Are Life Insurers Allowed to Deny Coverage Due to Pre-Existing Conditions?

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KEY POINTS

  • Health insurers are prohibited from discriminating against people with pre-existing conditions.
  • This is not the case for life insurance providers.
  • Buying coverage before developing a pre-existing condition can be a good idea.


Getting life insurance with a pre-existing condition isn't necessarily a given.

When the Affordable Care Act passed, it prohibited health insurance companies from discriminating against people with pre-existing medical conditions.

For several years it's been possible to buy health insurance even with a serious illness. Some people may be wondering if it is also possible to buy life insurance while having medical issues.

Here's what would-be policyholders need to know about a life insurer's ability to discriminate against those who have medical problems when they apply for coverage.

Life insurers have different rules when it comes to pre-existing conditions

The sad reality is that there is no requirement that a life insurance company provide a policy to someone with medical issues. In fact, not only can life insurers discriminate against people with pre-existing conditions, they do so all the time.

This can take the form of either denying coverage or charging much more when someone has been diagnosed with a medical problem. Life insurers typically ask detailed questions to try to determine if someone applying for a policy has a health issue. And it is common for insurers to require applicants to undergo a medical examination with a doctor of the insurance company's choosing. This is to make sure there are no hidden health problems that the policy applicant doesn't know about.

Because it is possible that a pre-existing condition can make it expensive or impossible to buy traditional term or whole life insurance, it's a good idea to get covered while young and healthy. Buying life insurance before a medical problem arises ensures that protections are in place. This is useful for surviving family members so that they wouldn't experience serious financial hardship in the event of your untimely death.

What to do about being denied life insurance due to pre-existing conditions

A life insurance company has the legal right to deny coverage to an applicant because of medical issues. So, those who have pre-existing conditions need to know what their options are.

In some cases, the best solution may involve shopping around with multiple insurers. Different companies have different rules about what types of medical problems will lead to a denial of coverage. Simply applying with another insurer could be sufficient to get affordable protection -- especially for people with pre-existing conditions that aren't immediately life threatening.

When no standard insurer will offer a policy because of a serious condition, though, there's still no reason to give up entirely on getting coverage. Guaranteed issue policies could offer a way to provide a death benefit to family members, although it's important to be aware of the downsides of this type of policy.

While guaranteed issue policies are available to just about everyone, there may be waiting periods before the death benefit is paid in full. The policies may also be more expensive and will likely offer a lower maximum death benefit.

Still, if guaranteed issue coverage is the only type of life insurance available due to a pre-existing condition, it may be worth buying. Without any protection, surviving loved ones could be left with funeral expenses as well as the loss of income or services the deceased was providing.

This can be a big burden that a guaranteed issue policy could help alleviate even if the coverage isn't as good as standard term life protection.

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