If You’ve Been Denied Due to a Pre-Existing Condition?

If you’ve been denied life insurance due to a pre-existing condition, don’t fret. You still have options. If your pre-existing condition has been a recent diagnosis, such as a heart attack or cancer, you may be able to wait and follow your treatment plan. If you stick to the plan and it’s working, you may have a better chance when reapplying for life insurance.

The other option is to invest the money you would have otherwise spent on premiums. In fact, you could sign up for an annuity that pays out a death benefit, similar to how life insurance would.

Bottom Line

SmartAsset: Buying Life Insurance With a Pre-Existing Condition

So, what should you remember about buying life insurance with pre-existing conditions? Many people have pre-existing conditions, and many of those can qualify for life insurance. However, a severe medical condition could raise your premiums or get you denied. If your insurance application is denied due to pre-existing conditions, your best option may be to invest the money you’d spend on it elsewhere. Finally, never lie to a life insurance company about your health, it could land you in legal trouble.

If you buy life insurance, don’t forget to tell your beneficiaries. They need to know about the policy, as well as where the signed copy is.

Tips for Getting Life Insurance

  • Unsure of how much life insurance coverage you need? Check out our handy life insurance calculator. With it, you can see how much money your family would need in your absence.
  • If you need help deciding on the right life insurance policy, a financial advisor can help guide you. Finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©, © Mitchell, ©