Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Dec 17, 2021

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The Truth in a Nutshell

  • Impaired risks are health- or lifestyle factors that reduce the ability to get the best life insurance rates
  • Life insurance companies consider the risk of professions, hobbies, habits, and illnesses
  • Some life insurance companies specialize in impaired risk

Applicants with high-risk jobs, hobbies, or illnesses might ask, “How much does life insurance cost?” Rates depend on your risk and the company providing coverage. Learning about life insurance companies that cover impaired risk will help you determine your eligibility.

Before learning about life insurance companies that cover impaired risk, enter your ZIP code to get free life insurance quotes in your area.

What activities do life insurance companies call ‘impaired risks’?

Life insurance companies determine eligibility and rates on a person’s risk. Riskier individuals are more expensive to insure because they might file a claim before they’ve made all payments into the policy.

An impaired risk is a health- or lifestyle factor that reduces a life insurance applicant’s ability to get the best rates. These factors can include a person’s occupation, habits, hobbies, or health. As a result, these applicants will find acceptance more complicated and will usually experience higher rates.

According to the Insurance Information Institute, impaired-risk life insurance brokers can help high-risk individuals find affordable life insurance companies that cover an impaired risk.

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How do life insurance companies determine rates to cover impaired risk?

Life insurance companies’ rates that cover impaired risk depend on the applicant’s health and lifestyle. Companies ask applicants various questions to determine their risk level. A person’s acceptance and rates depend on how the company views the answers to these questions.

What do insurance companies test for life insurance? For one, the underwriting process will determine if you have any underlying health conditions that might impact your risk level.

Life insurance companies use a rating system to place applicants into a risk category. While some companies have different names for each class, the levels are the same. The common classifications include:

  • Preferred plus
  • Preferred
  • Standard plus
  • Standard
  • Standard Smoker
  • Substandard

The best classification for most high-risk applicants is standard, but it depends on the company. Applicants with poor health and a risky lifestyle will fall closer to the substandard category.

Most life insurance companies rate risky applicants using a number (1-6) or a letter (A-P). These ratings determine how much more a policyholder will pay over the standard rate.

Honesty is best when speaking about risk with companies. Some life insurance companies don’t cover impaired risk. They could cancel your coverage if they determine you provided false information.

If you’re considered a high-risk applicant, a life insurance impaired-risk specialist can help you find affordable quotes from life insurance companies that cover impaired risk.

What do life insurance companies consider to cover an impaired-risk client?

Impaired-risk life insurance companies consider several aspects of an applicant’s life when determining eligibility. Every company looks at four types of risk to determine the risk level of an applicant. These risks include a person’s:

  • Profession
  • Hobbies
  • Habits
  • Illnesses

Life insurance companies consider death and injury statistics provided by the U.S. Department of Statistics and their experiences with customers.

What are high-risk occupations?

A high-risk occupation is a job that increases your chances of dying while working. Some professions have an increased risk of injury but not dying. These jobs will not be considered high risk by life insurance companies.

Professions that life insurance companies consider high-risk include:

  • Underground miners
  • Farmers and ranchers
  • Commercial fishers
  • Construction workers
  • Roofing specialists
  • Steelworkers

Companies consider these workers on a case-by-case basis. Life insurance companies will ask about their day-to-day tasks and the working environment before making a final decision.

What are high-risk hobbies?

Life insurance companies consider how likely a hobby could result in death. You can get coverage with a high-risk hobby in most cases, but you might incur an extra fee.

Hobbies that life insurance companies consider high-risk include:

  • Skydiving
  • Scuba diving
  • Bungee jumping
  • Racing (boat, car, bike, skiing)
  • Parachuting
  • Hang gliding

Life insurance companies consider how frequently you participate in these activities and your level of expertise when determining your eligibility and rates.

What are high-risk illnesses or habits?

Applicants with pre-existing health conditions are the most likely to have trouble finding coverage. These diseases can significantly decrease your life expectancy and make you riskier to insure. Additionally, habits that reduce your life expectancy can make it harder to find coverage.

Examples of high-risk illnesses and habits include:

  • Crohn’s disease
  • Heart disease
  • Organ transplants
  • Cancer
  • Kidney disease
  • High cholesterol
  • Smoking cigarettes or cigars
  • Chewing tobacco

Life insurance companies determine the risk of habits and illnesses differently. For example, AIG covers people with coronary artery disease if they acquire a physician’s statement. Meanwhile, Transamerica denies all applicants with coronary disease.

What if you don’t qualify for traditional coverage from life insurance companies that cover impaired risk?

If you’re too risky to cover, you won’t be able to obtain traditional life insurance, such as term life and universal life insurance. Fortunately, there are other options.

Guaranteed-issue life insurance offers acceptance without a medical exam or medical questions. These plans are for applicants who don’t qualify for traditional coverage. However, policyholders are considered high risk due to the lack of information and will experience higher rates.

Simplified-issue life insurance is another no-medical-exam policy. Although, you will have to answer some medical and lifestyle questions. The maximum coverage for this type of policy is $40,000, and, similar to guaranteed-issue plans, you’ll experience higher rates.

Some employers offer life insurance through group policies. All employees are eligible for coverage, regardless of their health or lifestyle, and your employer might subsidize a portion of the cost. However, your coverage only lasts while employed with the company, so leaving would result in the loss of coverage.

If you’re concerned about paying higher rates, another option is final expense insurance. This policy pays for your funeral and burial expenses. It doesn’t offer the same coverage as other whole life policies but will take the financial burden off your loved ones when you pass away.

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Life Insurance Companies That Cover Impaired Risk: The Bottom Line

When determining eligibility and rates, life insurance companies consider an applicant’s profession, hobbies, habits, and health. Companies use statistics and previous experience to assess the risk of each applicant.

Knowing these factors will help you determine if you qualify for coverage from life insurance companies that cover impaired risk.

Now that you know about life insurance companies that cover impaired risk, enter your ZIP code to find free life insurance rates in your area.