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Buying Life Insurance with Poor Health

June 10, 2019

While it’s certainly more difficult to find coverage when you have a chronic condition, it’s not impossible. We provide guidance here.

If you have chronic health problems and need life insurance, have no fear--there are options out there for you. While it’s no secret that younger and healthier individuals are quoted better life insurance rates, you shouldn’t assume you’ll be turned down if you are older with health problems. It may be easier than you expect to find coverage, and you have other options if you are declined.

Life insurance refresher

Take a look at our recent blog, Life Insurance: Is it Worth the High Premium? Life insurance is a crucial element of financial planning, and something that will help secure a more stable financial future for your loved ones when you’re gone.

There are different types of life insurance but essentially, life insurance is a contract with an insurance company that guarantees payment of a death benefit to named beneficiaries upon the death of the insured person.

What is underwriting?

Underwriting is the process that the insurance company uses to determine how much risk it is willing to assume in offering you life insurance. Underwriters will look at your age, your health, your driving record and your habits to predict how likely you are to pass away during a policy’s term. The insurance company wants to sell insurance to people who live longer so that they can collect more premiums before they have to pay your claim.

Why is it harder for unhealthy people to find coverage?

Simply put, the riskier you are to insure, the higher your rates will be. Hence, in general, you’ll raise red flags with a life insurance provider if you have obesity, heart disease, high blood pressure, high cholesterol, depression or another chronic condition.

What to do if you have a chronic condition

If you do have a chronic condition…

  1. Be upfront about your condition when applying for life insurance- Lying always puts your policy at risk. Also, the insurer is practically guaranteed to find out the scope of your condition through the paramedical exam and review of your medical records. Bring anything you can regarding your condition to the table. Life Insurance companies will consider people with chronic conditions if they are being treated and are responding well to treatment.
  2. Be careful about applying too often- Every time you get declined, you’ll be less likely to be approved by other insurance companies. It helps to speak to the underwriters before you submit your application.
  3. Consider simplified issue life insurance- While a detailed medical questionnaire is required with simplified issue life insurance, these policies do not require a medical exam to qualify. The drawback here is that the policies have higher premiums and lower benefit amounts than term life insurance.
  4. Consider guaranteed issue life insurance- As the name suggests, these life insurance policies are guaranteed for all and don’t assess your health as part of the application process. The drawback with guaranteed policies is that they generally provide a limited amount of coverage for a high price. Also, if you pass within two years of taking out the coverage, your beneficiary will get your money back, but no death benefit.

Also important to note- If your condition is only temporary, you should be able to buy insurance at rates closer to “normal” than you might think. You can typically get life insurance one to three years after you complete treatment.

Though it’s easy to get discouraged during this process, don’t lose hope. There are options. Need guidance on your individual situation? Contact KLR Wealth Management, LLC

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