Life insurance for high-risk individuals: What are your coverage options?

What do scuba divers, smokers, and people with high cholesterol have in common? They all may be considered high-risk by life insurance companies, making it harder for them to get covered.

Risk management has been defined as “the process of identifying, assessing, and controlling threats to an organization’s capital and earnings.” Life insurance companies are experts in risk management. They employ professionals, some are called “actuaries,” who measure and manage risk for the insurance company, while “underwriters” work within the parameters that the actuaries have given them to help them decide whether or not to issue a life insurance policy to an applicant.

Life insurance companies also rely on their agents that sell policies to help manage risk by filling out the application correctly and thoroughly to provide the underwriter with all of the information they need to make an informed decision

Though life insurance companies become profitable by issuing life insurance policies and collecting the premiums on those policies, they will sometimes decline an application or charge a higher premium because they believe the applicant is a high-risk individual and could negatively impact the company’s earnings. To the insurance company, the risk is greater than the potential reward.

In this article, we’ll look at what makes an individual “high-risk,” the challenges they face obtaining coverage, and what their options are when looking for a life insurance company that will approve their application or offer a policy that’s within their budget.

What is considered high-risk to a life insurance company?

There are many factors that influence an underwriter’s decision about issuing a life insurance policy. These factors include your health, profession, habits, and hobbies. Different life insurance companies will classify risks differently, but these factors influence your insurability and the life insurance premium if they issue you a policy.

Life insurance high-risk diseases

Many people have health issues or pre-existing conditions when they apply for life insurance. The severity of the illness is what determines if you are considered a high-risk individual. Certain diseases reduce an individual’s life expectancy and make them a higher risk to the insurance company.

Examples of high-risk diseases include:

  • Crohn’s disease
  • Heart disease
  • Organ transplants
  • Invasive cancers
  • Kidney disease
  • High cholesterol
  • Uncontrolled diabetes
  • Hepatitis C with low viral count
  • Untreated sleep apnea
  • Doctor-recommended drug or alcohol treatment

Life insurance companies may offer you standard premium rates, higher premium rates, or decline you all together with the conditions listed and many more conditions like them.

Life insurance high-risk habits

In addition to the many pre-existing conditions that can classify you as high-risk, there are certain habits that insurance companies consider high-risk, and they underwrite accordingly. Some of these habits include:

  • Cigarette smoking
  • Cigar smoking
  • Chewing tobacco
  • Smoking un-prescribed marijuana

Life insurance high-risk hobbies

Life insurers may also consider some hobbies to be high-risk. The type of hobby and the frequency you participate in it are determinants of insurability. For example, if you bungee jump once a year at the State Fair, a life insurance company is unlikely to decline you or charge you an extra premium. But, if you bungee jump as a hobby ten times per year, you would very likely be considered high-risk by the majority of life insurance companies.

Other high-risk hobbies that life insurance companies ask about on their application include:

  • Skydiving
  • Scuba diving
  • Racing (boat, car, bike, skiing)
  • Hang gliding
  • Parasailing

How high-risk life insurance rates are determined

Based on your answers to the questions asked on the life insurance application concerning your medical history, family history, and lifestyle, the insurer will decide if they’ll issue you a policy and assign you a risk level and health rating. Underwriters and life insurance companies use similar rating systems, though the name for each category might vary slightly.

These are the rating categories used by life insurers. The higher the category you’re placed in, the lower your premium will be.

  • Preferred select – nonsmokers who are in excellent health with little to no family medical history issues
  • Preferred – non-smokers who are in very good health overall but have a minor health condition
  • Standard – non-smokers with average health or have a family medical condition
  • Preferred smoker – current smokers or those that have quit or only smoke occasionally who are in excellent health and have no family medical issues
  • Standard smoker – smoker in good health
  • Table rating – this is a separate category for people who have below-average health or are considered high-risk by the insurance company. These rates are often referred to as “substandard rates” and have the highest cost for life insurance coverage.

With table ratings, the applicant is assigned either a number (1-16) or a letter (A-P) that corresponds with the percentage above the standard premium rate you would pay based on your age and gender. Every number or letter down the table adds 25% to the standard premium.

For example, if the standard premium rate for a policy is $100 and you are assigned a table rating of B, you would pay 50% more than the standard premium rate, which equates to a premium of $150.

Life insurance options for high-risk individuals

There are life insurance companies that specialize in certain illnesses or occupations that may accept a risk that another life insurer wouldn’t. For example, having high blood pressure may cause someone to be table-rated by one insurer, but another insurance company might offer that same person standard rates. This would be because the life insurance company specializes in issuing policies to people with high blood pressure.

There are also life insurance companies that specialize in guaranteed issue life insurance policies. Applicants for this type of policy are not asked any health questions and do not have to take a medical exam to qualify. Most companies offering guaranteed issue life insurance require that an applicant is between the ages of 45 and 85.

Some high-risk occupations also can be offered guaranteed issue group life insurance. For example, a company that employs oil rig workers on an oil-drilling platform in the Gulf of Mexico can offer guaranteed issue policies to their workers as part of their benefits package. This helps their otherwise uninsurable or table rated employees secure life insurance coverage.

If you’re considered high-risk, compare quotes and policies from as many life insurance companies as possible before purchasing coverage. While one company may decline you, there may be another insurer that specializes in insuring people with your disease or occupation.

An independent life insurance agent is a good source for finding life insurance companies specializing in high-risk cases. They’ll know which life insurers accept applicants with your risk profile.


Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

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