Study: Pre-existing conditions not always an obstacle to good insurance rates

By Emmet Pierce Posted : 10/18/2012

pre-existing conditions don't preclude life insurance It’s a mistake to assume you can’t find affordable life insurance as the result of a pre-existing medical condition, according to Genworth Financial.

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A recent study by the insurer concluded that many Americans fail to buy life insurance because they mistakenly assume that a chronic illness will make a policy unaffordable.

Advances in medicine and wellness care are making it easier for people to manage chronic conditions. At the same time, the insurance industry is using more sophisticated underwriting practices to provide preferred rates to people who have with less-than-perfect health. (See: "Is it crazy for life insurers to test for dementia?" )

"We need to redefine the word 'healthy' in the context of life insurance eligibility," Janet Deskins, Genworth senior vice president for product development, remarked in a statement. "For adults with conditions such as anxiety, asthma, depression, high cholesterol and sleep apnea, life insurance can still be an affordable part of their overall financial plan, especially if they are actively taking steps to manage their condition."  (See: "Untreated sleep apnea will raise insurance ratezzzz.")

Eric Tyson, author of “Let’s Get Real About Money” and “Personal Finance for Dummies,” says it’s wise to  get life insurance quotes from a variety of carriers before deciding that you can’t afford a policy. Rather than simply go to one or two insurance companies, he recommends price-shopping among several insurers.

Life insurance and medical risks

Not all insurers gauge risk the same way, Tyson adds. “Some insurers have a better understanding of certain medical conditions. You may be able to get much better rate that you expect.”  (See: "Understanding life insurance table ratings.") The key is managing your condition well.

Underwriters must balance the need the need to price policies competitively with the insurer’s ability to pay claims. If they price policies too low, claims can reduce earnings.

Genworth researchers conclude that between 39 and 54 percent of Americans between ages 18 and 64 with common, self-reported pre-existing conditions have no life insurance coverage. Doubts over insurability are partly responsible, according to the 2012 Genworth LifeJacket study of the uninsured. More than 25,000 adults across the nation were surveyed.

The overall number of adults without life insurance in the country slowly is rising. The study found that more than 118 million adults don't have life insurance coverage. That is 52 percent of the adult population, researchers reported. In 2011, 51 percent of U.S. adults were uninsured.

"Overall, we are seeing the continuation of a trend we witnessed in 2011: fewer Americans with life insurance and lower coverage amounts for those who are purchasing policies," Deskins said in her statement.



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