Individuals diagnosed with a non-communicable disease often face difficulty while applying for life insurance, and most of the time they’ll either be denied or forced to pay a very high premium. Non-communicable diseases, also known as chronic disease, are not passed from person-to-person.
The following conditions are considered chronic diseases:
- Diabetes
- High cholesterol
- Obesity
- Smokers
- Allergies
- Glaucoma
- Arthritis
So how do chronic illnesses affect my life insurance coverage? Term life insurance companies will require you to go through the “underwriting” process during your application, and that’s basically a system to decide how risky it will be to insure you. While factors like your hobbies, your driving record and the complete picture of your health enter into the analysis, the more health conditions you have now or have suffered in the past, the more expensive your life insurance is going to be.
Based on the specifics of your total health profile, your classification will ultimately be based on some tried and true underwriting guidelines.
Once the process is complete, you’ll be categorized into one of four different health classifications:
- Preferred Plus (lowest premiums)
- Preferred
- Standard Plus
- Standard (highest premiums)
Should your health history be particularly complex, you might also be placed in a ‘Substandard’ category which sets a sliding scale of premium payments based on your specific health complications.
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How Insurance Companies Rate Substandard Risks
In order to insure consumers with chronic diseases, life insurance companies will price their products at a higher rate to help cover future medical expenses or an early mortality risk. However, there are life insurance policies created to help protect these individuals without being charged an arm and leg.
Individuals could opt for a guaranteed issue life insurance policy, which requires no medical examination and no health questionnaire. In fact, the only people who are generally turned down are those already in the hospital or nursing home. Guaranteed life insurance policies only require a short list of health questions, such as whether or not they smoke, their height and how much they weigh. They don’t require any blood or urine samples. These policies are ideal for individuals with chronic diseases.
Unfortunately, since the insurance company cannot determine the risk they are taking on by insuring these individuals, they will often be charged a higher premium. Sometimes, guaranteed insurance won’t pay out death benefits if you die during the first couple of years that the policy is in effect, but it’s an easy and fast way to obtain coverage to help protect one’s family.