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Popular myths about life insurance and pre-existing conditions

Don't let common misconceptions stop you from getting the right policy.

Dawn Daniels

Updated Apr 27, 2020

Fact checked

There’s a lot of misinformation when it comes to life insurance — especially for customers with pre-existing conditions. Learn what to expect when applying for a policy so you can get the best deal.

Life insurance myths

There’s a lot of confusion around life insurance. While it can be a complex product, it has a simple purpose: to provide for your loved ones when you’re gone.

These are some of the most common myths about life insurance:

- Most Americans think term life insurance costs three times as much as it actually does, according to LIMRA’s Insurance Barometer Study. When the respondents were asked to estimate the cost of a $250,000 policy for a healthy 30-year-old, over half of them said $500 a year or more. The average cost is closer to $160 a year – or approximately $13.30 a month.Each provider has its own underwriting standards, so rates can vary. If you’re ready to purchase a policy, be sure to compare providers to get the best possible deal.
- Traditionally underwritten policies require a medical exam, but they’re not your only option. If you need coverage quickly or want to avoid a medical exam for whatever reason, you can look into no-medical exam life insurance.There are two main types: simplified issue policies ask you to fill out a health questionnaire of yes or no questions, while guaranteed issue policies forgo both the questionnaire and medical exam. However, since the insurer can’t get a complete picture of your health, these policies are typically more expensive.
  If you decide to go with a cheaper policy that requires a medical exam, you can choose to take it at your home, office, or another place where you feel comfortable.
- Many employers offer free or cheap life insurance as part of their employee benefits, which is great. But there are a few caveats. Firstly, it’s not portable – so if you change jobs, you’ll lose your coverage. Secondly, group life insurance usually capped at a small amount, like twice your base salary. To put this into context, most financial experts recommend purchasing a policy valued at five to ten times your annual salary.If you have debt, a mortgage, or loved ones relying on your income, the insurance offered through your workplace may not be enough. In that case, you might want to take out a separate life insurance policy to make up the difference, or ask your employer about supplemental policies.
- While there are a range of life insurance policies on offer, term life insurance is the best choice for most people. And it’s the cheapest and most straightforward policy.Term life policies provide coverage for a set period of time, like 10, 20, or 30 years. You get to choose the term, as well as how much coverage you want to buy. The premiums stay the same, so you know exactly how much you’ll pay each month. And when you die, your beneficiaries will receive a payout. If you outlive the term, you can purchase another policy or simply let your coverage lapse.
  If you’re looking for lifelong protection, there are three main permanent policies: whole life, universal life and variable life. Like term life, these policies pay a death benefit, but they also build cash value over time. As a result, permanent policies are more of an investment – and they have a higher price tag to match.
- In the US, the average full-service funeral and burial costs around $9,000, which is why many insurers offer final expense policies. Usually marketed to seniors, these policies are designed to cover end-of-life expenses, and coverage typically starts at $5,000 and tops out at $25,000.If that’s all you can afford and you don’t want your family to pay for your funeral, this policy checks those boxes. But if you have debts or loved ones who rely on your income, you might want to take out a larger policy that covers those financial obligations. This will ease the financial burden on your beneficiaries if you die.
- If you’re overweight or dealing with a health condition, you might think you’re not eligible for coverage. But the key is to shop around and compare rates from a few insurers. Each insurer has its own set of underwriting standards, and some are a lot stricter than others.If you’re still struggling, consider working with an independent broker who specializes in high-risk applicants. They’ll be able to guide you towards lenient insurers, and help you with your application.
- Some insurers won’t cover people with a history of heart disease, cancer or diabetes, and others will hike up their rates. While a pre-existing condition can create a barrier, it doesn’t mean you’ll automatically be denied coverage.If you have a health condition working against you, be honest and upfront in your application, and apply with a few insurers. You might also consider asking an insurance broker to pair you with a provider who specializes in your condition, and can better assess your risk factors.
- Permanent policies have “living benefits,” which means you can benefit from them while you’re alive. This comes down to the cash value component. When you pay your premium each month, a portion is invested to give your policy a cash value. Once you accumulate enough cash value, you can start to take out tax-free loans against your policy, and use the money to fund large expenses like home renovations or college costs. You can also surrender your policy and collect the cash.
- It’s true that life insurance mostly benefits people who have financial dependents. But if you’re a single person who has student loans, a mortgage or other debts, a life insurance policy can cover those expenses when you die so they’re not passed on to your family. On the same note, if you have children or ageing parents, a policy can give you the peace of mind they’ll be taken care of when you’re gone. And finally, if you want to pay for your own funeral, the death benefit can cover those costs.

Can I get life insurance if I have a pre-existing condition?

Possibly, but it depends on your condition and your insurer. Most providers have a list of pre-existing medical conditions that they will provide coverage for, and many insurers can adjust policies or premiums to provide coverage to people with pre-existing conditions.

But some insurers outright refuse to cover customers with certain pre-existing conditions, so it’s a good idea to contact the insurer you’re interested in directly to find out if they’re willing to cover your condition.

Myths about life insurance if you have a pre-existing condition

If you have a pre-existing condition, there’s a lot of additional misinformation floating around, like:

I won’t be able to get insurance coverage. Many people with pre-existing medical conditions are able to get coverage, though it may cost a bit more.
If my application was denied, I’ll never get coverage. Policy features and coverage limits differ between providers. Just because one insurance company excludes your condition doesn’t mean that all other companies will do the same.
I don’t need to tell my insurer about a condition that occurred a long time ago. It’s essential that you make your provider aware of any condition that may affect your application.

What happens if I don’t tell my insurer about my pre-existing medical condition?

In the event that a claim is made, insurers go to great lengths to ensure that the claim was not a result of any known conditions that should have been made clear during the application.

If it’s found that information was withheld during application, the insurer will reject the claim and there will be no payment made or refund of any premium payments.

Compare life insurance for pre-existing conditions

Name	Issue Ages	Minimum Coverage	Maximum Coverage	Medical Exam Required
LadderLife™ Life Insurance	20 - 60 years old	$100,000	$8,000,000	No	Term life insurance with no policy fees and the freedom to cancel anytime. Simple application process that can get you approved for coverage instantly.	Go to site More Info	Compare	loading Fetching your data...
Policygenius	18 - 85 years old	$10,000	$10,000,000+	Depends on provider and policy	Compare affordable quotes from 12+ A-rated life insurance companies side-by-side.	Go to site More Info	Compare	loading Fetching your data...
Quotacy	18 - 80 years old	$50,000	$25,000,000	Depends on provider and policy	Get a quote within minutes from more than a dozen insurers.	Go to site More Info	Compare	loading Fetching your data...
Fabric	25 - 60 years old	$100,000	$5,000,000	No	Get affordable term life insurance with accelerated underwriting or no-exam coverage up to $1,000,000. Available in all states except CA, NY and MT.	Go to site More Info	Compare	loading Fetching your data...
Sproutt	18 - 100 years old	$50,000	$3,000,000	No	This life insurance broker combines technology and the human touch to match you with a policy tailored to your needs.	Go to site More Info	Compare	loading Fetching your data...
LeapLife	18 - 75 years old	$100,000	$5,000,000	Depends on provider and policy	Apply for a simple instant-decision policy free of charge. Compare quotes from multiple A-rated carriers.	Go to site More Info	Compare	loading Fetching your data...

Compare up to 4 providers

Bottom line

There’s a lot of misinformation floating around when it comes to life insurance, especially if you have a pre-existing condition. It is possible to get coverage, but you may have to put in a little extra work to find the right policy.

If you’re ready to get started, compare life insurance companies to find a policy that fits your needs and budget.

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Dawn Daniels

Dawn Daniels is an assistant publisher with Finder, based out of Oregon. Her background includes editing more than 40 published books, including Financial Fitness: 21 Easy Exercises to Get Your Personal Finances in Shape Fast by Dr. Vi Scott. In her spare time, Dawn enjoys hiking ridiculous distances and collapsing in exhaustion.

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Popular myths about life insurance and pre-existing conditions