Life insurance companies base their rates on how risky you are to insure (the likeliness that you will die and they will have to pay out the death benefit).
It’s not that they don’t want to pay, it’s that life insurance carriers are in business to protect as many people as they can, so they must balance their financial investment and risks against the people they insure.
What are the Signs that You’re a High Risk?
High risk means a higher-than-average likelihood of disability or death due to health or lifestyle, and this includes the following:
- A pre-existing medical condition such as heart disease
- Participation in dangerous sports, activities or occupations, such as cave diving, or race car driving
- Your lifestyle habits such as smoking, substance abuse, or high alcohol consumption
Life insurance companies collect information during the application process, and this is when they uncover your high risk activities.
Below, we’ll review the three signs you’re a high risk for life insurance companies, and what to do about each one to improve the likelihood that you’ll get coverage at an affordable rate.
1. Overall Health and Pre-Existing Conditions
Your lifestyle and health are the main factors life insurance underwriters assess.
For traditional insurance, you complete a medical questionnaire when you apply and you may have to complete a paramedical exam. During this process, you will disclose any existing or past medical conditions you’ve suffered and treatment you’ve received.
If you fail to disclose health information, the life insurance carrier can deny any claims your beneficiary makes or cancel your policy without a refund.
During a paramedical examination, the nurse will go through a health questionnaire with you, check your blood pressure, draw blood and gather a urine sample. Your weight & height will also be measured. The results will be shared with the insurance company and additional information will be required if you have a health condition.
For example, if you have diabetes, the underwriter will want to know the severity of your case, including the year you were diagnosed, and your treatments to date.
Id you do have a pre-existing medical condition, the life insurance company may offer you a choice of premium or policy options like:
- They may insure you, with an exclusion for your pre-existing medical condition
- They may insure you and include your medical condition at the cost of higher (rated) premium
- They may decline to insure your life
What to Do About a Pre-Existing Medical Condition:
If you have a medical condition, follow all your doctor’s orders and take care of yourself by eating healthy and exercising. Work hard to manage your condition. If your condition is under control, the likelihood a life insurance company will insure you increases dramatically.
2. High Risk Hobbies or High Risk Occupation
Do you like extreme sports, bungee jumping, motorcycle racing and any other dangerous hobby? If so, your life insurance company will look at you as an expensive accident just waiting to happen. Many policies will outright exclude a specific list of pastimes, such as, skydiving, auto racing, cave diving and more.
Others might cover you for these anyway, but only at a higher premium cost.
As with hobbies, occupations are also classed in different categories of risk based on the nature of the work. Occupations such as flying small aircraft and commercail diving operations are sometimes associated with increased risk of death and/or injury. Thus, premiums may be higher. However, insurers also consider the duties you carry out in your specific role.
For example, if you work in the diving industry as an administrator (not in the water) a life insurance provider will base your premiums on your reduced level of risk.
What to do About High Risk Hobbies or Occupations
It might cost more, but many insurers will still cover these activities, and there are also insurers that specialize in providing coverage for thrill-seekers. This is why you should speak with a life insurance broker familiar with various life insurance carriers.
They know which companies cover individuals that engage in high-risk hobbies and occupations.
3. Lifestyle Habits
Smoking, recreational drug use and heavy drinking are all lifestyle factors. Generally, life insurers will charge you a higher premium for any lifestyle activity that’s linked to increased medical costs, or a raised chance of disability or death. In fact, smokers are likely to pay double the insurance premiums than non-smokers.
Alternatively, someone who is in great shape with a proven healthy lifestyle is usually eligible for discounts, reduced premiums and other bonuses from life insurance carriers.
How a Life Insurance Company Determines High Risk Lifestyle Habits:
- A non-smoker is someone who hasn’t smoked for more than 12 months
- You’ll have to list all prescriptions or medications you take regularly
- Insurers will ask about alcohol consumption, and other drug use
It’s important to note that many life insurance companies are changing their underwriting guidelines. For example, BMO, SSQ, Canada Life and Empire Life have changed their rules with regard to occasional marijuana use, and other companies have changed how they view cigar smoking.
No Medical Insurance
While traditionally underwritten insurance yields the lowest premiums, no medical insurance provides guaranteed protection. Those that will not qualify for traditional insurance, or are facing huge premiums due to lifestyle or health factors, can opt for policies that do not require health exams.
While the premiums are higher than traditional policies and the benefit lower, coverage is guaranteed, which provides peace of mind and money to pay off debts and take care of final expenses.
Get the Coverage You Need
At Shelter Bay Financial Corp., we are life insurance experts and we specialize in individuals that are high life insurance risks. As brokers, we have access to all the major Canadian insurance companies that offer unique products for high-risk individuals.
We help you save time and money with our fast, online and phone services. With screen share software to sign your application, you don’t even have to come to an office for an appointment.
Find out more and get the affordable coverage you need by calling toll free to 1.888.498.5288.