It sounds grim, but when searching for a life insurance policy, underwriters want to know one thing: what is your life expectancy?
This is because life insurers assume a financial risk by insuring you. The greater the likelihood that an insurer will have to pay out your insurance, the higher the premium you’ll pay — or the more difficult it will be to obtain coverage.
If you fall into any of these five categories, you may be considered a high risk to insure.
1. You have a pre-existing health condition
“Consider cancer, diabetes, and any autoimmune illness. “Morbid obesity is also a significant risk,” says Jeremy Hallett, CEO of Quotacy, an online insurance agency.
However, if you manage your pre-existing condition successfully, insurers will consider that when determining premiums.
The rationale is straightforward, according to Maureen Shaughnessy, a research actuary at LIMRA, a life insurance trade association.
“The more controlled your health risk is, the more favorable it is for your own mortality — which is good for everybody involved.”
2. You have a dangerous job
If you walk into a dangerous workplace every day, you might expect to be treated differently than someone with an office job.
The list of “dangerous” employment is based on specific tasks. According to Hallett, a police officer who works a beat may usually get good rates, however a police officer on the bomb squad may face higher premiums.
The criteria for military personnel are a little hazy. If you’re in the military but not a member of active-duty special operations forces such as Army Rangers or Navy SEALs, a broker can usually get you rates based on your health, Hallett says. However, if you’re sent to a dangerous part of the world, you’re unlikely to be accepted for a policy until you return to the United States, unless you work with a military-specific insurer.
These jobs can also create problems during the life insurance application process:
- Piloting involves student pilots, helicopter pilots, and crop dusters.
- Car racing.
- Certain types of scuba diving include wreck diving and cave diving.
What is the good news? If you leave a hazardous job, you can request that your insurer re-evaluate your rates.
3. You’re a thrill-seeker
Do you spend your weekends participating in extreme sports such as car racing, piloting, skydiving, scuba diving, or mountain climbing? Unfortunately, you will most likely wind up paying higher life insurance rates.
Insurers will consider the level of risk you are putting on and how frequently you engage in these activities.
“Racing your new Porsche around a circuit is fine. Simply ascending a mountain is fine. However, using ice picks and going 10,000 or 12,000 feet is not acceptable. If you plan to climb Everest or K2, they will not contact you until you return,” explains Hallett.
To avoid life insurance fraud, be honest with your insurer during the application process. You must disclose your risky hobbies, as well as how frequently you engage in them each year.
4. You are receiving drug or alcohol treatment.
The sort of drug and how long you’ve been clean are important considerations. Insurers take relapse rates and the risk of getting diseases like hepatitis C into serious consideration.
“Heroin, opioids, and methamphetamines are problematic. Typically, you cannot obtain coverage for a year following drug treatment,” adds Hallett.
In terms of alcohol treatment, insurers prefer that you stay sober for one to two years before granting a lower premium.
5. You have a recent DUI
A DUI is more than just a mark on your driving record; it can also impact your ability to obtain low-cost life insurance.
If you have a DUI within the last year, you might expect a higher rate when applying for life insurance. If you have numerous DUIs from more than five years ago, you will probably pay more than twice as much for coverage as someone with a clean driving record.
However, your insurer may not punish you for a single DUI that occurred five years or more ago.
Boosting your chances of approval
Consult with a life insurance broker or independent agency. These professionals work with a variety of life insurance providers and can help you navigate your options.
“You need a human being to take your profile to the market, shop it and come back to you with the best offer,” she explains.
According to Shaughnessy, each insurer has a varied risk appetite. To ensure you’re getting the greatest bargain, compare life insurance rates.
