Here’s everything you need to know about securing life insurance with pre-existing conditions.
Insurance is all about risk, and as a result, Life Insurance for people with pre-existing conditions is considered by insurers to be risky. To further complicate matters, what an insurance company considers to be a pre-existing condition isn’t always what the average person considers to be an issue. Don’t panic – we’re here to demystify pre-existing conditions and life cover.
What is a pre-existing condition?
Pre-existing conditions are medical conditions that in the past you have suffered from, experienced symptoms of, or have received treatment for. But it doesn’t stop there! They are also medical conditions that you are are CURRENTLY suffering from, being treated for or suffering symptoms of at the time of your application. It is a fairly all-encompassing list that consequently, and understandably, affects many people. When an application form is completed any conditions must be declared so that the insurance underwriter can make a reasonable assessment of the risk.
The challenge is often that the applicant, the underwriter and GP all consider these pre-existing conditions differently. So if you hear your GP say ‘it’s nothing to worry about’ and subsequently don’t put it in the application it can cause problems at claim time. The same if you forget that operation 10 years ago as you are feeling better so why mention it, the underwriter will want to know.
Does it have to be declared?
Almost all of us tend to think that if we feel fine then we are fine. “That back pain is manageable and isn’t a problem.” “That mole removed 15 years ago isn’t an issue.” “The broken arm with a pin in it hasn’t ever caused any problems so it’s not worth mentioning to the underwriter.” The GP might not be concerned about the slightly elevated cholesterol or blood pressure, suggesting more exercise and fewer pies and beer as a solution. Likewise, a GP might not think it is worth referring their patient to a specialist for knee pain as they know treatment won’t be funded. Maybe they feel that these things can be addressed in 5 or 10 years, or if they get worse.
The underwriter, however, is looking far into the future. A 30-year-old may have a policy for 50 years or more so. Consequently, the underwriter can’t judge based on how the applicant feels now, or if the GP doesn’t think treatment is necessary. They have to predict the future risk. If left unchecked, will that high cholesterol turn into a fatal coronary in 30 years time? What about those moles, were any of them cancerous? Conditions that seem unimportant now may be indicators of future risk [and a sign that you should make sure you have life AND health cover!].
Read more about Health Cover with Pre-Existing Conditions
Ok, but what will it cost?
A pre-existing condition doesn’t always mean an increase in premiums. It depends on the condition, the treatment and the prognosis. Unlike health cover, insurers don’t exclude health issues from life cover policies (although they may exclude high-risk hobbies such as piloting or mountaineering). Rather than an exclusion, they may add a loading to a premium. Loadings are usually a percentage increase on the standard premium.
For instance, someone with reasonably well-controlled Type 1 diabetes may have a 150% loading on the premium. A cancer survivor, 5 years after the successful treatment of a small malignant tumour, may end up paying a few dollars a year extra for every $1000 of cover for 5 years. In comparison, someone with a history of high cholesterol that is controlled, even on medication, may have no loading. The insurer’s medical team will make the assessment based on the condition, treatment and prognosis.
So how high can a loading go? For some applicants with serious or multiple health issues, or a poor prognosis, the insurer may decide that the risk is just too high. As a result, they may simply refuse to offer cover. In this circumstance, the best option is to take out accidental death cover which will only cover death through an accident but it is certainly better than nothing!
There is hope!
The process of securing life cover with a pre-existing condition is undoubtedly more complicated than a standard application. It also usually takes a lot longer and requires a lot more work. The insurer will probably request GP notes and may send you for some other tests. Premiums can work out more expensive as loadings are applied. It can also seem to be ‘too hard’ to deal with underwriters.
Because of the technicalities of the application, you should speak to an independent insurance adviser. The adviser will have experience with what is likely to happen and what the insurers will probably ask for. Furthermore, they can talk with different underwriters to get an idea of what can be done to support your application. They can then give you the best advice based on what the underwriters say. An experienced insurance adviser will action most of the process, so you don’t need to do anything.
When you talk to the adviser have as much information to hand about your condition as possible. If it was a cancer then know the dates, the treatment, the type, the size, the malignancy and any treatments. If it is a chronic disease like Type 1 diabetes then the diagnosis date, HbA1c, any complications and co-morbidities like blood pressure and cholesterol. Information is power!
Those with pre-existing conditions can often secure life insurance. It may just cost a little extra due to the perceived risk to the insurance companies. An insurance advisor will walk you through the process, and also do all the behind-the-scenes work involved.
Finally, if your health has improved, it may be possible to have loadings reduced as a result. Maybe you’ve got your blood pressure under control or a subsequent test showed the initial diagnosis was wrong. Certainly, talk to your adviser to see how your health improvements may impact your premiums.
Get in touch now to talk through your options by calling 0800 COVER YOURS or filling out the form below. No obligation – just straightforward advice. Based in Kapiti or Wellington (or are passing through)? Let’s meet face to face to talk through your options. That’s not an offer you’ll get from online providers!
REGISTERED FINANCIAL ADVISER
P: 0800 COVER YOURS (0800 268 379) M: 022 040 7117