How to Get Cheap Life Insurance With Preexisting Conditions

COVID-19 update: If you're thinking about life insurance in the context of the coronavirus, see below for information on whether it counts as a preexisting condition.

When it comes to life insurance, preexisting medical conditions cover a wide range of health problems. They can increase your rates or even prevent you from applying for coverage. However, depending on what type of medical problem you have, you can typically find an insurance company that will provide cheap quotes for the coverage you need.

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Term life insurance is typically the cheapest form of coverage, even if you have a preexisting medical condition. But not everyone can pass the underwriting stage. In those cases, policies such as no medical exam or guaranteed acceptance are available. They cost more but accept a wider range of medical problems.

With any of these policies, a preexisting condition may limit the amount of your death benefit.

Term life insurance with a preexisting condition

Term life insurance offers coverage for a set period — usually five to 35 years. If you pass away during this time, your beneficiary would receive a payout. If you qualify for term life insurance coverage, a preexisting condition will raise your quotes significantly. But you can choose a much higher death benefit (than with products with limited underwriting).

Term life insurance quotes are largely based on your health. Insurance companies have four standard tiers of health ratings. Premiums vary a little within a tier, but if you move to a higher tier, your quotes will be much higher.

Each insurance company has its own health requirements and conditions it is willing to insure. So, if you have a preexisting condition, you should consult an independent insurance agent. Agents represent multiple companies and are experts in determining where you'll get the lowest rate.

No medical exam and simplified issue life insurance with preexisting conditions

Simplified issue and no medical exam policies are term or permanent life insurance with fewer requirements to qualify. There's no medical exam, and depending on the company, fewer health questions in the application. Simplified issue policies have lower maximum death benefits than fully underwritten policies, but you can find coverage up to $250,000.

When applying for simplified issue life insurance, you'll answer several health questions. This will determine whether you qualify and what your premiums are. It's important to be honest. Insurance companies regularly check your answers against multiple databases and can cancel your coverage if they find any differences.

Depending on the company, you might be disqualified from simplified issue life insurance if:

If you are healthy, a simplified issue policy doesn't make sense, because you'll pay more for the same coverage. Some agents will tell you how convenient no medical exam policies are, but you'll likely save less than an hour by skipping the medical exam, which won't make up for the higher premiums. However, these policies are a good alternative if you don't qualify for fully underwritten term life insurance or your preexisting condition is significant enough that most insurers will not sell you a policy.

Guaranteed acceptance life insurance with preexisting conditions

Guaranteed acceptance policies are usually whole life insurance, meaning they offer lifetime coverage (as long as you pay your premiums. There are no health questions on the application, and you don't have to get a medical exam, so these policies are great if you have a severe preexisting condition.

Death benefits for guaranteed acceptance policies are generally limited to $25,000. If you only want enough coverage for end-of-life costs, such as a funeral, guaranteed acceptance coverage should be sufficient. Unfortunately, if you have a severe enough preexisting condition that disqualifies you for non-guaranteed coverage, you're unlikely to find a company that offers over $50,000 in death benefits.

Also, guaranteed acceptance policies usually pay little to nothing for the first two or three years. For example, if you die within the first two years of buying Colonial Penn's guaranteed acceptance policy, your beneficiary would only receive the amount you paid in premiums plus 7% interest, compounded annually.

A guaranteed acceptance policy will almost always be the most expensive option for any amount of coverage, because all applicants are accepted. Given the high quotes, guaranteed acceptance life insurance isn't recommended for people healthy enough to qualify for term life insurance. In some cases, quotes can be so high that you'd pay more in premiums over the life of the policy than your beneficiary would receive.

Which preexisting conditions matter when getting life insurance?

For life insurance, preexisting medical conditions include a wide range of issues, from heart disease to obesity. Below are some of the most common health problems that could affect your ability to get life insurance or cause you to pay higher premiums.

With the current spread of COVID-19 across the globe, life insurance companies are seeing a spike in interest from people who want coverage because they're worried about infection. If you currently have COVID-19, some companies may count it as a preexisting condition and ask you to reapply after you recover.