Can You Get Life Insurance With a Serious Health Condition?

If you've been turned down for life insurance, or you've assumed you couldn't qualify because of your health, you're not alone. Many people with conditions like heart disease, diabetes, COPD, cancer history or multiple sclerosis wonder whether coverage is even possible.

The short answer is that it often is. But the type of policy matters a lot, and every insurance company sets its own rules. Here's how the main options work.

Why one "no" isn't the final answer

Each insurer decides for itself which health conditions it will accept, at what price and with what kind of benefit. A condition that one company declines may be acceptable to another, sometimes with a different type of policy. That's one reason working with an independent broker can help: one application history doesn't have to define your options.

Fully underwritten coverage

This is traditional life insurance. You answer detailed health questions, and the insurer may ask for a medical exam, lab work and your medical records. If your condition is well controlled, you may still qualify for this type of policy, sometimes at a higher rate than someone without the condition. It usually offers the most coverage for the money, so it's often worth checking first.

Simplified issue: health questions, no exam

Simplified issue policies skip the medical exam. Instead, you answer a set of yes-or-no health questions, and the insurer checks prescription and medical databases. Coverage amounts are usually smaller, and many people use these policies for final expense needs like funeral costs and final bills. If you can answer "no" to the questions, the benefit may be available in full from the first day.

Graded benefit policies

If you answer "yes" to certain health questions, an insurer may offer a graded (or modified) benefit instead. With a graded policy, the full death benefit for death from natural causes isn't paid until the policy has been in force for a set time, often two or three years. If death happens earlier, the policy may pay a partial benefit or a refund of premiums, depending on the policy. Death from an accident is often covered in full from the start. The exact terms vary by company.

Guaranteed issue: no health questions

Guaranteed issue life insurance asks no health questions, so your health can't be the reason you're turned down, as long as you're within the insurer's age range. The trade-offs are smaller coverage amounts, a higher price for the same benefit and a waiting period, often two or three years. If you pass away from natural causes during the waiting period, many of these policies return the premiums you've paid, sometimes with interest, instead of paying the full benefit. After the waiting period, the full benefit is generally payable. Again, the details may vary by company and state.

A story close to home

This topic is personal for Matt. His mother lived with multiple sclerosis, and most insurance companies wouldn't cover her. He kept looking until he found a guaranteed issue policy that would. It had a two-year waiting period, she lived beyond it, and when she passed the policy paid out in full. That experience is a big part of why he doesn't give up on finding coverage for people who've been told no. You can read more about Matt here.

Tips before you apply

• Answer every health question honestly. In North Carolina, a policy can generally be contested during its first two years based on statements in the application. A wrong answer can put a future claim at risk.
• Have your list ready. Write down your medications, doses, diagnoses and approximate dates. It makes the process faster and more accurate.
• Don't cancel existing coverage first. Keep any current policy until a new one is approved and in force.
• Start with the most coverage you may qualify for. If you might qualify for simplified issue, that's usually worth checking before you settle on guaranteed issue.
• Think about how much you need. Our guide to what affects final expense costs in NC can help you size it.

How a local broker can help

Matt MacMillan is an independent insurance broker in Mooresville who works with families across Iredell County and Lake Norman. He compares options from the companies he represents, explains the health questions and waiting periods in plain English, and helps you apply for the type of policy that fits your situation. You can also learn more about whole life insurance and term life insurance. There's no fee for his help and no obligation.

This article is general information, not legal, tax or financial advice. Coverage, rules, features and availability may vary by insurance company and state, and every policy is subject to the insurer's underwriting and eligibility rules.