What is Special Risk?

A few decades ago life insurance was kind of a pass/fail proposition, which meant anyone who presented as a non-standard risk was denied coverage. Today, insurance companies have changed their risk policies and offer life insurance to suit just about any individual.

About 93 percent of individuals, regardless of their medical conditions, are insurable. Many of these individuals are placed in a higher risk class known as “special risk” or “impaired risk.”


What is Special Risk?

Special risk is a type of life insurance policy designed to cover individuals that have health or other characteristics that represent a higher-than-average risk to the insurance company. A special risk policy will most likely cost more for the same amount of coverage than someone with a standard risk situation will. The insurance company must charge more money to compensate them for the fact that they have a greater likelihood of having to pay out on the policy than they would for standard or preferred policyholders.

Who is Considered Special Risk?

Life insurance companies consider people a special risk when they have had past issues such as an alcohol or drug abuse problem. Smoking, depression and dangerous hobbies such as skydiving also place people in the special risk category. Other medical factors that might place people in this category are issues such as diabetes, heart disease, hepatitis C, stroke, obesity or high blood pressure.

Changing Special Risk Policies

A special risk categorization is not set in stone. For example, people lose weight all the time, and in fact, may experience improvement in blood pressure, cholesterol and other markers of disease as a result of their weight loss. This also happens when people quit smoking — the body has an amazing ability to heal, and according to the Ohio State University Medical Center, many indications of disease such as high blood pressure may start to heal within the first day of quitting smoking.

Within two weeks, the risk of heart attack drops, lung function improves and fatigue and shortness of breath lessen. Within one year, heart disease is reduced by 50 percent compared to people who are still smoking, and within five years, the risk of having a stroke is the same as that for non-smokers. It is important to contact your life insurance company and request a review of your policy if you have lost weight or quit smoking. A new medical exam may reveal that your health has improved enough to move you into a more affordable rate class.

Special Risk Advocates and Finding Coverage

Many people have medical conditions that prevent them from qualifying for standard life insurance rates. However, do not give up — the life insurance market becomes more competitive all the time and insurers are starting to change their underwriting requirements for those with medical issues. Because of advances in medicine, many people are able to keep certain conditions well-controlled and insurance companies may reward this with lower insurance premiums.

Some insurance agencies have dedicated staff that work as special risk advocates. If an insurance company underwriter reviews all of your information and decides you are not insurable, a special risk advocate will work with you and the underwriter to go back over your medical and other information, to try to get a standard policy issued.

Special risk advocates usually know who to speak with for the best coverage, and they know what underwriters like or frown upon. If you find yourself having difficulty obtaining a policy, ask around to find an insurance agency that has an advocator for special risk policies. These people have usually been former underwriters or specialists, or perhaps managed underwriters and oversaw the process of approving impaired-risk policies.

When working with an advocate, pay attention to the questions they ask — an effective advocate will ask detailed questions about your medical history and condition because they understand what needs to happen for someone with your medical condition to obtain life insurance. If the person does not ask you many questions and does not seem helpful, it might be time to find a new agent.

Another Option

After shopping for life insurance, if you have not found a company that can issue you a policy, consider guaranteed issue life insurance. This is the most expensive type of life insurance, but it does not require a medical exam. These types of policies have quotes available online and coverage can also be purchased online.


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