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December 31, 2021 Newswires
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Why you pay more for high-risk life insurance

Rocky Mount Telegram (NC)

It sounds morbid, but when you're shopping for a life insurance policy, insurers want to know the answer to one question: What's your life expectancy?

That's because life insurers take on a financial risk by covering you. The higher the chance of an insurer having to pay out your policy, the more you'll pay — or the harder it will be to get coverage.

If you fall into one of these five groups, you may be deemed a high risk to insure.

Pre-existing health condition

"Think cancer, diabetes and any type of autoimmune disorder. Morbid obesity is a big risk, too," says Jeremy Hallett, CEO of Quotacy, an online insurance brokerage.

However, if you're managing your pre-existing condition well, insurers will take that into account when setting rates.

The reason is simple, says Maureen Shaughnessy, research actuary at LIMRA, a life insurance trade organization.

"The more controlled your health risk is, the more favorable it is for your own mortality — which is good for everybody involved."

A dangerous job

If you walk into a risky workplace every day, you can expect to be treated differently from someone with an office job.

The list of "dangerous" jobs is based on specialized tasks. A police officer who works a beat can typically access good rates, but a police officer on the bomb squad could get slapped with a higher premium, Hallett says.

The guidelines for military members are a little blurry. If you're in the military but not part of active-duty special operations forces, like Army Rangers or Navy SEALs, a broker can normally get you rates based on your health, Hallett explains. However, if you're deployed to a dangerous part of the world, you probably won't be approved for a policy until you're back on U.S. shores, unless you go with an insurer that specifically caters to the military.

The good news? If you leave your hazardous job, you can ask your insurer to reevaluate your rates.

A thrill-seeker

Do you spend your weekends doing extreme sports like car racing, piloting, skydiving, scuba diving or mountain climbing? Unfortunately, you'll likely end up with higher life insurance rates.

Insurers will look at the level of risk you're taking on and how often you participate in these activities.

To avoid committing fraud, it's important to be upfront with your insurer during the application process. You must disclose your hazardous hobbies, as well as how many times a year you do them.

Drug or alcohol treatment

The type of drug and the length of time you've been clean come into play. Insurers carefully consider relapse rates, as well as the likelihood of contracting diseases through drug use, such as hepatitis C.

"Heroin, opioids and meth are problematic. Typically, you can't get coverage for a year after drug treatment," says Hallett.

As for alcohol treatment, insurers want to see you sober for one to two years before offering a lower rate.

A recent DUI

A DUI is more than a blip on your driving record — it can also affect your ability to get low-cost life insurance.

If you got a DUI in the past year, you can expect a higher premium when you apply for life insurance. If you got multiple DUIs over five years ago, you'll likely pay more than twice as much for coverage as someone with a clean driving record.

However, your insurer might not penalize you for just one DUI that happened five or more years ago.

Chances of approval

Work with a life insurance broker or independent agent. These professionals partner with a bunch of life insurance companies, so they 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," Hallett says.

As Shaughnessy says, every insurer has a different risk appetite. To make sure you're getting the best deal, it's worth comparing life insurance quotes.

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