What is a Pre-existing Condition?
In life insurance, a pre-existing condition is a health condition with which you’ve been diagnosed before applying for life insurance coverage. Depending on its severity, the condition can affect your ability to get coverage or the premiums you need to pay to maintain your policy.
Why life insurers care about pre-existing conditions
In order to keep their companies solvent, life insurers have to carefully balance the amount they’ll need to pay out when their insureds pass away with the amount they can expect to bring in via premiums from their living insureds. That means projecting the life expectancy for anyone to whom they issue a life insurance policy.
As a major piece of that puzzle, most life insurance policies require a medical exam from a physician the insurer has approved. This allows them to get a good idea of your overall health, informing their projection of your life expectancy.
If you have a health condition that comes up during that exam, the physician will report it and the insurer will take that into consideration.
Similarly, if you know you have a pre-existing condition, you should self-report it to your insurer. They’ll likely have you fill out a questionnaire as part of the application process, so don’t leave that information off. If you do and you pass away within the contestability period, they can void your policy and give your beneficiaries nothing.
Notice that we’re talking about pre-existing conditions here. If you get diagnosed with a health condition when your life insurance is already in force, you don’t need to worry. It won’t change anything about your coverage (although it will impact policy renewal if you don’t have a permanent policy).
How pre-existing conditions impact life insurance
A pre-existing condition doesn’t necessarily mean your life insurance application will be denied. Insurers frequently issue policies to people with pre-existing conditions.
It’s all about the severity of your condition and what it means for your life expectancy. If you have a minor condition like slightly elevated blood pressure, you shouldn’t have any trouble getting coverage. That said, because of the elevated health risk, you may pay more for your life insurance policy.
In short, the more serious your pre-existing condition, the more your policy will likely cost — and the more likely you are to have your life insurance application denied.
Because of your condition, you should be prepared to pay higher premiums than the average individual. If budget becomes an issue for you, consider term life insurance rather than a permanent policy. This locks in the premiums you’ll pay for the duration of the policy’s term (e.g, 20 years, 30 years) rather than for your lifetime. This makes term life insurance much more affordable than permanent life insurance.
Life insurance options with a pre-existing condition
Regardless of the severity of your pre-existing condition, don’t let it stop you from applying for life insurance. During underwriting — the process that occurs after you apply for a policy — insurers work to get a holistic picture of you. Your condition will be a factor they consider, but it’s just one piece of the puzzle.
Equally importantly, insurers consider your age. The younger you are, the more likely you are to live a sufficient number of years to make premium payments on your life insurance policy, allowing the insurer to recoup the cost of covering you.
Waiting to apply for life insurance because you’re worried about a pre-existing condition means getting older. And getting older will make coverage harder to find and more expensive. Don’t let a diagnosis stop you from applying now in order to get the most cost-effective coverage you can.
If worse comes to worst and you apply for term or permanent life insurance but get denied because of your pre-existing condition, don’t panic. You can explore no-exam life insurance.
No-exam coverage for people with pre-existing conditions
If other policy options aren’t available to you, there are several types of life insurance that skip the medical exam. You can check out:
Accelerated life insurance
Instant issue life insurance
The policy types vary. Guaranteed issue coverage should generally be your last resort as it comes with a relatively small death benefit for a relatively high premium. That said, it can still be better than leaving your beneficiaries with nothing when you’re gone.