How To Obtain Whole Life Insurance With Pre-Existing Conditions

Getting denied because of Pre-Existing conditions is a major concern for our clients looking to obtain a whole life insurance policy.  However, for most conditions, there are companies willing to offer easy to qualify simplified issue whole life.  Unlike term life insurance, there are a lot more of these products available.

The 3 types of Whole life Insurance for people with pre-existing conditions

When someone with some type of medical conditions reaches out to us for Whole Life, there are three types of whole life we look into to determine which one they would qualify for? 

• Simplified Issue Whole Life Insurance
• Fully Underwritten Whole Life Insurance
• No Exam Whole Life Insurance

Simplified Issue (SI) Whole life: The Easiest way to qualify

Pros

• Great for people with moderate to severe conditions
• Easiest type to get approved
• Simple Yes or No Questions

Cons

• Most expensive of all three options
• The maximum death benefit is low.
• Limited options for people under 50

Simplified Issue Whole Life is by far the easiest one to qualify for.  It’s best used for a person with moderate to severe medical conditions.  Oftentimes, all you need to do is answer no to some pertinent questions on the application.  If all of your answers check out, you are eligible to obtain a whole life insurance policy with first day coverage.  

The questions are designed in a way to eliminate the severely unhealthy.  After all, the insurance companies want your business.  They just want to avoid issuing a life insurance policy to someone who’s at risk of dying prematurely.  

Here are some examples of questions they would ask 

1. .Do you require assistance to feed, bathe, dress, or take your own medication or are you currently confined to a hospital, nursing home, mental facility, hospice, or require home health nursing care?
2.  In the past 5 years has the proposed insured: 1) been tested positive for exposure to the HIV infection, or 2) been diagnosed as having ARC, or AIDS caused by the HIV infection, or 3) other sickness or condition derived from such an infection

To be clear, your answers alone don’t qualify you.  The insurance carrier will still have to run a script check and look into their MIB (Medical Information Bureau) database.  

The purpose of the script check is to check if you take a medication that is in their “black list”.  Typically these medications are used for conditions that they try to weed out in the applications.  This is why it’s important to give your agent as much information as possible.  

An experienced agent knows there are medications out there used for multiple purposes.  If the agent makes it known that the drug is taken for a less serious condition, you are far more likely to qualify.

The MIB is a database shared by health and life insurance carriers to share errors & misrepresentations from insured & applicants.  The insurance company you apply to will check it to make sure there are no notes under your name.  If there happens to be one, they will check if this information is noted in your application.  

It’s important to note that unlike an exam , the MIB and the script checks can take anywhere from a few minutes to a couple of days.  You will know in no time whether or not you qualify.  

Fully Underwritten Whole Life: Hard to qualify but it’s the fairest.

Pros

• Most affordable of all three options
• A great option for people with complex conditions.
• High death benefit, up to $10 Million+
• Options for participating cash value options.
• Very fair since it looks at the whole picture

Cons

• Hardest to qualify for.
• Not an option for people who don’t follow doctor’s orders
• Most products don’t offer options under $25,000

Fully Underwritten Whole Life Insurance is the opposite of “simplified issue”.  Though it is mostly used for people with minor and mild conditions.  It can be sometimes used for certain conditions that would get declined by a final expense policy.  

This type of policy typically requires a paramedical exam as well as a thorough underwriting of your health history.  Because of the in-depth look at your history, it can uncover issues that a Final Expense Whole Life cannot.  

Though this seems cruel to people with all sorts of pre-existing conditions.  It’s not all gloomy for this type of whole life insurance.  A fully underwritten whole life insurance policy can issue a policy where a simplified would not.  

A thorough investigation of your health can sometimes reveal that a severe pre-existing condition is actually under control.   You as a potential insured have a chance to explain the reason you may be taking a dual use medication.

Dual use meds are #1 reason people get mistakenly denied.  Unlike simplified issue policy which may deny you coverage just because a medication is under their black list.  

For example a drug like Propranolol could be used for serious heart conditions but for something as mild as headaches.  We have had clients who were given a Preferred rate (the best rate you can receive) for a policy although it’s considered a serious drug by final expense carriers.  

As long as you can prove that it’s being used for the lesser of the conditions, you’re better off going with a fully underwritten policy. 

One major downside to a fully underwritten policy is that its product offerings require a much higher death benefit than the other types. Most Fully Underwritten policies start at $50,000 death benefit or higher. There are some exceptions, but this is by far the most common.

No Exam Life Insurance policy

Pros

• Great options for people with mild medical conditions
• Affordable options for people who have minor health issues but don’t want to take an exam.
• Some but limited cash value options. 
• Fast underwriting process, approval within hours or days.

Cons

• Nuanced conditions are typically not an option unless very mild. 
• Limited death benefit when compared to a fully underwritten policy. 

No exam is somewhere in between the previous two types.  The advantages & disadvantages are product dependent.  Some no exam products are almost as strict as a fully underwritten policy: those tend to have better rates.

Others are more laxed, though not as relaxed as a simplified issue or final expense policy. The more lenient ones would reject some conditions based on the fact that they are too nuanced to not be underwritten.  

For example it’s hard to get approved for a no exam policy, if you suffer from crohn’s disease.  There is a wide range of Crohn’s disease patients.  Some are mild, others are severe.  

The insurance industry wants to do a full investigation on those types of diseases in order to issue a policy.  

CD and other autoimmune are perfect examples of pre-existing conditions that may get approved for both Simplified Issue & Fully Underwritten.  However it’s unlikely that type of disease will get approved for no exam, unless it’s truly mild. 

No Exam whole life insurance options tend to have higher death benefit than Simplified Issue.  It’s quite significant.  While most SI options only go up to $50,000.  No exam whole life can go up to $250,000 and some stricter options go up to $500,000.

Once you go above $500,000, you’d have to with a fully underwritten policy. However, we realize that only a select few of our clients are looking to go that high for a permanent policy.

For Pre Existing Conditions, Whole Life is more lenient.

Though some people assume that whole life is harder to qualify for because it’s a permanent policy.  It’s actually slightly easier to get Whole Life if you have pre-existing conditions.

 There are 3 major reasons why life insurance carriers have more whole life options for someone with a chronic conditions

• Term Life insurance is riskier for insurance carriers
• More products available because of the final expense category. 
• Whole Life has low death benefit options

Term Life is riskier for insurers

Term Life Insurance is more of a risk for insurance carriers.  Because of the more affordable premium to obtain a high death benefit, insurance companies are worried that this would attract fraud.  

They fear people with pre-existing conditions investing a small amount when they feel their health deteriorating.  Because of this, most insurance companies don’t even offer simplified issue options for term life insurance. 

Final Expense Life Insurance only available in Whole Life

Final Expense(FE)) Whole Life is a type of Simplified Issue Whole Life  reserved for people age 50 and over.  This type of product is very lenient for the common pre-existing conditions often suffered by people of advanced age. 

Common types of conditions offered to potential applicants are:

• Diabetes (some even while taking insulin)
• Stroke Survivors (1-2 years after episodes)
• Cancer (2 years + after remission)
• Several heart diseases 
• Autoimmune diseases
• COPD, Bronchitis
• And much more… 

There is not really an equivalent to final expense for term life insurance products.  SInce it’s so easy to obtain, there is a chance a term life version of FE would be an invite for fraud.

Regardless of the reason, the fact is that there are no real options for simplified Term.  Though there are a few out there, they are not as lenient as Final Expense Whole Life. 

No low death benefit options for Term products

Because of the aforementioned reasons, Whole Life Insurance is more likely to have low death benefit option. Though there are some low term options available, they are only offered by vey small final expense companies and not available in all states.

Typical Simplified Whole Life Insurance products start at $5,000 to $75,000 or so. While Final Expense Whole Life ranges from $2,0000 up to $35,000. Only a couple of these companies offer products beyond $25K.