Life insurance is no different to any other insurance in that it is essentially based on probability. The higher the probability the insurers have to pay out - the higher the premium. This means that there will almost certainly be categories of people finding it more difficult to obtain life insurance due to the perceived higher risk.
High risk groups
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Over 50s: Getting life insurance as you get older gets harder (and often the premiums get higher). Typically, a simple no frills policy is best suited if you fall into the 'Over 50's' category. At the very minimum, it is advisable to obtain a life insurance policy that will cover the cost of your funeral and burial expenses. This way, your loved ones will not be burdened with the cost when you do pass away. You can select from term life insurance or whole life insurance. If you want to know the difference between the two then click here.
While term life insurance usually costs less to purchase, you may find it difficult to obtain coverage again when the length of your term expires and you are much older in age. It is more practical to consider a Whole of Life policy. Many insurers have a fixed price for all term lengths but some increase premiums with age. Therefore, you must carefully consider both types of policies and weigh the pros and cons of each in order to determine which is best for you. Take a look at our current market offerings to the over 50's by clicking here.
- High-risk workers: Occupations such as those within the oil & gas industry, armed forces, pilots, fishermen and those who work at heights all tend to find getting life insurance more difficult. Typically, you would need to go through a broker but rest assured there are several markets catering for high risk occupations.
- People with pre-existing medical conditions: These can range from diabetes, depression, testicular cancer and kidney disease. There is also special life cover available for those with HIV/AIDS and most markets deal with this under 'Impaired Lives' - which is not the best terminology. People with pre-existing medical conditions can usually find insurance through a broker.
- Those wanting a very high sum insured: If you are after a very high value life insurance sum then our advice would be to speak directly to an independent financial adviser.
- People with dangerous hobbies: These could include diving, caving, aviation, motor sports, climbing and mountaineering, parachuting, bungee-jumping and other extreme sports. Remember that some policies would not payout if you were to die whilst participating in one of these sports.
- Ex-patriots: UK life insurance may not be suitable or not particularly tax efficient for ex-patriots. You will need to consult an independent financial adviser for a suitable alternative.
What will it cost me?
Whilst not exhaustive this is a listing of fairly typical criteria that providers check and use to determine the cost of your premium:
- Your age: The younger you are when you take out the policy the cheaper your monthly premiums are likely to be.
- Your weight: The increasing incidence of obesity and its direct effects on other medical conditions means that life insurance providers are now more likely to consider overweight people a greater life insurance risk and are thus prone to higher premiums.
- Smoker/non-smoker: Not smoking reduces your premium because of the likelihood of premature death in smokers.
- General medical history: some policies will ask you standard medical questions and may require further information from your GP. If they feel that this puts you in a higher risk category then your premiums are likely to be higher. Underwriters will take family history into account when assessing your health. The predominant issue is that the appearance of certain conditions in your immediate family (parents and siblings) could indicate a higher likelihood of you suffering from the same condition. They tend to be most concerned with inherited conditions such as heart disease, diabetes, breast cancer or any other cancers at an early age.
- Additional extras: It goes without saying the more you add on to your policy the more you are likely to have to pay for it.
- Lump sum or an annual figure payout: A family income benefit policy often has cheaper premiums than a lump sum payout policy.
- Index-linked policy: If you are going to protect yourself against inflation then it's going to cost you.
- Level of cover: The higher the potential payout, the higher the premium.
To compare life insurance quotes from the UK's leading providers click here.
Author: KYM Editor
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