Life Insurance with Health Conditions?

Ever been told you can’t get life insurance because of a previous medical condition?

Premiums on any life insurance policy simply represent the risk to the insurer. If the risk is higher, the premiums are higher and if the risk is lower, the premiums are lower – this applies to all types of insurance. Fundamentally, the risk is dependent on just two factors. Firstly, the likelihood of the insurer having to pay out and secondly, the size of a potential pay out. The former can be broken down into the following categories when referring to life insurance all factors affect the risk to the insurer:

  • Age of Applicant
  • Length of Policy
  • Medical History
  • Type of Policy
  • Lifestyle, Hobbies and Occupation of Applicant

In this blog we will focus on the effect your medical history can have on your ability to secure life insurance policies and how any applications are likely to be treated by insurers.

It is not uncommon for people who have suffered serious conditions to still be eligible for life insurance policies. Examples of familiar conditions that people can suffer from and still get life insurance include cancer, heart attack, diabetes, mental health trauma, obesity and many more. The severity of these conditions and personal circumstances of the applicant are considered by the insurance provider to assess the risk and therefore the appropriate premium if insurance can be offered.

Different insurance providers have different risk appetites for different conditions so just because one provider may view your application in one way, it doesn’t mean another provider wouldn’t offer more favourable terms. This is one of the ways in which using a good life insurance broker can benefit you.

Where there is a previous medical history, insurers have various options open to them about how they want to respond to your application. These include the following:

  • Accept – In many cases, insurance providers will still offer standard terms despite you having had something happen in your previous medical history. Naturally this is more likely if the history relates to a minor incident, but you’d be surprised how often this is the case!
  • Ratings – Adding a loading onto the standard premium for your policy. For example, a 50% loading on a policy normally £10/month would mean your premium would be £15/month
  • Exclusion – Removing a health condition from the list of conditions your policy covers you for. This is often done when the applicant has previously suffered from the specific condition. For example, if you have been off work due to stress, an insurance provider may choose not to cover you on an income protection policy for stress in the future.
  • Deferred – Delaying the offer of cover to an applicant for a specified period before they are invited to reapply. This is often done when the applicant has recently suffered from a condition and may not yet be fully recovered.
  • Decline – In some cases the insurance provider will decide they do not want to offer cover as your application may fall outside of their criteria. As mentioned previously, this doesn’t necessarily mean another provider won’t offer you cover either.

Life insurance providers want to offer you cover so, if they can, they will. Naturally they are a business and must remain profitable so if they deem insuring you to be a higher risk, the premiums will be higher to reflect this. If you’re looking at setting-up or reviewing your existing life insurance policies, we’re here to help with free, professional advice.