Is It Really High Risk Life Insurance?

The term high risk gets thrown around in the life insurance world probably way more than it should. The truth is that with the exception of truly high risk companies like Lloyds of London, life insurance companies would “prefer not to participate” in a case where mortality experience ( a closer than near death experience) is high.

Lloyds takes the stance that everything is insurable for enough money. I often get quotes for civilian contractors who have been hired to work in war zones like Afghanistan. The prices aren’t pretty, but when you’re the only one that will touch it, it is definitely the best offer on the table.

Impaired risk life insurance is really the correct term for those who present potentially more than a standard risk. The unique thing about impaired risks such as bipolar disorder, cancer or heart disease is that depending on the severity and success of treatment, a person can be approved at standard or better rates or declined life insurance. Take, for example, two men with heart disease. One was diagnosed after a mild heart attack at age 55. He was treated with a one vessel angioplasty, and proactively followed all of his cardiologists recommendations including cardiac rehab, diet and exercise, treatment for risks such as cholesterol and regular followups to include stress tests every few years. Because the heart attack was mild he had an ejection fraction of 58%. This man could potentially get a standard rate to a table 2 (50% above standard).

The second man was 42 when he was diagnosed with multiple vessel coronary artery disease. Although he didn’t have a heart attack, he did undergo a six vessel bypass operation. He was obese and didn’t show much interest in doing anything about that. On a followup stress test his ejection fraction was 49%. Because of the early age onset CAD, multiple vessels, obesity and low ejection fraction this client would be looking at a table 6-8 (150%-200% above standard) best case. Although still insurable he presents more of a mortality risk than the first guy. If this man smoked or had type 2 diabetes he would have his application for life insurance declined. At that point he would present a high risk.

Another example would be two women, both age 50 and both diagnosed with bipolar disorder 10 years prior. The first woman had just never been able to get complete control of the disorder. She had tried several medications and was currently on multiple meds including anti psychotic medication. She had been dealing with suicidal thoughts for a long time and had tried to commit suicide during one of the medication changes right after diagnosis. Her marriage had failed and she was unable to hold a regular job due to bipolar. She occasionally quit taking medication as prescribed and was prone to self medicate with alcohol. Almost without a doubt this woman would not be approved for life insurance. Too unstable, multiple meds, active suicidal ideations and alcohol use would be the end of that application.

The second woman was an executive of a company. She sought the best help she could get upon diagnosis and was compliant with prescribed treatment to a fault. Although she had to deal with the ups and downs of the disease she had been married 22 years and had raised 3 children. She had never had suicidal thoughts. She didn’t drink. The only medication she took was depakote, a medication normally used for seizure disorders, which has been proven successful in milder cases of bipolar disorder. This client could very well be looking at preferred to standard rates.

In both instances I showed polar opposites in both the heart disease and bipolar disorder. In both instances the better case would bring near average (standard) rates or better. More important to know is that if the wrong agent took all four of these cases to the wrong company they would have all had their life insurance declined. Most companies aren’t willing to peel away the layers to see what the real risk is.

Bottom line. High risk life insurance could be defined as insurance that would be declined by all companies except Lloyds of London and equivalent high risk companies. Given the right agent and the right company, almost all impaired risk cases can be approved. It might be expensive, but it won’t be anywhere near what high risk insurance would cost.