Life insurance with a health condition: what changes, and what does not

What underwriting is actually doing

An insurer is trying to estimate how likely it is to pay a claim, and when. A health condition moves that estimate; it does not switch it off. Underwriters look at what the condition is, how long ago it was diagnosed, how it is being managed, and whether it is stable. Two people with the same diagnosis can be assessed very differently depending on those answers.

The outcome is usually one of three things: standard terms, a rating that increases the premium, or a decline for that product. A decline from one carrier is not a decline from all of them, and it is not a decline from every type of cover. Carriers specialise, and an independent agent's job is to know which one is comfortable with which condition.

Which products stay open

Fully underwritten term or permanent cover, with a medical exam and records, gives the best terms for conditions that are controlled: many forms of high blood pressure, high cholesterol, well-managed diabetes, asthma, and a history of some cancers with a clean period since treatment. These are decided case by case, and stability over time counts heavily.

Simplified-issue policies ask a set of health questions and no exam. They are faster and more forgiving, and the price reflects that. For somebody whose condition would attract a heavy rating under full underwriting, the simplified route might not cost more and is far less effort.

Final expense cover is the door that stays open longest. Many of these policies ask few questions or none, and some accept applicants who have been declined for everything else. The trade-off is a smaller benefit and, on the no-questions versions, a graded period at the start during which a death from natural causes returns premiums rather than paying the full amount. That period is the thing to ask about before you sign.

Honesty on the application is the whole game

Every policy contains a contestability period, commonly the first two years, during which the insurer can investigate a claim and check the application against medical records. An answer that was untrue when given can lead to the claim being denied and the policy cancelled. That is the outcome to be careful of; it is worse than a higher premium, because the family finds out at the worst possible moment.

Disclose everything asked, including conditions you consider minor and medication you consider routine. Underwriters see the records anyway. A condition disclosed up front is priced; a condition discovered later is contested.

This is also why it is a mistake to shop by applying everywhere at once. Declines can be recorded and shared between insurers, and a string of them makes the next application harder. Let an agent place the application with the carrier most likely to accept the condition, once.

When to apply

For a stable condition, the best time is now, because the next best time is later and later is always older. For a recent diagnosis, a new treatment, or a change in medication, it can be worth waiting until things have settled: underwriters reward a track record of stability, and applying in the middle of an adjustment means being assessed on the worst version of the picture.

Ask about the medical exam before you book one. Some conditions are better presented through records than through a single reading on a nervous morning. Your agent should be able to say which route suits your history.