We all know the importance of having life insurance to protect our family and loved ones when we pass away and now you also may have the ability to do just that.
So what really constitutes being considered a high risk?
Usually there are two reasons for falling into this category. The first being that you have a very dangerous job or engage in an extremely dangerous hobby! Some examples would be law enforcement, firefighting, race car driver or private pilot.
The reason for the high risk designation for this group is that people in these types of occupations run the risk of dying prematurely either by accident or by deliberate methods thus making it very unattractive for insurance companies to write policies.
The second reason for being considered high risk is that you may have certain types of medical conditions. Examples of those would be cancer, HIV, diabetes, heart disease and liver disease to name just a few. As with the group of individuals above, this group suffers due to high mortality rates compared to that of the average individual.
Why Is It So Hard to Get High Risk Life Insurance?
For the most part, mainstream insurance companies will not insure people that fall into the high risk category. Why? Bottom line is that it is not profitable to do so. Now you may think that seems a bit outrageous but think about from a business standpoint for just a second.
Insurance companies, just like any other company that you know of is in business to turn a profit. You may not like the sound of that but it is just the cold hard facts. What compounds this problem is that most of the major insurance carriers use mortality tables that date back to the 1970's.
These by far do not take into consideration the advancements in medicine that help prolong many of the conditions that were stated above.
So What Should You Do if You Are Considered High Risk?
The first thing you need to do if you require high risk life insurance is to start doing your research. Within the last 15 years, companies are becoming more attuned to the marketplace and have started to underwrite high risk individuals. A few of these would be Mutual Of Omaha and CNA. If you have HIV, you should contact Guarantee Trust And Life Insurance. This is a company that specializes in insuring HIV patients.
Don't be afraid to get out the phone book and start making phone calls to independent insurance agents. Try and stay away from agents that represent the major insurance companies because in most cases these agents are prohibited from writing high risk insurance policies.
Another excellent source of information is a publication called Who Writes What by National Underwriter. This publication lists agents who specialize in this type of environment. Check with your local library or you can find the number easily online.
If you are willing to put in the effort, you should be able to find an underwriter that has experience with your condition.
What Type Of High Risk Insurance Can I Expect?
In the majority of cases, the type of insurance that will be offered to you will be whole life insurance. The reason for this is quite simple. The premiums that you will pay will be significantly higher and your death benefit will be significantly lower than the industry average.
Whole life policies also carry a cash value, due to the high nature of the premiums. And in high risk policies, the cash value of the policy reverts to the insurance company upon your death. Sure, that doesn't seem quite fair but it offsets the company’s liability to a certain degree. That is how they can still be profitable in dealing with high risk clients.
Another factor that you have to be prepared for is that most high risk insurance policies will not pay any benefits during the first year of coverage.
Try and work with more than one insurance agent to get the best deal possible. But don't expect to be able to negotiate the price of the policy. Remember, you're high risk and at somewhat of a disadvantage.
Is The Application Process Hard?
In most cases, applying for high risk insurance is easier than applying for standard insurance. Now you may think that seems to be a bit backwards. But the reality is that you aren't trying to hide a medical condition. The insurer knows up front what the worst case scenario is. In a majority of cases, the application part is the least frustrating part of the whole process.
So What Does It All Mean?
Simple! Each year more and more avenues are opening to those that are deemed high risk. Now granted, in order to achieve this trade offs have been made. As we spoke about earlier, fewer benefits, higher premiums and more restrictions are found in high risk life insurance policies when compared to industry standards.
But when it is a matter of not being insured and protecting your family and loved ones this hardly seems to be too high of a price to pay.
All you need to do is put forth the effort and do not give up after you hear the word “No”. Use all available resources you have at your disposal and be diligent. You know you need high risk life insurance and now you know that you do have choices.