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Life insurance with a pre-existing condition

Jun 14, 2022 5 Minute Read

Around half of US adults are currently living with one or more chronic health conditions. If you’re among them, you know that facing life’s challenges with a medical issue isn’t always easy. However, if you have a pre-existing condition, you can take solace in knowing you can still protect loved ones by getting a life insurance policy. While it’s true that some pre-existing medical conditions can affect how much you’ll pay for coverage, a licensed agent can help you find the right life insurance policy to match your needs and budget.

What is a pre-existing medical condition?

Technically, a “pre-existing medical condition” could refer to any diagnosis you’ve received before applying for life insurance. However, the term typically refers to long-term conditions with lasting health effects. While each life insurance provider assesses pre-existing conditions differently, common examples include:

  • Heart disease
  • High blood pressure
  • Asthma
  • Cancer
  • Epilepsy
  • HIV
  • Depression and anxiety disorders

This list is by no means comprehensive. However, as medical advancements make it easier to manage a pre-existing medical condition, life insurance companies have likewise lowered barriers to coverage. You might even find that your own pre-existing condition has almost no effect on your eligibility with certain providers.

Other factors can impact your life insurance eligibility, too. An insurer may also consider the life expectancy and severity of your disease, your overall health and habits, and how long ago you received your diagnosis.

Why pre-existing conditions matter for life insurance

Life insurance companies use actuarial science to determine the relative financial risk of insuring each applicant. To do so, insurers consider various factors, including pre-existing conditions, age, gender, and high-risk behaviors like smoking or skydiving.

Based on how risky it will be to insure someone, applicants are assigned a category, like standard, preferred, or preferred plus. Preferred plus candidates typically receive a more favorable rate than those who fall into the standard category.

While pre-existing conditions can lead to higher-cost standard plans, your diagnosis may have little influence on your eligibility if your chronic condition is well-managed or has gone into remission. No matter your situation, know that while pre-existing conditions matter to life insurance companies, you still have options.

Life insurance options for pre-existing conditions

Insurance providers offer a variety of plans with different coverage levels, premiums, and prerequisites to meet your needs.

Term life insurance

Term life insurance offers coverage for a fixed period that you choose, typically between ten and thirty years. If your condition is non-life threatening and well-managed, you may be able to qualify for term life coverage. These policies also have the benefit of relatively low premiums. However, they do not accrue cash value, and if you outlive your term life policy, your beneficiaries will not receive a payout.

Permanent life insurance

On the other hand, permanent life insurance offers coverage for your entire life, as long as you make premium payments. Permanent life policies do accumulate cash value over time. However, they almost always require a medical exam and charge higher premiums than term life policies.

Final expense

Final expense policies provide modest coverage specifically for end-of-life and funeral expenses. These plans don’t require a medical exam, and they have relatively low premiums. A final expense policy could work well for individuals with medical issues, especially if family members only need financial assistance with burial expenses.

Guaranteed issue life insurance

Guaranteed issue life insurance policies offer a reliable coverage option often up to $25,000 to people whose pre-existing conditions disqualify them from most plans. A guaranteed issue plan does not require any medical exam, meaning applicants who fall within providers’ age requirements almost always qualify. However, they are usually subject to a graded period of two years before benefits are fully in effect. However, some plans offer limited coverage in the interim, so it’s best to directly confirm the details with the insurer.

Life insurance riders

You may be able to purchase certain life insurance riders that offer protection against some financial implications of chronic disease. Some examples of riders include:

  • Terminal illness riders give you and your beneficiaries the option to collect some of your death benefits before you pass away if you receive a terminal disease diagnosis.
  • Living benefit riders pay out a living benefit to you and your family if a qualifying medical condition causes you to require nursing home care or home health services.

Tips for getting life insurance with a pre-existing condition

In addition to finding the right plan, you can take a few steps to improve your chances of eligibility for a life insurance plan with pre-existing conditions.

  • Take advantage of any group life insurance plans offered by your employer. These policies are typically inexpensive and don’t generally require a medical exam for coverage up to a certain amount.
  • Ensure you’re working closely with your doctors and following your treatment plan. Well-managed conditions often have a much smaller impact on your eligibility.
  • Choose the right type of policy. If you’ve recently been diagnosed with an illness or suffered a serious health episode, you may want to apply for coverage that doesn’t require a medical exam. Then, if your condition improves, you could apply for a new plan with a medical exam which can lower your premiums.

Do I have to tell a life insurance company if I have a pre-existing condition?

Since pre-existing conditions impact life insurance eligibility, it may be tempting not to disclose them during the application process. However, not disclosing a health condition can cause your coverage to be denied.

Life insurance companies use sources like your prescription history to identify potential fraud. If they determine you’ve withheld critical health information, you not only lose coverage but you can be reported to the Medical Information Bureau Database, which could prevent you from receiving life insurance from any insurer.

Even worse, if insurance companies identify a fraudulent claim after your death during the contestability period, your beneficiaries will likely lose your death benefit. Honesty is the best policy when it comes to applying for life insurance with pre-existing conditions!

What can I do if I’m denied life insurance because of a pre-existing condition?

There are a few ways to prepare for the future if you are denied life insurance coverage.

  • Calculate the amount of money that would have gone to your monthly premiums, and invest it instead in a savings or an investment account. That way, you will still leave your loved ones with money for end-of-life expenses.
  • Apply for a no medical exam policy. Some insurers offer no medical exam life insurance for permanent or term policies. While some no medical exam options require you to answer health questions, others are guaranteed issue, meaning you can’t be turned down based on your health status.
  • Focus on managing your condition and reapply for coverage. If you can show improvement and stability upon reapplying, you may be approved.

Ultimately, if you have pre-existing conditions, life insurance can seem daunting. Fortunately, you don’t have to navigate this process alone. A licensed insurance agent can listen to your unique needs and guide your search for the right plan, so you can receive excellent life insurance coverage even with a pre-existing condition.