Life insurance can be used for many purposes, such as income replacement, college-education funding and wealth preservation. But sometimes, just when you need life insurance the most, you can't get it because of poor health. Nevertheless, don't be so quick to jump on the "I'm uninsurable" bandwagon. Many life insurance companies offer policies just for the not-so-healthy. Why? Because better healthcare, improved lifestyle, advances in medical care and improved diagnostic procedures have generally increased life expectancies for those applicants with health impairments.

Before you submit that life insurance application, consider how most life insurers determine whether they'll sell a policy to an individual and how much they'll charge for the insurance protection. Thinking like an insurer can help you get the coverage you need.

The Insurance Company's View of You
The process that the insurance company undertakes to evaluate whether an applicant is insurable is called underwriting. Each company's underwriting is somewhat different, yet the basic concepts are the same. The company will look closely at your present health as well as prior health conditions, diseases or ailments, but generally, the insurance company also considers a number of other factors, such as:

  • age of the insured
  • gender
  • height/weight
  • family health history
  • purpose of insurance
  • marital status
  • amount of insurance applied for
  • occupation
  • income
  • history of smoking
  • dangerous hobbies/activities

Specifically, the company will request your medical records and request that you undergo some type of medical examination. If you have an illness, medical condition or disability, the insurer may also ask that you be examined by a doctor of its choice who will likely also review your medical records.

The underwriting process for life insurance is not the same as it is for health insurance. There are some chronic illnesses and diseases that do not affect ones life expectancy, yet they may require regular medical treatment. In this case, you may have a harder time getting health insurance than life insurance. For example, life insurance has been issued to people with asthma, heart disease, cancer and hypertension.

It's a Numbers Game
Once all the information is gathered, the company will assign a rating to you as the insured. The rating is the company's measure of the risk or probability that it will have to pay a death claim within a certain period of time. You're pooled with other applicants of the same risk category. The company figures some will "beat the odds" and outlive the projected life expectancy, others will die prematurely, while some will die within the projected time period. Based on the underwriting factors, the greater the likelihood you'll die sooner rather than later, the more the company will charge for a premium to cover the cost of funding the benefit it'll have to pay at your death. If the company determines that the risk of having to pay the death claim prematurely is too great, it will refrain from offering a policy.

But that's where companies differ. Some companies are more conservative in evaluating the risk you pose, whereas others are more aggressive in their assessments. This is where it might help you to use the services of an impaired-risk specialist.

An Impaired-Risk Specialist Can Help
An impaired-risk specialist is an insurance broker who is familiar with life insurance underwriting in general and the variables that companies will consider when insuring applicants based on their particular health issues. In short, they speak the language of the underwriters and can point you in the right direction when it comes to finding the right carrier for the insurance you want.

Some impaired-risk specialists may also serve as advocates for you and negotiate with insurers to get insurance at the best price possible. In essence, you have to demonstrate to the company that you don't fit the risk category it projects. An impaired-risk advocate can help present your case in the most favorable light. If you have health problems, consider using special-risk advocates or impaired-risk specialists who help find impaired-risk life insurance coverage.

Some Helpful Tips
The following are some tips that will help get you the coverage you want and need at a price you can afford.

Talk To Your Doctor
The insurance company will ask your doctor for your medical records, so it's a good idea to talk to your physician about your health and alert him or her to the likelihood of the request from the insurer. If your doctor thinks you've progressed favorably and that you're following a prescribed health plan to control or prevent the health condition, having that opinion in your medical record can only help your cause.

Choose the Right Time
Sometimes the passage of time helps as well. If you've had treatment or surgery recently, the longer you remain healthy after the procedure, the better the odds you'll continue in your recovery, increasing your life expectancy.

Shop Around
Different insurance companies often take significantly different views of various illnesses so it's wise to shop around. While one company may deny coverage entirely or charge a much higher premium due to a specific ailment, another insurer may offer coverage for the same illness at a lower cost.

Discover Reinsurance
Some companies offer insurance to higher-risk applicants because they share the cost with another insurance company (called "reinsurance"). These companies are more likely to insure you if you have health issues.

Get Healthy
Demonstrate that you're taking steps to control or improve your health. Demonstrating that you exercise and have a healthy diet increases the chances of living a longer life, making you a better insurance risk.

Investigate Group Plans
Many companies offer life insurance to all employees, regardless of their health histories. Some alumni associations and professional organizations also offer life insurance on a group basis without requiring a physical.

The Bottom Line
Even if you've been turned down for coverage in the past, you may be able to get coverage now. Understanding the potential insurers' points of view and taking measures to demonstrate that you're not the risk they may think you are may get you the life insurance policy you need.

Related Articles
  1. Retirement

    Life Insurance: How To Get the Most Out Of Your Policy

    There are many benefits to owning a life insurance policy - if you get the right one for you.
  2. Home & Auto

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  3. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  4. Markets

    The 5 Biggest Chinese Insurance Companies

    Read about the top Chinese insurance companies by market capitalization, and learn a little about their positions in the marketplace.
  5. Insurance

    5 Ways to Lower Life Insurance Premiums

    Learn several effective methods for lowering life insurance premiums. These include quitting smoking and considering term life insurance.
  6. Insurance

    Understanding Taxes on Life Insurance Premiums

    Learn about the tax implications of life insurance premiums, including when they might be taxable and whether they are tax deductible.
  7. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  8. Insurance

    Who is a Beneficiary?

    A beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.
  9. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  10. Retirement

    Strategies for a Worry-Free Retirement

    Worried about retirement? Here are several strategies to greatly reduce the chance your nest egg will end up depleted.
  1. Net Collections

    A term used in medical accounting to describe the amount of money ...
  2. Corridor Deductible

    Expenses that are paid by the insured in excess of an insurance ...
  3. Insurance Consortium

    A group of businesses or organizations that join together to ...
  4. Mobile Health

    Mobile health is the practice of medicine using new mobile technologies.
  5. Automatic Premium Loan

    An insurance policy provision that allows the insurer to deduct ...
  6. Blanket Medical Expense

    An insurance policy which provides coverage for all medical expenses ...
  1. What happens if my insurance claim falls below the deductible level?

    Though the ins and outs of health insurance are often confusing, the concept of the insurance deductible is relatively straightforward. ... Read Full Answer >>
  2. How is the deductible I paid for my insurance claim treated for tax purposes?

    The deductible you pay on your health insurance policy may be tax-deductible if you meet certain conditions. However, whether ... Read Full Answer >>
  3. What are the main factors that impact share prices in the insurance sector?

    The main factors that impact share prices in the insurance sector are interest rates, earnings and actuarial risk. In the ... Read Full Answer >>
  4. Why do insurance policies have deductibles?

    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>
  5. Which emerging markets are seeing the strongest growth in the insurance sector?

    The emerging market economies seeing the strongest growth for the insurance sector are primarily the main emerging market ... Read Full Answer >>
  6. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!