Buying life insurance when you have a pre-existing condition

​Having a medical condition doesn't automatically disqualify you from buying life insurance. While finding coverage can be more difficult than it is for others, individuals with challenging medical histories and even severe conditions can usually find at least some coverage.

Risk categories
Terminology varies, but life insurance companies typically have several pricing tiers:

• Preferred plus - Perfect health. No history of health problems. Weight, blood pressure, cholesterol level and other lab results are all at or near optimal.
• Preferred - Excellent health. May have one minor issue, such as slightly elevated cholesterol or blood pressure.
• Standard - Average health. Some people with mild or controlled pre-existing conditions may qualify for life insurance.
• Standard plus - Applicants with more severe pre-existing conditions may qualify as a "standard plus 1" or higher. Carriers are still willing to issue policies to many people with pre-existing conditions, as long as these conditions have been under control for a set period of time. For example, diabetics may have to submit medical records that demonstrate that their blood sugar levels have been under control for at least six to 12 months. Some carriers will issue policies to individuals with a history of certain cancers - typically after a waiting period of several years after the cancer is in remission.

​In seeking coverage, you should bear the following in mind:

Expect higher premiums. The more severe your pre-existing condition, the higher the premiums you can be expected to pay. It's a function of the historic mortality rates of others near your age in similar health.

Use an independent insurance broker. Each insurance company underwrites risk in different ways. For example, some companies are more willing to take on individuals with diabetes than others, or have looser requirements. An independent insurance broker can present your application to a number of different carriers with favorable underwriting to get the best policy for you, at the best possible price.

Expect to provide more records. Once you submit your application, your carrier may want additional medical records or other tests before issuing a policy. Don't be discouraged or frustrated by this process - often, the underwriters are asking for more information to justify putting you in a more affordable risk category.

Limited underwriting policies. Some carriers issue smaller policies with no medical exam and limited medical underwriting. They may just do a medical records check and ask you a few health questions. These policies are easier to qualify for, but because they attract others with health problems, the premiums are more expensive than with fully medically underwritten policies.

Guaranteed issue life insurance. A few carriers will issue small whole-life policies - typically $25,000 - on a nearly guaranteed basis. There may be an exclusion period of two to five years before the policy will pay a benefit. These smaller policies are useful as burial and final-expense policies. 

If your pre-existing condition is not severe, you may be better off applying with a fully underwritten life insurance policy than with a limited underwriting or guaranteed acceptance policy.

Workplace group life insurance. Some employers provide smaller no-underwriting or limited underwriting policies to all full-time employees. You may just have to answer a few health questions, or you may automatically qualify just by being an employee. These policies may not be portable, which means that you lose coverage if you leave the company.