It sounds morbid, but when shopping for a life insurance policy, insurers want to know the answer to a question: what is your life expectancy?
This is because life insurers assume financial risk by covering you. The higher the likelihood that an insurer will have to pay your policy, the more you’ll pay – or the harder it will be to get coverage.
If you belong to any of these five groups, you could be considered a high risk to insure.
Pre-existing health condition
“Think of cancer, diabetes, and any kind of autoimmune disease. Morbid obesity is also a big risk, ”says Jeremy Hallett, CEO of Quotacy, an online insurance brokerage company.
However, if you manage your pre-existing condition well, insurers will take this into account when setting rates.
The reason is simple, says Maureen Shaughnessy, research actuary at LIMRA, a professional life insurance organization.
“The more controlled your health risk, the more favorable it is to your own mortality, which is good for everyone involved.”
If you walk into a risky workplace every day, you can expect to be treated differently from someone with a clerical job.
The list of “dangerous” jobs is based on specialized tasks. A police officer who works a beat can usually access good rates, but a bomb squad police officer could get slapped with a higher premium, Hallett says.
The guidelines for the military are a bit fuzzy. If you’re in the military but aren’t an active-duty special operations force, like Army Rangers or Navy SEALs, a broker can normally get you rates based on your medical condition, explains. Hallett. However, if you are deployed to a dangerous part of the world, you likely will not be approved for a policy until you are back on the American shores, unless you choose an insurer that caters specifically to the world. ‘army.
The good news? If you quit your dangerous job, you can ask your insurer to reassess your rates.
Do you spend your weekends doing extreme sports like motor racing, piloting, parachuting, scuba diving or mountaineering? Unfortunately, you will likely end up with higher life insurance rates.
Insurers will look at the level of risk you take and how often you participate in these activities.
To avoid committing fraud, it’s important to be candid with your insurer during the application process. You should disclose your dangerous hobbies, as well as the number of times per year that you practice them.
Drug or alcohol addiction treatment
The type of drug and the length of abstinence come into play. Insurers carefully examine relapse rates, as well as the likelihood of contracting drug use-related illnesses, such as hepatitis C.
“Heroin, opioids and methamphetamine are problematic. Typically, you can’t get coverage for a year after drug treatment, ”says Hallett.
As for the treatment of alcoholism, insurers want to see you sober for one to two years before offering you a lower rate.
A DUI is more than an oversight on your driving record – it can also affect your ability to obtain low-cost life insurance.
If you got a DUI in the past year, you can expect a higher premium when you apply for life insurance. If you had multiple DUIs over five years ago, you will likely pay more than twice as much for coverage as someone with a clean driving record.
However, your insurer might not penalize you for a single DUI that occurred five or more years ago.
“You need a human being to market your profile, buy it and come back to you with the best deal,” says Hallett.
As Shaughnessy says, each insurer has a different risk appetite. To make sure you’re getting the best deal, it’s worth comparing life insurance quotes.