How to Find Affordable High-Risk Life Insurance

High-risk life insurance is a class of life insurance for people considered an increased risk to insure. You could be considered high risk if you have a job or hobby that puts you in life-threatening situations or have below-average health.

How does being classified high risk affect life insurance?

Being considered high risk means your premiums will likely be higher. You may also have limited options, as some insurance companies deny applications for specific types of risk. For example, if you are older than 81, many companies will not offer coverage unless you have no health issues.

The greatest difference between high-risk life insurance and standard life insurance is the cost. If you are classified high risk, then the insurance company's projected life expectancy for you will be shorter. So you pose a greater financial risk to the company, since they may need to pay out the death benefit sooner than for a person at low risk.

Can I buy life insurance if I am considered high risk?

You can purchase life insurance if you are considered high risk, but your coverage options, sometimes called impaired risk insurance, will likely be limited. You'll almost always pay higher rates also. Your risk status is determined by several factors, including your health, lifestyle, profession, habits and hobbies. Exact classifications differ by insurance company, but these factors help them decide whether an applicant is high risk.

Life insurance for high-risk occupations

Some examples of high-risk professions include:

It's important to note that not all life insurance companies have the same definition of dangerous occupations. During the underwriting process, they'll ask you questions about your day-to-day activities on the job, along with the work environment. This allows the company to evaluate the key risks of your occupation.

What if my employer offers a group insurance plan?

Employers often offer group life insurance plans to their employees. This is very common in high-risk occupations, as companies want to provide protection for their employees who may have a hard time getting individual coverage.

If your employer offers a certain amount of life insurance at no extra cost, also called basic coverage, take advantage of the policy. However, basic group plans usually have maximum limits of $50,000 or the employee's annual salary. So you may need supplemental life insurance if a basic policy doesn't cover your financial obligations. This can be bought as a supplemental plan through your employer or as an individual life insurance policy.

Compare rates and options between your employer's coverage and what you find through your own research, so you can buy the best policy for your situation.

Life insurance for people with high-risk diseases and habits

If you have health issues or a preexisting medical condition, the severity will determine if you are high risk. Certain diseases reduce life expectancy and increase the risk for insurance companies.

You may also be considered high risk if you have habits that could reduce your life expectancy, such as regularly smoking cigarettes or cigars. However, if you have quit (for a specific amount of time) or only smoke occasionally, you may be eligible for preferred or standard tobacco health ratings.

High-risk diseases and habits can include:

Life insurance for high-risk hobbies

Your hobbies could also cause you to be considered high risk when applying for life insurance. This mainly depends on the hobby and how frequently you do it. For example, if you enjoy bungee jumping and go 10 or more times per year, then Ameritas would charge you an extra $5 per $1,000 in life insurance coverage. But if you jump fewer than 10 times per year, you would pay standard rates (provided you don't have other high-risk factors).

High-risk hobbies that life insurance companies ask about typically include:

You would not be a high risk to insure if you try an activity once. For example, if you go skydiving for the first time, then life insurance companies wouldn't usually consider you high risk. The frequency of these hobbies largely determines the cost of life insurance and whether a company will offer you a policy.

How are high-risk life insurance rates determined?

When you apply for permanent or term life insurance, the company will ask a variety of questions about your lifestyle, medical history and family history. Whether you qualify for a policy, and what rates you'd pay, directly depend on your assigned risk level and health rating. These are determined during the underwriting process and, if required, a medical exam.

Life insurance companies have similar rating systems, although the names and definitions of each category may vary. Overall, the higher the category you qualify for, the lower the premium.

In the case of high-risk life insurance, rates are usually determined by table ratings.

With table ratings, you get a letter (A–P) or number (1–16) that denotes the percentage above the standard premium amount you would have to pay. Every letter or number down the table adds 25% to the standard premium. For example, if the standard premium is $100 and your table rating is B, you'd pay 50% above the standard rate: $150. If you have a rating of 7, then you'd pay 175% above the standard rate — a premium of $275.

Although table ratings are the usual method used to rate risk, each insurance company has its own way to evaluate your risk level. For example, one company may assign someone with high cholesterol a table rating, but another insurance company may offer that same person standard life insurance rates. This may be because the second provider is a specialist in policies for people who have high cholesterol.

Choosing the best high-risk life insurance policy

If you're looking for affordable high-risk insurance, compare quotes and policies from as many companies as possible before buying. This requires researching the insurance companies' underwriting policies to determine which match up with your situation.

As mentioned earlier, if an insurance company specializes in the type of high-risk life insurance that applies to your situation, they'll likely accept your application and give you an affordable rate. Conducting your own research is highly valuable, as the difference between a standard and table rating could significantly increase your yearly premium, starting at 25% more.

If you are having trouble finding a company that will offer the policy you're looking for, reach out to an independent insurance broker. Experienced brokers and agents can provide insight into which risks life insurance companies will underwrite and answer your questions. They may even know exactly which companies accept applicants with your risk profile.

Guaranteed acceptance life insurance

If you're unable to get standard underwritten coverage but need a policy, consider guaranteed acceptance life insurance. These policies require no medical exams or lifestyle questions, and rates are based entirely on your age, location and sex.

The catch is that guaranteed acceptance life insurance is more expensive than standard life insurance and usually caps the death benefit at $25,000. However, you will not be denied coverage.