WASHINGTON, January 21, 2014 — Traditional life insurance coverage may not be an option for those with certain health conditions or who participate in high risk activities. But that does not mean being uninsured; a high risk life insurance plan may be an option.
High risk life insurance is geared toward those who possess adverse health conditions such as diabetes or hypertension and may not qualify for coverage at the standard policy rates. A high risk life insurance policy may also be sought for someone who participates in activities that are considered higher risk, such as bungee jumping or auto racing. It also covers individuals in dangerous types of occupations such as firefighters and police officers.
When considering an applicant for life insurance coverage, underwriters typically consider how much risk that an applicant could pose to the insurer. This helps the underwriters in determining the likelihood that the insurer will have to pay out a claim in the future. Applicants who present a higher likelihood of risk will be charged a higher premium.
Applicants who pose an average, or standard, amount of risk, will be charged a standard premium by the insurer. However, a table rating refers to the premiums that are charged to those who are unable to qualify for standard premium rates.
Table ratings can be given to policy holders for both medical and non-medical reasons. For example, cancer, diabetes, or high blood pressure may cause one’s life insurance rates to be higher than those of an applicant who does not have these conditions.
Likewise, working in a dangerous occupation, or having several convictions for driving under the influence may also cause one to be given a table rating on their policy. Essentially, anything that may increase the likelihood of one’s premature death could cause a table rating.
Table ratings may not be permanent. Depending on the reason for the rating, they could change. In many instances, the insurer may offer an applicant the option to reapply for coverage after the plan has been in force for at least two years. If the condition that caused the table rating is no longer present at that time, it could be reduced or removed.
When shopping for life insurance, there are different ways of underwriting the application. Underwriting is the process of assessing the risk that you potentially present to the insurance company in terms of the likelihood of submitting a claim while your insurance policy is in force.
The primary types of life insurance underwriting include:
- Guaranteed Issue – With a guaranteed issue, no health questions will be asked on the application for coverage. Here, you may be required to fall into a particular age range or belong to a certain group or association in order to qualify. The premium rate that you are charged for coverage will typically vary, depending upon your age, as well as your location.
- Simplified Issue – Simplified issue policies require some underwriting information. With this type of underwriting, enough health questions are asked to ensure that you are not suffering from a life threatening health condition. The insurance company may also request your permission to obtain your medical and credit information.
- Fully Underwritten – Fully underwritten life insurance policies will require you to answer quite a few health related question in order to apply for coverage. The insurance company will also likely obtain information from your primary care physician, as well as information about your finances from the major credit bureaus. In addition, you may also be required to take a medical exam and/or to provide blood and urine samples. Those who are considered to be high risk applicants will typically be required to be fully underwritten prior to being approved for life insurance coverage.
If your situation calls for high risk life insurance, it is important to works with a professional who is well versed in this type of coverage – as not all agents or insurance companies are familiar with securing higher risk policies.