What is impaired risk life insurance?
Impaired risk life insurance is designed for people currently suffering health issues or who may have had health problems in the past. Though such people may require life insurance, many insurance providers are reluctant to provide cover for clients who have pre-existing medical conditions, work in a risky occupation, participate in adventure activities or live an unhealthy lifestyle. Simply because of their medical history, some people are deemed too risky to insure.
Impaired risk insurance providers, however, weigh the risk of insuring each individual applicant. If you have a health condition but take great care of yourself, impaired risk insurance companies will take note of this and won’t automatically lump you in with every other person who has the same condition.
How is an impaired risk life insurance applicant different to a regular applicant?
Life insurance providers assess a number of factors when considering applicants but are primarily concerned with your health and your lifestyle. There are a number of factors that make people who apply for impaired risk life insurance particularly risky to insurers:
- Pre-existing medical conditions. These are medical conditions for which you have been receiving treatment for a prolonged period of time, such as diabetes. It can also mean a medical condition that has been passed on in your family such as cancer or high blood pressure.
- Extreme sports and adventure activities. If you’re an action junkie who regularly engages in extreme sports or adventures such as skydiving, bungee jumping or motorcycle riding, insurance providers believe you have an increased mortality rate to other applicants. High-risk activities also include visiting countries that the Australian government has already issued an advisory warning for travellers recommending they don’t visit at that time.
- High-risk occupations. Some jobs simply expose you to more danger than others. For example, a fisherman or someone operating heavy machinery is obviously going to find themselves in more hazardous situations than an office-bound accountant.
- Unhealthy lifestyle. If you’re overweight or a smoker, you’ll probably know that both obesity and smoking are linked to some pretty unpleasant health conditions. This will obviously be taken into account by your insurer.
- Age. It’s a fact of life that the older you get, the more prone you are to illness. As a result, premiums will rise as you age.
How is impaired risk underwriting different?
In a nutshell, underwriting is essentially the process of determining the degree of risk a person presents, in order to either accept or reject their life insurance application. Obviously, different people present different degrees of risk to an insurance company. For example, a generally healthy and active 30-year-old is going to be at a much lower risk of suffering an early death than an overweight smoker in his 60s.
An underwriter will check various factors on your life insurance application to determine how much risk you will pose. These include:
- Your age. It might sound a little cold, but insurance companies simply consider older people to be at a greater risk of dying than their younger counterparts.
- Your genetic medical history. If there’s a long history of cancer or heart disease in your family, you may be assessed as high risk. On the other hand, if there’s no history of medical dramas in your family tree, this will stand you in good stead.
- Your current health conditions. If you’re regularly unwell or have undergone serious surgeries in the past, your risk rating is obviously going to be higher. However, if you’re a picture of good health, you’ll be seen as presenting a lower risk.
- The nature of your occupation. People who hold down office jobs are generally considered to be a lower risk. However, if your occupation sees you facing dangerous or risky situations on a regular basis, your risk factor will be seen as high.
If you’re a high-risk candidate, the impaired risk life insurance underwriting process involves further steps. These insurers will commonly conduct an informal inquiry, which involves collecting your health data for examination. They can then get a better picture of you and your health condition as an individual, rather than grouping you with every other sufferer of the condition.
Tips for impaired risk applicants to take out insurance cover
- A few simple lifestyle changes might make the process of looking for cover much simpler. Consider quitting smoking, selling your motorbike or getting yourself back to a healthy weight to lower your risk rating.
- Speak with an insurance consultant. Shopping for life insurance can be daunting at the best of times, but the process can be even harder to understand if you’re looking for impaired risk life insurance. Life insurance advisers will know which providers are more likely to offer the right level of cover for someone in your situation, and can help you tailor cover to suit your needs.
- Compare your options. Don’t just settle for the first life insurance policy you come across. Do your research, weigh up the pros and cons of different policies, and seek recommendations from others before making your final decision.
- Try to find an impaired risk insurance provider that has specialist experience in your particular risk. Every company assesses risk in different ways, so do your research to find a company that might be perfect for you. If you’re declined cover from one company it can greatly increase your chances of being turned down by another, so choosing the best insurance provider first up is critically important.
- For sufferers of chronic illnesses like asthma or diabetes, make sure to do everything in your power to follow your doctor’s orders and try to control your condition. This will not only improve your health but also help you out when it comes time to apply for life insurance.
Does Life Insurance Finder Work with Impaired Risk Life Insurance Companies?
The team of insurance consultants that life insurance finder provides details to provide quotes for 12 reputable Australian life insurance companies. These companies are not necessarily considered high-risk though many may still be able to provide cover through making necessary adjustments to the policy or applying a premium loading. It is always worth speaking with a consultant just to find out what is available and the next best steps if cover is unable to provided.