Finding life insurance when you're unhealthy
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Healthy people buy life insurance. It’s just a fact: Per a deep dive into anonymized Policygenius data, applicants, on average, have lower rates of common health conditions including high cholesterol, diabetes, asthma and depression, than the national average.
Sounds weird, we know. Unhealthy people are, statistically speaking, more likely to die than healthy people, so their coverage needs are, theoretically, more pressing. But poor health means higher premiums or, worse, a policy denial, so people in less-than-stellar shape are perhaps reluctant to shop, even when they want coverage.
Thing is, you can get life insurance with imperfect health — and at an affordable rate, depending on the condition and its severity.
Buy sooner, rather than later
Consider non-medical exam policies only as a last resort.
Assume you’re too expensive to insure
Buy the first policy you see
Ignore your illness
Lie about your health
OK, let’s back up and review how life insurance companies set premiums. Rates are based on a bunch of things that’ll tell an insurer how likely you are to die during a policy’s term. These are the big ones:
Your driving record
The riskier you are to insure, the higher your rates. So, yes, broadly speaking, the older, unhealthier and more … let’s say, free-spirited you are, the more you’ll pay. But, on the ground level, life insurance underwriting gets much more granular. Companies use all the info they collect to formally “classify” you. There are four standard classifications, listed here from best (read: lowest premiums) to worst (read: higher premiums):
Preferred Plus: You’re in perfect health!
Preferred: You’re in almost perfect health!
Standard Plus: You’re in good health.
Standard: You’re … OK, I guess.
Psst: Insurers also have special “Smoker” rates, which we’ll discuss a little later.
If you don’t fall into one of those classifications, you’re “substandard” — and about to get rated. That’s where the underwriter assigns you a grade (usually A-J or 1-10), based on your health and history. That grade coincides with their rate table. The lower your grade, the higher your premiums.
Here’s the thing, though: While this system is fairly standard, the criteria for classifications is not. So one insurance company’s “Standard” is sometimes another insurance company’s “Standard Plus.” Or a “J” on one rate table is potentially an “I” on another carrier’s chart.
Finding an insurer with more tolerance for your health condition (or bad habit) is paramount to finding an affordable policy. And, yes, that’s a thing: Some insurers are just cooler with, say, marijuana smoking than others. Why?
“The definition of good health changes a lot,” Policygenius adviser Robin Shrestha explains, as do societal norms. Take marijuana, for instance, which has been legalized for recreational use in a few states in recent years. Some insurers have started giving Preferred rates to infrequent users, while others still send these applicants straight to Standard with a Smoker rating.
“Some of just have a different philosophy,” Shrestha says.
Well, it’s all relative, so, at the end of the day, affordable life insurance is, you know, life insurance you can afford. But, for frame of reference, let’s consider an insurer’s ideal — or “Preferred Plus” — candidate: a young non-smoker in perfect health. Based on our quoter, this person can expect to pay between $20 to $36 a month for a $500,000 20-year term life policy. So, on average, they’re looking at paying $28 a month for life insurance.
Rates go up 15% to 25% between Preferred Plus, Preferred, Standard Plus and Standard, Shrestha estimates. Again, we’ll split the difference and say an insurer’s applying a 20% rate increase. Here’s how rates can change across classifications.
For many people, $50 a month for life insurance isn’t unaffordable. In fact, you can probably “find” those dollars by diving into your budget. Once you hit the rate tables, though, the increases get precipitous. You’re facing a 25% jump each step down — and you’re starting at 25% over Standard. Higher base prices equal higher subsequent increases. And so the rates go up like so:
Now, again, depending on your financial health, a $230-per-month premium might fit into your budget. Everyone’s got a different tipping point. But you can see the difference moving up a step or two can make — and how you can potentially lessen a price burden.
We say “potentially”, of course, because, yes, certain health conditions render a person virtually uninsurable — at least for the immediate future. Other issues will almost always get you rated, with your exact grade contingent on the condition and how severe it is.
Some conditions that’ll get you denied
Cancer or, even, cancer history
HIV or AIDs
Some conditions that’ll get you rated
High blood pressure
For starters, don’t assume your condition will price you out of a policy. As you can see from our sample rate table above, it pays to shop around. (We can help you quickly pull and compare life insurance quotes here.) Here are some more tips
Between the paramedical exam and a review of your medical records, the insurer is practically guaranteed to find out the scope of your condition. And, on the off chance something gets missed during underwriting, lying puts your policy at risk. (Insurers can use that fraud to cancel your policy or refuse the death benefit.) But you don’t just want to come clean to the insurance company. You also need to be honest with yourself about your current health, Shrestha says. That way, you’re prepared for the premiums it’ll net you. Plus, you might disclose information that works in your favor. Say you have a prescription for Xanax on your medical records, but only actually took the pills once of twice while on a plane. “For some carriers, you can get second best rates with situational anxiety,” Shrestha says.
We get it: An insurance broker telling you to work with an insurance broker. Who would’ve thunk it? But they’re going to have a leg up on the whole “best life insurance company for your health condition” factor so you’re saving yourself, at best, a chunk of change and, at worst, hours of research.
At least if it’s affordable, though perhaps less than ideal, because your condition can get worse or you can develop other health issues that’ll make it even harder to get an affordable policy in the future.
Don’t accept that premium as a final answer. Most, if not all, life insurance companies let you retest a year or two into your policy. And, if the results reflect significant improvement to your health, your rate can drop for the rest of your term.
These let you move up a grade or even classification by hitting certain healthy living targets, like avoiding a moving violation for three years or going for routine checkups and screenings. Table shave programs run the gamut — and are more popular among permanent life insurance — but, if there’s a discount on the table, you’ll want to know about it.
Some health problems are chronic and others can’t get reversed on a clip, but an insurer will judge you less harshly if you’ve taken steps to deal with the issue. So, let’s say you have high blood pressure, but are taking your meds. Or have diabetes, but are seeing a physician and demonstrate via lab work your sugar is under control. You might get a better rate, Shrestha says.
OK, we promised we’d talk about cigarettes. Why? Because they’re guaranteed to jack up your premiums. Smoking can lead to innumerable health conditions, so insurers actually have separate classifications for people who light up.
Preferred smokers are tobacco users in otherwise perfect health.
Standard smokers are in so-so health on top of tobacco use.
Either classification will cost you. Let’s go back to that $500,000/20-year term policy. Per our quoter, assuming all other factors are equal:
A 35-year-old non-smoker would pay between $21.07 to $36.00 per month.
A 35-year-old smokerwould pay between $85.50 to $131.50 per month.
So, yeah, you’re basically in rate-table territory and things haven’t even gotten started yet. Here’s the bad news: You can’t quit cold turkey and skip a smoker’s rate. Nicotine can show up on a urine test for up to a month. Plus, the insurer asks questions about past tobacco when you fill out your application. And “if you smoked within the last year, you’re going to get a smoker’s rate, no way of avoiding it,” Shrestha says.
Here’s the good news: Certain insurers offer affordable rates to former smokers. Some companies — Prudential and Lincoln Financial, notably — even offer Standard rates to applicants on smoking cessation products, pipes, cigars or e-cigarettes. And, while you might not get that lower rate right now, you certainly can if your quest to quit proves successful.
“Stop today, call me in a year and I’ll get you that rate,” Shrestha says.
OK, again, don’t assume you’re en route to a denial. We say this not necessarily because you’ll get approved. After all, we don’t know what condition you’re dealing with, but because people should think twice before rushing to non-medical life insurance.
For starters, certain policies letting you skip the physical — like simplified issue term and accelerated underwriting life insurance — are actually geared toward healthy-ish (and, in the second instance, young) applicants who want a small policy with no hassle.
“The only reason you do that is because you’re afraid of needles,” Policygenius Mike Hogan says.
And policies of last resort — like guaranteed issue and final expense life insurance — are just that: last resorts. That’s because you’re getting a limited amount of coverage for a very, very high price. To put its cost in perspective, here are quotes for a $25,000 policy from our partners who sell final expense insurance. (Mutual of Omaha and Transamerica won’t cover certain applicants, while AIG guarantees a policy, but at a higher cost and with some protective clauses. If you die within two years of taking out the coverage, your beneficiary simply gets your money back, not a death benefit, and AIG takes commission.)
As you can see, costs are prohibitive — and, TBH, you’ve got a better chance of scoring an affordable rate by shopping for traditional life insurance. For contrast, a $100,000/20-year term policy would cost a relatively healthy 57-year-old about $40 to $60 per month, Shrestha says.
Final expense insurance, conversely, is for “older unhealthy people who need to cover their burial expenses,” Hogan says.
The Healthiest & Unhealthiest States in the U.S., based on an analysis of Policygenius data
Guide for Quitting Smoking, courtesy of the Centers for Disease Control and Prevention
Recommendations for Physical Activity for Adults, courtesy of the American Heart Association
A crib sheet for surviving the life insurance medical exam, for anyone gearing up to take one.
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Disclosure: Policygenius offers insurance policies from many of the nation's top insurers, who pay us a commission for our services. However, all editorial choices are made independently.
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