life insurance

Can I Get Life Insurance Regardless of My Health?

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Estimates from the Department of Health and Human Services show that 19 to 50 percent of non-elderly Americans have a preexisting health condition. If you are thinking about life insurance, you may wonder how your health will affect your ability to get it. Can you get life insurance regardless of your health? We will give you a straight answer. And we will explain what to expect as you search for a life insurance policy.

Can You Get Life Insurance Regardless of Your Health?

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In most cases, you can get life insurance regardless of your health. But depending on your health condition, the death benefit—or the payout to your survivors—may be limited. And your monthly insurance premiums may be higher than average. Your insurance company may request that you complete an exam or additional health screenings for many health conditions. But other companies offer no-exam insurance, which may be an option for you.

Will Your Health Affect the Cost of Your Life Insurance Premiums?

Your health is one factor that will affect the cost of your health insurance premiums. But other factors can affect your rates, too. Consider seven:

  • Age – As we age, the cost of life insurance premiums increases.
  • Gender – Women live longer than men and generally pay less for life insurance.
  • Health history – Your history of illnesses, diseases, surgeries, and prescription medications can affect the cost of life insurance.
  • Family health history – A history of genetic diseases can affect your premiums.
  • Lifestyle – If you smoke or participate in high-risk sports or hobbies, it will affect your life insurance premiums.
  • Occupation – Some jobs are riskier than others. Loggers, pilots, roofers, garbage collectors, and others have an increased risk of accident, injury, and death. And their insurance premiums are higher.
  • Policy and coverage amount – Generally, whole life insurance premiums are higher than term life insurance premiums. Also, insurance policies with a higher death benefit have higher premiums. For example, you will pay more for a policy with a $500,000 payout than one with a $50,000 payout.

Which Health Conditions Can Contribute to Higher Life Insurance Premiums?

Various health conditions can contribute to higher life insurance premiums. But having a preexisting condition does not automatically increase your premiums. The insurance company will consider several factors, including the history and severity of your illness, the diagnosis, and the treatment plan.

These conditions might contribute to higher life insurance premiums:

  • Acquired immunodeficiency syndrome (AIDS)
  • Alzheimer’s disease
  • Anemia
  • Anxiety
  • Anorexia or bulimia
  • Asthma
  • Attention deficit disorder (ADD)
  • Attention deficit hyperactivity disorder (ADHD)
  • Autism
  • Autoimmune diseases
  • Blindness
  • Cancer
  • Cardiovascular or heart disease
  • Dementia
  • Depression
  • Diabetes
  • Digestive disorders
  • Epilepsy
  • Heart disease
  • High cholesterol
  • Human immunodeficiency virus (HIV)
  • Lung disorders
  • Mental health disorders
  • Neurological disorders
  • Obesity
  • Osteoarthritis
  • Osteoporosis
  • Pancreatitis
  • Psoriasis
  • Pulmonary heart disease
  • Renal failure
  • Rheumatoid arthritis
  • Sleep disorders
  • Tuberculosis

What If You Have Cancer and Need Life Insurance?

If you have cancer and need life insurance, guidance is available. Please download the Consumer’s Guide to Cancer Insurance on the National Association of Insurance Commissioner’s website. The document gives you practical suggestions, offers caution, and lists several factors to consider before purchasing a life insurance policy.

What Type of Life Insurance Is Available If I Have Health Issues?

If you have health issues, several types of life insurance are available. Options include term insurance, no-exam insurance, and guaranteed acceptance life insurance. Consider the benefits and disadvantages of each type of insurance.

  • Term life insurance – Although your health will impact your term life insurance premiums, you will have the flexibility to choose a higher death benefit.
  • No-exam insurance – You can get term or permanent life insurance without an exam. But your coverage amount will be limited. Depending on the insurance company, certain medical conditions may disqualify you from purchasing the policy.
  • Guaranteed acceptance life insurance – No medical exam or health questions are required. Most insurance companies offer guaranteed acceptance insurance as a whole life policy with a maximum death benefit—often around $25,000. Guaranteed acceptance life insurance policies usually have terms that limit your beneficiary’s payout when your policy is new. For example, If you decease within one or two years after purchasing the insurance, your beneficiary will receive little or no death benefit.

For information on how term and whole life insurance compare, read our post Term Life vs. Whole Life Insurance – How to Decide.

Conclusion

In most cases, you can get life insurance regardless of your health. Below are four key takeaways:

  • You can find term and whole life policies—some that do not require an exam.
  • Although a preexisting medical condition does not automatically mean higher life insurance premiums, sometimes premiums are higher than average.
  • Insurance companies may limit the amount of life insurance coverage you can purchase.
  • Request prices from different insurance companies to compare your options.

Want to Know the Cost of Life Insurance Premiums?

If you have a preexisting medical condition and want to know how much life insurance will cost, contact Hunt Insurance of Raleigh. We offer personalized, hassle-free service. John Hunt will be upfront in explaining your options and the cost.

Is Life Insurance Taxable?

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Life insurance can replace some of your income, pay debts, and take care of your beneficiaries’ expenses. But is life insurance taxable?

Is Life Insurance Taxable?

Generally, your life insurance death benefit is not taxable. Your beneficiary will receive a tax-free sum. But if you do not have term life insurance, there are exceptions.

When Is Life Insurance Taxable?

Is life insurance taxable infographic from Hunt Insurance of Raleigh, NC

Life insurance is taxable in specific situations related to permanent life insurance, which includes whole life, universal life, and variable life policies. Term life insurance, however, guarantees a payout, and no taxes are involved.

Taxes for permanent life insurance:

  • Delayed payout – If you add a clause in your policy for the insurer to hold the death benefit before releasing it to the beneficiary, interest will accrue. And your beneficiary must pay taxes on the interest. Or, if your beneficiary asks the insurer to hold the fund temporarily, taxes are due on the interest income.
  • Incremental payout – When the full death benefit is paid in installments (e.g., monthly) until the funds are exhausted, your beneficiary will not owe taxes. But you may be taxed on the interest gained as the policy ages.
  • Cash value life insurance
    • Outstanding loans against a cash value policy are taxable. If you don’t pay back the loan before you die, the balance is subtracted from the death benefit.
    • If you surrender a policy for cash and make a profit, the profit is taxable.
    • Withdrawals greater than what you paid into the policy are taxable.
  • Sell a policy – If you sell the policy’s rights to a third party and make a profit, the profit is taxable.
  • Group life insurance – If you receive group life insurance from your employer, the amount above $50,000 is considered taxable income. And the death benefit is taxable.
  • Inheritance tax – If you name your estate as your life insurance beneficiary and live in a state with an inheritance tax, the death benefit might be taxable. Retirement accounts, savings, your home, and other assets increase the value of your estate. If your estate’s value exceeds the tax threshold, the death benefit may be taxed.

How to Avoid Taxes on Life Insurance

If the value of your estate is significant, you can avoid taxes on life insurance:

  • Don’t name your estate as beneficiary.
  • If your estate’s value exceeds $11.58 million (as of 2020), transfer policy ownership to another person. Visit the Estate Tax page on the Internal Revenue website for details.
  • Create an irrevocable life insurance trust if you want to maintain control of the policy but not be the legal owner.

Note: If you die within three years of transferring ownership of a life insurance policy, the full death benefit is automatically included in the value of your estate.

Professional Advice on Life Insurance Taxes

Hunt Insurance of Raleigh, NC, offers free consultations and professional guidance to help you find a life insurance policy that is right for you. Call, text, or submit our contact form to request a free consultation.

What Happens to Your Life Insurance If You Leave Your Job?

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If you leave your job, what happens to your life insurance depends on the type of plans your employer offers. Group life insurance—or employer-sponsored insurance—can have options to port or convert your plan. But not all plans have these features.

Life Insurance After You Leave Your Job

Whether or not you can keep your life insurance if you leave your job depends on the conditions of the insurance plan. Conversion and portable plans allow you to retain at least a portion of the insurance.

Conversion

Some group life insurance policies allow you to convert to an individual plan if you leave your job. You can convert without a physical exam or medical questionnaire. Common options are whole life or universal life insurance.

  • Whole Life – The insurance will be in effect for your entire—or whole—life. The premiums are fixed and won’t change with your age or declining health. Although premiums are higher than term life insurance, your policy can build cash value. You can borrow from the accumulated cash value or use it to pay insurance premiums.
  • Universal Life – Universal life insurance combines affordability with permanence. It offers the lower premiums of term insurance, but like whole life insurance, it lasts for the remainder of your life. The plans your employer provides may—or may not—build cash value.

Portability

Portability allows you to continue your life insurance plan if you’re laid off or voluntarily leave your company. You’ll have term life insurance protection for a period that is specified by your plan. Depending on the policy, you can take all or a portion of the coverage after you leave your job. The plan might specify—in dollars—the minimum and maximum amount of coverage that you can continue for yourself, your spouse, or a child.

If Neither Option Is Available

If your employer offers life insurance that cannot be converted or ported, you lose your coverage when you leave your job.

Is Employer-Sponsored Life Insurance Enough?

Eighteen percent of consumers only have group life insurance coverage that is employer-sponsored. Two factors can help you determine if your employer-sponsored coverage is enough:

  • Portability or conversion – If your employer offers life insurance that you can’t convert or port after you leave the business, consider purchasing additional coverage. Ask the human resources team at your job about the cost of premiums if you separate—voluntarily or involuntarily. It may be less expensive to purchase a personal term life insurance policy.
  • What’s needed to sustain your survivors? – Funeral expenses, replacement income, education costs, and more can affect how much money you want to leave your beneficiaries. For a list of current and anticipated expenses to consider before you buy an insurance policy, read our blog post, Did You Buy Too Much Life Insurance? What Now?

John Hunt, insurance agent and owner of Hunt Insurance of Raleigh, Durham, and Chapel Hill, sponsors this post. Call us for a hassle-free quote: 919-840-8418.