High-risk life insurance is for individuals who represent an unfavorable risk to an insurance company. The Financial Web website says high-risk clients include cancer patients who just recently went into remission, people with heart conditions and individuals with AIDS. High-risk life insurance policies may also be written for people who take part in dangerous occupations or hobbies such as car racing, flying an airplane or rock climbing.
How It Works
High risk life insurance can work like any other life insurance policy. When the policyholder dies, his beneficiaries will receive a benefit equal to the face amount of the policy. However, high-risk polices have exceptions to this practice. For example, under the terms of a high-risk policy, when death occurs within a certain period of time (usually five years) after the policy was taken out, the beneficiary might receive only the premiums that were paid by the insured during the life of the policy.
Restrictions
Some insurance companies offer high-risk policies that have high deductibles and a six-month to one year waiting period for full acceptance. In certain cases an exclusion due to death that was caused by a preexisting condition may be waived. These circumstances might include a change in lifestyle or newer medication that may allow the individual to live longer.
Premiums
Insurance companies that offer high-risk life insurance are well aware that certain behaviors will influence the survival of people who suffer from potentially life-threatening ailments. That's why high-risk premiums are much more expensive than non-risk life insurance policies.
Determining Rates
The majority of insurance companies use decades-old standard mortality tables to determine life insurance rates. According to the Insurance Help and Advice website, some insurers are beginning to utilize a method called "clinical medical underwriting." This system takes into account recent medical advances and lifestyle choices that allow a person with serious medical conditions to extend her life.
Finding an Agent
CNN.com recommends finding a life insurance agent who is knowledgeable about high-risk policies and is most likely to find you the best rate. It may be in your favor to retain the services of more than one agent to see which one comes up with the best deal. Some people may ultimately be turned down for high-risk life insurance coverage.
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