Bankrate.com • By Jay Macdonald • June 2011
Life insurance rates are determined by a combination of factors, including your age, gender, occupation, financial status, risky pastimes, lifestyle (particularly tobacco, alcohol and drug consumption), face amount of the policy and your health.
Armed with actuarial tables and company history, a life insurance underwriter will place you in a risk class based on the likelihood that you will expire before your life insurance policy matures, thus forcing the company to take a loss on your policy. Naturally, the higher the face value of your policy, the closer the underwriter will scrutinize your health.
Those deemed a good bet to go the policy distance may qualify for the preferred or preferred-plus rate class that offers the best rates. Riskier applicants may only qualify for standard or substandard rates, while some individuals may be deemed too risky to insure.
Which health conditions are most likely to affect your life insurance rate class?
We asked Stephen Bloom, first vice president and chief underwriter for New York Life and Jacki Goldstein, M.D., vice president and chief medical officer for MetLife's Life New Business and Underwriting to walk us through the top 10 for a 40-year-old man.
High blood pressure: Keep a lid on it
First the bad news: If your blood pressure has never remotely approached 120 over 80, an underwriter will wonder why.
"High blood pressure that's not well-controlled can lead to a lot of end-organ diseases like coronary artery disease, stroke, kidney damage, peripheral artery disease -- a lot of different vascular complications," says Goldstein.
The good news: "The industry underwrites very favorably individuals who have high blood pressure that is well-controlled and well-managed," Goldstein says. "Every company would have different criteria, but if your physician started you on some medication and it shows by a couple of readings that you're in really good control, most carriers would look at that very favorably."
Could someone with high blood pressure qualify for a preferred policy?
"Yes, they could," she says. "Different carriers have different categories of preferred, but yes, high blood pressure that is well-managed, most carriers would have that qualified for preferred."
Type 2 diabetes: Youth works against you
Type 2 (or adult onset) diabetes presents a challenge to underwriters because of the toll it takes on the body's vascular system. It can lead to coronary artery disease, peripheral vascular disease, renal failure and blindness.
"It absolutely can affect risk class because there are a lot of potentially life-threatening complications that can result from diabetes," says Goldstein.
Youth works against the Type 2 applicant. "The younger they are, the higher the risks as they get older," says Goldstein. "If I get diabetes at age 70, I might already have coronary artery disease or a stroke anyway, so the impact of the diabetes might not affect my life expectancy in the way it might a 40-year-old. A 40-year-old is unlikely to qualify for preferred in my experience."
Bloom says the key to affordable coverage is control and management.
"We would take into consideration whether the proposed insured is under the care of a medical professional and whether the condition is well-controlled. Some conditions may require a period of time after diagnosis -- for example, six to 12 months -- before we could insure the client," he says.
Sleep apnea: You snooze, you lose
Sleep apnea is a potentially life-threatening sleeping disorder characterized by repeated pauses in breathing during sleep. A similar disorder called narcolepsy causes a person to suddenly fall asleep without warning.
Goldstein says these conditions concern insurers on two fronts.
"It's certainly the issue of daytime somnolence and motor vehicle accidents or operating any other kind of vehicle or machinery where you can endanger yourself because of the somnolence. But actually, severe sleep apnea can be associated with high blood pressure, coronary artery disease, et cetera, so it's more those associated issues that make it a risk classification matter."
Goldstein has good news for sufferers of this rare condition, however.
"I don't want to say that it never affects the risk class, but even if it is a severe degree of sleep apnea, if it is well-controlled and well-managed, they can get very favorable underwriting. It's only when it is severe and untreated that it becomes a risk classification issue," she says.
Heart disease: Insurers fear the 'big one'
Heart disease will always flag a life insurance underwriter for the simple reason that "the big one," a massive heart attack, can be sudden and deadly. Heart disease itself encompasses a wide range of diseases and conditions, from atherosclerosis to a prolapsed mitral valve. Because the severity and progression of heart disease can be difficult to document, underwriters typically take a second look at the applicant's family tree for guidance.
"We do consider family history in our underwriting assessments," says Bloom. "Generally, this is associated with immediate family members -- father, mother, sister, brother -- who may have developed heart disease or had a stroke."
Will heart disease keep you out of the preferred risk class?
"In general, coronary artery disease in a 40-year-old would usually be looked at carefully and could be something that is rated (not preferred)," says Goldstein. "If it is actually very, very severe to where the heart has significant damage to it so that it is not pumping effectively, it could actually be a situation that is not insurable."
Our 40-year-old man may be asked to undergo an electrocardiogram prior to becoming insured.
Asthma: Well-managed asthma sufferers can breathe easy
Asthma is a common chronic respiratory condition in which the airways suddenly and unexpectedly constrict, causing coughing, wheezing, shortness of breath and a tightening of the chest.
"There are asthma deaths, but for individuals who are under good medical care, that would be a rare circumstance," says Goldstein.
An underwriter's concern about asthma would likely rise in relation to the severity of the condition and how well it is managed.
Should an asthma sufferer aspire to a premium rate class? Absolutely, says Goldstein.
"An individual who has well-controlled asthma could well be a preferred underwriting risk. For the most part, asthma will be extremely favorably underwritten," she says.
"On the other hand, although we hardly ever see this, if someone who has asthma is ending up in the hospital several times a year, that would be a less favorable risk."
Cancer: The rule of thumb is, there is no rule of thumb
Although the word "cancer" will flag any life insurance underwriter, its ultimate effect on an applicant's rate class can vary from negligible to substantial.
"Cancer is obviously not one illness; there are hundreds of cancers and many, many cancer histories can be favorably underwritten," says Goldstein. "Even for the same kind of cancer, there are so many different stages of the same kind of cancer. There are some people who might have a more advanced stage, some people who have a very early stage, and then treatments vary."
Bloom says New York Life might take six months to a year to monitor some applicants before writing a policy. "Cancer conditions may require a longer period of time depending on the location of the cancer, the staging and type of treatment involved," he says.
Just as each cancer is individual, every insurance company will underwrite it differently.
"We do underwrite cancers," Goldstein says. "Within the industry, there are going to be some cancers that are going to be preferred, some that are uninsurable and some that will fall in between."
Obesity: Too overweight to underwrite?
Centers for Disease Control and Prevention statistics indicate that more than one-third of adult Americans are overweight and another one-third are clinically obese. In one way or another, obesity can contribute to most of the other nine health hazards on our list.
Goldstein says insurance companies calculate an applicant's body mass index, or BMI, when determining their risk class.
"We certainly consider obesity as a health condition. Most carriers do have build tables that play into what the risk classification is in terms of what weights can qualify for the preferred classes. Some individuals who get very, very heavy could end up having rated (substandard) policies. Individuals who are very morbidly obese might not even be insurable."
Obesity isn't the only weight-related health concern. "Likewise, people who are underweight, malnourished, that is also a health condition," Goldstein says.
How might anorexia affect an applicant's rate class?
"In general, if someone has a history of anorexia, if they're in remission and their weight is more ideal, they can definitely get underwritten," says Goldstein. "But individuals who currently have active anorexia nervosa, those would be concerns."
Organ transplants: Location, location, location
Organ transplants are serious business, which explains why insurance underwriters treat them on a case-by-case basis.
"It really depends," says Goldstein. "Kidney transplants are one of the more common kinds of transplants and we do insure individuals. There are lots of different aspects that we need to look at with someone who has had a kidney transplant, but most of the industry will underwrite those individuals depending on how well they're doing with that transplant. But assuming that they're recovering from their surgery, they're doing very well, they're not having any complications from the transplant, kidney transplants can be underwritten."
How about liver or heart transplants?
"Liver and heart transplants might be insurable by some carriers, but I think it would not be insurable by many," Goldstein says. "There just hasn't been as much experience to be able to know exactly what the risk classification should look like. I would be reluctant to say that nobody is doing that, however."
Bloom says New York Life steers clear of organ transplants, except for some kidney transplants.
Goldstein says at least one category of transplant recipients can look forward to a very favorable risk class: corneal transplants.
Depression: Severity is key to rate class
Depression is the one mental condition that can really put a damper on your life insurance rate, and for good reason: When this psychological condition becomes severe, it can lead to suicide.
"Depression and mental disorders in general are among the more common health conditions that you see in all age groups," says Goldstein.
"There are many individuals who are very favorably written and even could be preferred, depending on the degree, the severity and how well it is managed. On the other end of the spectrum, if you had someone who had severe, major depression, lots of hospitalizations, lots of suicide attempts, that individual would not be rated as favorably, and possibly might not even be insurable."
Bloom adds, "We also would not consider individuals with dementia such as Alzheimer's, people who have recently completed rehabilitation for drug/alcohol use, or someone currently residing in a hospital/nursing home or facing major surgery."
Life insurers also will typically refuse coverage to individuals who are HIV-positive.
High cholesterol: Unhand that cheeseburger!
Although it's not a disease, a high concentration of cholesterol in the blood is thought to contribute to the type of life-threatening conditions that life insurance companies like to avoid.
"The concern with high cholesterol is that it is a risk factor for the development of a lot of vascular conditions, including coronary artery disease, stroke and other atherosclerotic kinds of disease," says Goldstein.
Life insurance underwriters tend to treat high cholesterol as they might high blood pressure.
"High cholesterol, if it is managed, it's going to be offered preferred," says Goldstein. "To the extent that it is well-managed and well-controlled, it can be very favorably underwritten."
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