What is high-risk life insurance?
High-risk life insurance covers individuals who cannot be fully covered under a traditional life insurance policy because of their qualifying medical or lifestyle risk factors.
High-risk life insurance policies offer cover for those who have a higher risk of dying, whether due to illness, their profession, or other lifestyle factors.
According to the ABI, life insurance companies pay out around 98% of claims each year.
According to Aviva, 58% of UK life insurance claims in 2023 were due to cancer, and 28% were due to heart disease.
Unbiased can help you find an insurance broker best suited to your needs.
What is a high-risk life insurance policy?
High-risk life insurance policies are designed to offer cover to individuals who have a higher risk of death due to many factors, such as a history of accidents, health issues, a risky profession, or engaging in dangerous activities.
These policies are more expensive than traditional life insurance policies because there is a higher chance that the policyholder will die.
While high-risk life insurance policies offer coverage like standard policies, they are tailored to accommodate an individual's specific risks, whether these are medical, professional, or lifestyle-related.
So, it's essential to disclose all relevant information honestly to ensure you get the right coverage and avoid potential claims issues later.
What makes you eligible for high-risk life insurance?
The circumstances that enhance your eligibility for high-risk life insurance include:
Pre-existing health conditions such as diabetes, cancer, or heart disease.
Engaging in high-risk activities like extreme sports, aviation, or deep-sea diving.
A history of substance abuse or smoking.
Dangerous occupations such as military service, mining, or construction.
A risky lifestyle, such as frequent international travel to conflict zones.
A family history of serious illness.
Previous denial of life insurance coverage due to health or lifestyle factors.
Falling into the middle to old age category.
Let’s look at some of these factors in more detail:
Medical factors
Medical factors that may place applicants in the high-risk life insurance bracket include serious conditions, including certain types of cancer, such as leukaemia, lung cancer, or melanoma.
Additionally, chronic illnesses like diabetes, heart disease, and HIV/AIDs also elevate risk.
Other medical factors include a history of strokes, organ transplants, and severe mental health disorders. These conditions often require specialist underwriting, which may result in higher premiums or modified coverage.
Lifestyle factors
Lifestyle factors contributing to high-risk life insurance include engaging in dangerous occupations such as firefighting, logging, and deep-sea fishing.
Participation in high-risk hobbies, including skydiving, rock climbing, or racing, may also elevate risk.
A known history of substance abuse, for example, heavy smoking or alcohol consumption, is another significant lifestyle factor affecting a high-risk life insurance profile.
And, of course, travelling to regions with high levels of political instability or conflict may also increase risk.
Do I need high-risk life insurance?
People typically seek life insurance to provide financial security for their loved ones and dependents when they're gone.
If you meet the criteria of a high-risk client and want to ensure financial stability for your loved ones, then it's a good idea to consider life insurance.
Adults of all ages, particularly those in their prime earning years, should consider a high-risk life insurance policy to cover expenses their family may face in the event of their death.
Payouts can help with:
Mortgage payments
Childcare and education
Outstanding debts
People who should consider life insurance, whether a traditional life insurance policy or a high-risk one, include:
Adults with young children
Homeowners with mortgages
Individuals with co-signed loans
Those with ageing parents in their care
People worried about funeral expenses
What are the pros and cons of high-risk insurance?
High-risk life insurance has pros and cons you need to consider.
Pros of high-risk life insurance
Below are the advantages of a high-risk life insurance policy.
Tailored coverage: High-risk insurance is customised to address your specific circumstances, ensuring adequate coverage.
Financial protection: It provides financial security for you and your beneficiaries in case of unforeseen circumstances that might not be covered under standard insurance.
Access to coverage: Despite being considered high risk, you still have insurance coverage, ensuring you're protected.
Legal compliance: In some instances, such as driving with a poor record, high-risk insurance ensures compliance with legal requirements, preventing potential penalties and fines.
Support and assistance: High-risk insurers often provide additional support services for clients, such as counselling and rehabilitation programmes, which can help mitigate risks and improve their situation.
Cons of high-risk life insurance
High-risk life insurance also comes with a few challenges.
Higher premiums: Due to your increased risk, high-risk life insurance typically involves higher premiums, which can potentially strain your budget and make it more challenging to afford.
Limited coverage options: Some insurers may offer limited coverage options for high-risk individuals, which might only partially meet your needs and preferences.
Exclusions and restrictions: High-risk policies often include more exclusions and limitations, restricting the circumstances under which your beneficiaries can claim benefits.
Underwriting challenges: High-risk profiles may require more rigorous underwriting processes, including extensive medical examinations or financial assessments, which can be time-consuming and invasive.
Stigma and perceptions: Being classified as a high-risk individual could carry a social stigma and potentially impact your self-esteem.
However, even if the only way you can buy life insurance is with a high-risk policy, if you have people who depend on you financially, it’s usually better to get cover, rather than risk going without.
An insurance broker can help you find the best value deal and support you through the underwriting and application process.
What is the average cost difference between a high-risk and traditional life insurance policy?
Traditional life insurance policies typically offer coverage to low-risk individuals with good health and safe lifestyles, resulting in lower premiums.
On the other hand, high-risk life insurance policies tailored for individuals with health issues, risky occupations, or hazardous hobbies come with significantly higher premiums.
For example, the average cost of life cover for 40-year-old non-smokers is £11 a month, compared to £22.53 for smokers.
How to get a high-risk life insurance quote
You can obtain a traditional or high-risk life insurance quote in various ways.
However, regardless of how you choose, remember it is essential to provide accurate information about your health, lifestyle, and coverage preferences to receive a reliable quote.
If you don’t answer questions honestly or withhold information, your policy may not pay out.
Here are some ways to get a high-risk insurance quote:
Through a high-risk life insurance company
Through an insurance comparison website
Via an insurance broker or financial adviser
Through direct contact with insurance companies
Through employer-sponsored benefits
Seek expert financial advice
High-risk life insurance considers medical and lifestyle factors that increase a policyholder's risk to their insurer, often resulting in increased premiums.
Different ways to get a quote include contacting a high-risk life insurance company or using an intermediary, such as a comparison service or a broker.
Let Unbiased match you with an expert insurance broker who can provide you with personalised, expert financial advice according to your needs and circumstances.
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