Financial adviser Brenton Tong on life insurance for pre-existing conditions
How do I apply for life insurance with a pre-existing condition?
"Typically, when applying for any type of life insurance policy, whether it be life insurance, total and permanent disability, income protection or trauma, your medical history and any pre-existing medical conditions will be taken into consideration. Your medical history will either be a hurdle at the time of applying for insurance, or it will be a hurdle in making a claim on your policy.
As a rule, if your medical history isn't examined when you apply for insurance, you run a very real risk that a claim isn't going to be paid on your policy in the future as the insurance company can lean on pre-existing medical conditions as a reason not to pay – so in most regards, it's best to deal with the pain (medical examination) upfront and remove any uncertainty about your ability to get insurance."
Can I get life insurance with a pre-existing condition?
Will I pay more if I can get life insurance with a pre-existing condition?
"If you do have a pre-existing medical condition that the insurer feels may have a material effect, then you're likely to either have your policy accepted at a higher rate – called a loading. If you're a smoker, premiums for insurance are usually higher as you represent a higher risk to the insurance company. If you have other medical issues that the insurer feels put you at a similar risk as a smoker to early death, then they will charge you accordingly. You can expect to pay from 50 – 100% more for your premiums in this situation."
What happens if I am declined due to a pre-existing condition?
"If you are declined for your insurance, it's always best to ask why – sometimes the answer isn't what you were thinking of. While it may be based on a pre-existing medical condition, it may be a combination of things. It could be a family history of heart disease coupled with higher blood pressure, high cholesterol and a high BMI. In this circumstance, you may be able to focus on improving your health and losing weight and then applying again. Sometimes just 5kg could make the difference. The family history might still be there, but there is one less factor for the insurance company to be worried about.
Sometimes your medical history is bad enough that it's a flat no and you won't be able to be accepted no matter what you do. You may be tempted to find a less reputable insurance company to see if they will insure you – if you go down this path, be very careful and read all the fine print."
What is a life insurance pre-assessment?
"Even if you do have a complicated medical history, it's worth getting pre-assessed for an insurance application. This is a shortened version of an insurance application that a medical underwriter will assess and give guidance on how they would likely deal with such an application. They may indicate that it's still worth putting it in, or that they need further information. As with most things in life, if you don't try, you'll never know. "
