Life Insurance for High-Risk Policy Holders
If you are baffled that you can’t get a life insurance because most companies have categorized you as a high risk, don’t be discouraged just yet. It could only mean that you have to look for a company specializing in high risk life insurances.
The best way to get around being high risk and finally getting life insurance is to understand the process of how insurance companies come up with a quote for your premium payments. Particularly, you should know the reasons that make for high risk life insurance. And finally, know what types of high risk life insurance are available and where you can get them.
Betting on Your Life Span
Life insurance is actually a bet against the lifespan of the insured. Insurance companies generally bet that the insured outlives a policy so that they could earn more on their investment. Because when an individual pays premium payments, the fund goes to an investment vehicle. So the more payments are tendered, the more capital that goes into an investment vehicle that the insurance company chooses.
So what happens when an insured pass away? The company pays the beneficiaries the death benefit and other benefits stipulated in the policy. Generally, the company will make money if the premium payments and the earnings are way higher than the benefits. So if the insured passes away even before this level is reached, that could mean a loss for the company.
In order to avoid a loss, an insurance company takes the proper precautions. Low risk individuals will get lower premium payments since they are perceived to outlive the policy. High risk individuals on the other hand, get to pay a higher premium amount or are turned down for coverage.
What Makes for a High Risk Life Insurance
So now you may probably be wondering what makes for a low risk or high risk life insurance? The following factors are considered and weighed by an insurance company in order to determine the risk involved in betting on your life span.
Health Conditions. Health conditions or weight are things that could affect the lifespan of an individual. Conditions such as diabetes, heart problems and psychological disorders are considered to lower the expected life span of an individual.
Age. The younger you get life insurance, the less expensive will you premium payments will be. It’s the same with almost any type of insurance because young age typically signifies a healthy body. Thus, a senior is considered to be a more risky bet.
Living Conditions. This factor is probably the least that insurance companies consider but if you have poor living conditions or have a small paying job, you are considered more risky. The reason behind this is that individuals who do not have access to health care or a more healthy food and lifestyle tend to develop serious health conditions.
High-Risk Jobs. Individuals involved in high-risk jobs are generally considered high risk and would need a special kind of insurance. Jobs involved in drilling, construction, deep sea fishing and military service are examples of high-risk ones.
High-Risk Hobbies. Similar to high-risk jobs, if an individual is involved in hobbies such as sky diving, motocross, racing, paragliding and rock climbing they are considered for a high-risk coverage.