Buying life insurance with pre-existing conditions can seem like jumping through hoops, both for potential buyers and insurance brokers alike. Brokers may shine or fall hard. They may put you with the right insurance company for your unique pre-existing condition and get your policy issued, or put you with the wrong one that gets you declined or results in a substantially higher premium.
According to the U.S. Department of Health & Human Services, 1 in 2 Americans has a pre-existing condition. If you are one of the lucky ones who are exceptionally healthy without any significant family history or traffic violations, then you can just run the quotes on the right side and choose the preferred plus table rating.
If, however, you are not in the best of health or have any pre-existing conditions, then you landed on the right page. I will share with you some tips that could save you some of the common troubles.
What Is a Pre-Existing Condition?
A pre-existing condition is a medical condition or ailment that started before the policy’s effective date. In other words, if you were planning to buy life insurance AFTER you found out you have cancer, this would be considered a pre-existing medical condition.
Not all pre-existing conditions are considered to be a big deal from the insurance company’s standpoint. Insurance companies have different underwriting criteria which they use to assess or evaluate an applicant’s risk. Higher risk means higher rates and vice versa.
It’s also important to understand that for any given condition, one company may rate you up and another will not, therefore choosing the right company for your pre-existing condition is the magic sauce that gets the best rates.
Life Insurance Health Class Ratings
After you apply for life insurance, you may be required to take an exam and go through an underwriting process. Health class ratings are the outcome or result of the underwriting process. In other words, they are the levels that the insurance company uses to classify your risk and calculate your premium.
Every health class has different risk and therefore a different premium. It should be no secret that the higher risk you pose, the higher premium they will charge. Rate class depends on lifestyle, current health, risky hobbies and traffic violations, among many others.
If you are healthy, you will fall into the first four health ratings. If you are below the standard health, you will be classified in a table rating (also called substandard rating).
As mentioned above, substandard rating may be attributed to health factors, occupation, or even things outside of your control like family history. These factors add up to higher than average mortality risks for the insurance company.
Most companies use a rating system where each table rating adds 25% to a standard rate. Below are the most common ratings:
- Preferred Plus
- Standard Plus
- Table 1 (25% extra from standard)
- Table 2 (50% extra from standard)
- Table 3 (75% extra from standard)
- Table 4 (100% extra from standard)
- Table 5 (125% extra from standard)
- Table 6 (150% extra from standard)
- Table 7 (175% extra from standard)
- Table 8 (200% extra from standard)
- Table 9 (225% extra from standard)
- Table 10 (250% extra from standard)
Common Pre-Existing Conditions and Expected Class Ratings
Keep in mind this is only for illustration purposes and shouldn’t be taken as a binding offer. With every pre-existing condition, the key to having the best rate is how your situation is managed, whether or not you are following your doctor’s recommendations, and if there are any complications.
- High blood pressure – a prevalent condition for individuals over 50 years old. If well-controlled up to 135/85, you can get preferred best; 145/90 can get preferred or standard plus.
- High cholesterol – if total cholesterol is less than 300 and the HDL ratio is 5 or less, you can get preferred best. Any time it’s over 300 with a ratio of 7 or less, expect standard ratings.
- Build – a very personal matter for most of us. Yes, the insurance company will ask your height and weight and rate you based on that. Being overweight doesn’t automatically increase your rates. Most insurance companies aren’t asking for a runner physique; most are pretty reasonable with the levels. For instance, a male 6’0” can weigh 227 lbs and get preferred best, or weigh 279 lbs and still get standard ratings. A female can weigh 185 lbs at 5’7” and still qualify for preferred plus.
- Asthma – for mild seasonal, you should expect preferred best. For 2 medications or less and well-controlled, expect preferred.
- Diabetes – well-controlled type 2 diabetes can expect standard plus. Type 1 would be a table rating or declined.
- Anxiety/Depression – another common ailment in our culture. On one medication, you can expect preferred. If using 2 or more, you are looking at standard.
- Sleep apnea – good compliance for over a year and no residual symptoms can get you preferred. Severe will get you standard.
- Arthritis – mild can get you standard rates, moderate up to table 3, and severe (including steroid use and ongoing treatment) can be table 4 to decline.
- Atrial fibrillation – an irregular heartbeat that can increase stroke and heart-related complications. If no treatment has been recommended for you and minimal pain, you can get standard. With frequent prescription drug therapy, you can get table 3. A severe case will be table 4 to decline.
- Back pain – mild can be a standard rating; severe table 2 to table 4.
- Ulcer – most of the time expect standard if it’s been two years since treatment. Under two years and this is usually a decline.
- Skin cancer – If you only had basal cell carcinoma, you may get preferred or preferred best rates.
- Tumors – benign is usually standard.
- Thyroid disorder – usually standard or even preferred, depending on the severity and control of the illness.
- Prostate Cancer – usually standard or even preferred depending on current PSA levels and treatment.
Above are a few of the general pre-existing conditions we get asked about. Underwriting sometimes seems an art more than set rules by the insurance companies. Since every company sees you in a different light, it’s a broker’s job is to match you with the best company for your unique situation.
Table Shaving—the Best-Kept Secret If You Have Pre-Existing Conditions
The bottom line for life insurance companies is to get as much business as possible while keeping their risks low. They know that most individuals aren’t entirely healthy and do have few pre-existing conditions. They also strive to be competitive in the industry by “playing nice” with potential clients.
So they came up with the idea of table shaving or underwriting credit opportunities. For instance, they may use treadmill credits to offset overweight issues or good A1C levels to offset debits for diabetes.
This can result in a notable improvement in the table rating levels from a substandard offer to preferred, or from table 2–3 to standard. This can save you thousands in the policy premium. It’s important to mention that crediting decisions must be evidence-based decisions. Which means a physician note or a treadmill ECG test is a must.
Can You be Approved for Life Insurance with a Pre-Existing Condition?
The short answer is yes. However, the type of policy or the rates may not be to your liking. If your only pre-existing condition is elevated blood pressure and it’s controlled with medication, you should get preferred or even preferred plus in many cases. If you are overweight, you can still get standard ratings with most companies.
The biggest issue with pre-existing conditions is the combination of more than one health ailment at the same time. For instance, if you have diabetes, are overweight and a smoker, you will have a hard time getting lower rates or even qualifying for a traditional policy.
You can always apply for a guaranteed issue life insurance, however, this should never be your first choice.
Tips for Getting the Best Rates
- Find a broker who can help – there is a notable difference in shopping for life insurance when you are in perfect health versus if you are not in the best of health. We can all do an oil change ourselves once in a while, but when it comes to rebuilding an engine, most prefer to go to a pro. If you are not in the best of health or have a few medications that you are taking, you are not doing any yourself any favors by shopping alone.
- Follow your doctor’s advice – this has many health benefits which you already know. But the most significant advantage is that the insurance company sees you as less of a risk, which can improve table ratings, as mentioned above, and save you money.
- Don’t ever shop with only one company – always do your research and compare a few companies. Try to get a tentative offer before you choose to whom to apply. A tentative offer is an anonymous underwriting review of your conditions. Most brokers offer this service, where they gather all your medical information and turn this to the insurance companies to see who can come with a better offer. This isn’t a standard “apply and pray” method, it’s a deliberate effort to get the best rate.
- Try not to get declined – easier said than done. Any declination you get from one company will hinder your efforts to try to get a policy with the next one. Only apply to those companies that give you have the highest chance of getting approved. This is another reason shopping alone makes no sense.
- Take the exam – it would be in your best interest to do so. No-exam life insurance costs more, and you may get a worse table rating than if you took the exam (since they can’t do an exam). Also, to qualify for the table shaving, you’ll have to do the exam.
Life insurance with pre-existing conditions is possible to obtain. The type of health ailment along with how it’s managed and recurrences are the basis of the rates you will get.
You can run the rates yourself on this page and choose the standard (regular) table ratings.