Many 'Impaired Risks' Can Qualify for Insurance

Insurance is all about covering risk. People with a chronic condition, cancer survivors, even those with risky hobbies may find that they don't qualify for standard insurance rates because they are considered an impaired risk.

The most common reasons someone is an impaired risk are heart conditions, diabetes and cancer. Race car drivers, scuba divers and people who fly small airplanes for fun can also be in the impaired category. "Anything that is out of the norm in terms of risk" can knock a person out of the running for a standard rate policy, said Whit Milner, executive vice president of The Milner Group, an Atlanta-based insurance broker

Being an impaired risk doesn't mean you can't get life insurance, however. Many carriers will take impaired risks, and a good broker can match an impaired risk to the company that's most willing to write a policy for that particular situation, Milner said. Milner's family has been in the insurance business for six generations, and The Milner Group is the oldest brokerage agency in the United States to do impaired risk.

Different insurers tend to "specialize" in different kinds of risks -- they will be more aggressive in writing policies for a specific condition. "We can look at an applicant's medical background and know which company will be most willing to write a policy," Milner said. For instance, one company specializes in insuring folks with sleep apnea "because something in their research or experience tells them it's not as risky as some other insurers believe," he said. Some conditions, such as the late stages of diabetes, may not be coverable, or the costs could be prohibitive. Sometimes people simply wait too long to apply for insurance and their health has deteriorated too much. But other conditions, including HIV, which used to be considered uncoverable, are now acceptable to some insurers.

An impaired risk presents a higher risk to the insurer, so the rates will be higher than a standard risk. To a large degree, the actual rate will depend on the individual and his or her specific situation. Many companies base rates on a "point system," Milner said. An applicant is assigned a specific number of points for each condition he has, such as diabetes or high blood pressure. The points are tallied and a chart is consulted to determine the rate.

Because so much is riding on the medical history of the applicant, Milner advises those applying for insurance to be frank and upfront when applying for insurance. "The insurer will want as many details as possible. The underwriters have to feel comfortable that they have all the facts. They want to be sure that everything has been disclosed before they write the policy. The more the applicant can tell upfront, the better it is."

He acknowledges that some people are reluctant to release their medical records and suggests the best way to peace of mind is to deal with a reputable agent with whom you feel comfortable.

Approval will be based primarily on three criteria: medical records or reports from personal physicians, a physical exam and a financial background check. People with impaired status often have several doctors -- an internist, a cardiologist, an oncologist, etc. -- which can lengthen the approval process. Delays can occur in receiving records from doctors, and underwriters simply have more records they need to review, so it takes more time. Applicants can help speed the process by providing complete and accurate names, addresses and phone numbers for all their doctors, so that the insurance company can request the appropriate records.

Sometimes, conditions improve and a person can seek lower rates, even get back to standard rates. An obese person could lose a lot of weight and apply for standard rates, for example. With cancer survivors, the passage of time, combined with continued cancer-free status, can result in lower rates.

"If you are ever in doubt that you have too high of a rating, put the ball in your court," Milner suggested. In other words, ask your agent to shop around for a rating or to continue to search for the best rating. "You can always drop the more expensive policy and get a cheaper one."

Milner credits his father, Seixas G. Milner, with being a real pioneer in the impaired risk insurance industry. "When he founded this business, Dad would go to insurance agency managers and suggest they help impaired risk applicants, because those applicants would bring in referrals from lots of other people. Many agency managers saw the wisdom in that," he said.