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How Does Health Affect the Cost of Life Insurance?
Your health is the second most important factor that determines the cost of insurance. Second only to your age, insurance providers weigh your health heavily to arrive at your life insurance costs.
Insurance companies evaluate your health as an indicator of the likelihood that they will have to pay out on the policy during its term. Therefore, the better your health is, the longer your life expectancy will be.
Life insurance companies find out about your health by asking you a series of health questions. These questions include your smoking status and if you have heart disease or other serious health conditions. The best life insurance products also require that you take a medical exam for a complete medical history. If you pass the health exam and questionnaire, you get lower life insurance premiums than those who don’t.
How do Life insurance rates work?
Life insurance rates are based on actuarial tables, which means that the carriers look at how long people like you have lived in the past, and use that data to predict how long you will live in the future. So, if you are a young and healthy non-smoker, you will be rated as a low-risk individual and will have lower life insurance rates than someone who is older and/or smokes cigarettes.
Life insurance rates are determined partly by the risk grade assigned to the applicant. That risk grade is determined by factors such as
- health condition
- hobbies and lifestyle
- credit report
- driving record
The biggest emphasis will be placed on your age and health. Any serious health conditions such as cancer, diabetes, HIV/AIDS, asthma, heart disease, and high blood pressure usually lead to the denial of life insurance coverage for some types of policies. If you are able to get insured, there will be exclusions to those conditions, and your life insurance premium costs will be much higher.
Conversely, applicants in good health will receive preferred rates with the lowest monthly premiums.
What is considered healthy for a life insurance company?
All life insurance companies consider you healthy based on the answers on your life insurance application and the findings of a life insurance medical exam. You will also be asked to provide information about your family history of serious health conditions.
A healthy rating is given to applicants with no history of cancer, heart disease, diabetes, HIV/AIDs, asthma, or high blood pressure.
The insurance company will underwrite your application. If no significant health risks are found, you will be rated as a lower risk because you are healthy.
For a life insurance company, healthy is everything. It’s about being in excellent physical and mental health, leading an active lifestyle, and having a positive outlook on life. A healthy person is someone who is less likely to make insurance claims and someone who will live a long life.
How do health conditions affect your life insurance premiums?
A life insurance company will always charge more to applicants deemed to be a higher risk to the company. First and foremost, they look at your health history and current health status. Insurance companies want to know if you’re likely to live a long and healthy life, or if there are any health concerns that could shorten your life expectancy. They’ll also take into account your family’s health history, as genetic factors can play a role in your own health. Other important factors include your lifestyle choices such as whether you smoke or drink alcohol, your occupation (some jobs are more dangerous than others), and where you live: your environment can impact your health. All of these factors play a role in determining how much you’ll pay for life insurance and whether you’re considered a high-risk customer.
So whether you buy term life insurance or a permanent life insurance policy, your health will reflect on the life insurance cost you pay.
Having poor health does not always mean paying higher insurance rates your entire life. If your health improves, you can always lower your life insurance cost by asking the insurance company to re-evaluate your policy. Alternatively, you can just buy a new life insurance product.
How does weight affect your life insurance premiums?
When it comes to life insurance, your weight can have a significant impact on your premiums. One of the key indicators of weight is body mass index (BMI). Your BMI is a measure of your body fat based on your height and weight. It’s used to estimate your risk of developing obesity-related health conditions, such as heart disease, stroke, and diabetes.
Generally speaking, the higher your BMI, the higher your life insurance premiums will be. That’s because being overweight or obese increases your risk of developing health problems that could shorten your life expectancy. Life insurance carriers consider overweight people more likely to develop risky health conditions and die prematurely; consequently, they charge higher premiums.
For many people, this is a solvable problem. If you need to be covered now, you can buy a term life insurance policy to give you protection for now. Then, once your weight improves, you can switch to a permanent whole life insurance policy.
How does smoking affect your life insurance premiums?
Tobacco use is the leading cause of preventable death in Canada. According to Canada Gazette dated 11 June 2022, tobacco use causes about 48,000 deaths each year.
Smoking is one of the most important factors in determining your life insurance premiums. If you smoke, you can expect to pay significantly higher premiums than non-smokers. In Canada, smokers typically pay at least 50% more for their life insurance coverage than non-smokers.
This is because smoking is a major health risk factor. Smoking increases your chances of developing many serious health conditions, including cancer, coronary heart disease, and stroke. These health risks make it more likely that you will die prematurely. As a result, insurers charge higher premiums to offset the increased risk of insuring a smoker.
If you are a smoker and are looking for life insurance coverage, there are a few things you can do to help lower your premiums. First, consider quitting smoking. If you can prove that you have not smoked for at least 12 months, you will be eligible for non-smoker rates.
Frequently asked questions
1. What health issues prevent you from getting life insurance?
Certain health conditions make getting life insurance coverage difficult, although not impossible. If you happen to have any of the following conditions, your options will be more limited as you look to buy life insurance:
- high blood pressure
- heart disease.
Any of the above conditions will usually rule you out of preferred rates with either permanent life insurance or term life insurance.
Not all is lost, though, for people who have pre-existing conditions. You can buy other life insurance types, such as guaranteed issue or simplified issue life insurance. You may have to pay premiums that are higher, but at least you can get some coverage to protect the financial future of your loved ones. With these term life insurance policies, you can maximize the death benefit amount for a fraction of what you would pay for the same coverage with permanent life insurance.
2. Does life insurance look at medical records?
Yes, when you buy a life policy, life insurers will ask you to authorize them to obtain a copy of your medical history records. They do so to determine the level of risk you are to insure.
3. What if I lie about smoking for life insurance?
It is not a good idea to misrepresent anything on your application when you are purchasing life insurance. While you may get away with it initially, you risk being denied the claim if you die because the insurance company may find out you misrepresented the facts. It is not worth putting the financial security of your dependents at risk just to save a few dollars.
You can buy a term life insurance policy with a higher coverage amount for a time and then quit smoking. Then, after three years without tobacco, you will be rated a non-smoker. You can then purchase an insurance policy at better rates.
4. What medical questions do they ask for life insurance?
When you apply to purchase life insurance, the insurance company will ask you questions to identify high-risk factors that could result in an early death benefit payout. They will want to know if you have conditions such as cancer, heart disease, diabetes, asthma, HIV, or depression, among other things.
There will also be questions about your family medical history, which is also considered to evaluate you as a risk.
5. Why do life insurance companies want medical records?
Medical history and records are an important part of risk assessment with issuing a life insurance policy. The records will determine life insurance costs for the company and, in turn, life insurance rates for the insured.
6. Can insurance companies access my health record?
Yes, an insurance company will want to review your health record. They can only do so with your written permission which they will obtain from you during the application process.
7. Why is a medical report important in insurance?
Before issuing a life insurance policy, the company will need to assess the risk being insured – you. The medical report will play a part in determining the life insurance premium and the type of life insurance coverage they will offer you.
8. How do insurance companies check for pre-existing conditions?
The most common way to find out about pre-existing conditions when you buy life insurance coverage is through a health questionnaire and a medical exam. Both of these are part of the insurance application.
9. What illnesses are considered pre-existing conditions?
The most common pre-existing conditions that life insurance companies are concerned with are:
- heart disease
- high blood pressure.
Applicants with these conditions may not qualify for certain types of policies, such as whole life insurance policies and universal life insurance policies. However, life insurance companies offer many solutions so you can still be covered.
You can buy term life insurance in most cases regardless of your health condition. The trade-off may be how much coverage you can buy to meet your insurance needs.
10. What happens if you don’t disclose pre-existing conditions?
Failing to disclose pre-existing conditions on an insurance application is not a wise decision. If a claim is filed, the company may investigate and find out your omission. You then run the risk that the claim is denied, and the death benefit your heirs were counting on will never be paid out.
Taking care of your health can offer great benefits if you try to buy life insurance. Your rates will be much lower, and you can maximize the value of your dollars to get the highest coverage available at the lowest cost.
If your health is not so great, speak to an insurance advisor who may be able to get you a life insurance quote you can live with.