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Impaired life insurance, critical illness cover and income protection

The facts about getting impaired life insurance

Impaired life insurance includes any person who may not be able to make a standard application due to medical conditions, hazardous occupations or high-risk hobbies. As these factors could lead to a reduced life expectancy, insurers view them as higher risk. Impaired life insurance rates and terms will vary depending on your risk factors, but most will have an increase in premium or special terms like ‘exclusions’. Any application for impaired life insurance will require you to provide further details of your risk factors such as your medical history, working conditions or hobbies.

What does Impaired life insurance cost?

The cost of your impaired life insurance cover will vary depending on your risk factors. For pre-existing medical conditions, you will need to provide full details of your medical condition (e.g. type 2 diabetes). For hazardous occupations or hobbies, impaired life insurance will require you to provide details of your higher risk activities.

Your premiums for Impaired Life insurance will also depend on:

  • Sum assured (£’s)
  • Term of cover (years)
  • Type of policy (e.g. Family, Mortgage, Whole of Life etc.)

Impaired life insurance rates/ratings

Any impaired life insurance will likely have an increase in premium due to the higher risk of claims. This will vary between life insurance companies and some health conditions may be able to receive more favourable terms than others. It is important to remember that higher risk clients could obtain impaired life insurance from another provider if their impaired life insurance cover has been declined elsewhere.

Percentage (%) loading for Impaired life insurance

Any non-standard application for impaired life insurance will likely have an increase in premium or special terms. Percentage loading will raise your impaired life insurance premiums by a set percentage to accommodate high risk factors. This will vary between insurance companies due to their own underwriting criteria for impaired life insurance.

EXAMPLE:

Basic premium
% loading
Final premium
£20.00 50% £30.00
£20.00 100% £40.00
£20.00 150% £50.00
£20.00 200% £60.00
£20.00 250% £70.00

Per mille loadings for Impaired life insurance

‘Per mille loading’ is a loading method that is rarely used and often only relevant to very severe medical conditions. ‘Per mille loading’ would raise your impaired life insurance premiums by a set amount (e.g. £1, £2) per thousand £’s of cover. As this is quite rare, you are unlikely to see ‘per mille loading’ applied to your impaired life insurance cover. ‘Per mille loading’ can be very flexible, as insurance companies can choose to apply it for a specified period rather than just full-term.

If you are considered higher risk or have pre-existing medical conditions, you may have an ‘exclusion’ applied to your impaired life insurance cover. This would prevent your from claiming against your impaired life insurance policy for anything related to your high-risk factors (e.g. Medical condition, occupation, hobbies). ‘Exclusions’ are often very strict, so it is important you check your policy closely and are aware of what will be covered by your impaired life insurance. An ‘exclusion’ could also affect your eligibility to access additional benefits such as Total and Permanent Disability, Waiver of Premium and Guaranteed Insurability.

We can’t tell you how much impaired life insurance to apply without knowing your personal circumstances. However, we can offer a few guidelines to help you with your decision. It is important to remember that your impaired life insurance cover could increase after underwriting and this could affect how affordable your policy will be.

  • The amount left to pay on your mortgage.
  • Any outstanding debt (e.g. Loans, second charge, credit cards and other)
  • Dependants
  • Spouse or Partner
  • Annual Income (after Tax)
  • Any financial assets (e.g. car, house, business etc.)

If you feel unsure or require more information to decide how much impaired life insurance you will require to secure your family and home, see our Iam Insured insurance calculator [LINK].

Critical illness cover is a type of impaired life insurance that will provide policy holders with a tax-free lump sum if they become unable to work. People seeking this sort of impaired life insurance may have some difficulty depending on their high-risk factors. Any non-standard application for critical illness cover will require medical evidence or further details. Time off work in the past due to health conditions could lead to an increase in premiums or ‘exclusions’ applied to insurance cover. When considering how much impaired life insurance critical illness cover you should apply for, think about:

  • Your annual Income (after Tax)
  • Mortgage/rental payments (annual)
  • Cost of living (annual)
  • Any other potential costs (e.g. medical treatment or adaptations)

Income protection provides monthly payments if you become unable to work. This type of impaired life insurance will require medical evidence or further details. People with higher risk activities or medical conditions may need to seek out a specialist insurer in order to obtain this type of impaired life insurance. Rates and terms will vary, and income protection impaired life insurance may have an increase in premiums or ‘exclusions’ applied. Some things you should consider when choosing an amount of income protection are:

  • Monthly income (after tax)
  • Mortgage/rent payments
  • Debts (other)
  • Cost of living

Which insurance companies offer Impaired life insurance?

Depending on your medical conditions or risk factors, impaired life insurance can be available at standard rates or terms. For more complex cases, such as severe medical conditions, you may benefit from seeking out a specialist impaired life insurance company.

Iam Insured are an impaired life insurance specialist, authorised and regulated by the financial conduct authority. To speak with a member of our expert team, call us now on [TELE] or send us an email [EMAIL].

Impaired critical illness cover and income protection providers

Many people can obtain an impaired life insurance critical illness or income protection policy. This will vary dependent on your high-risk factors or health conditions and could lead to your impaired life insurance cover being declined. You may benefit from consulting a specialist insurance company, like Iam Insured, if you have been declined for impaired life insurance cover in the past.

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