Whole Life Insurance for Pre-Existing Conditions

Whole life insurance is a permanent coverage policy that lasts, as the name suggests, for a lifetime, provided you do not default on the agreed premium payments.  

Although one of the primary factors that impact the cost of whole life insurance is the amount of coverage you need, pre-existing conditions may also influence the premiums–making it essential to understand all of the life insurance information and terms before making any decisions.

Life insurance providers underwrite each policy they offer, which involves an assessment of multiple elements, such as:

• Your age at the time of purchasing the policy
  
• Your income, occupation, and requested coverage amount
  
• Your health and any pre-existing medical conditions
  
  

You can be asked to complete a questionnaire and the policy could be later be rescinded if the carrier determines that you did not report a confirmed condition or healthcare concern that would have affected your eligibility for your chosen whole life policy or the premiums offered by the carrier.

End-of-life expenses such as funeral and hospital bills can be costly, and when a partner dies, the widowed spouse often has to cover all these payments. Having life insurance can help lighten the financial load.

Some whole life insurance policies may be offered without a medical exam – instead insurers rely on answers in the health questionnaire, which can still be a good indicator of someone’s health, tobacco usage, occupation, and medical history. However, any medical condition that could potentially affect the duration of the policy or the date at which the insurer needs to pay out the death benefit could affect your options.

While your premiums will reflect the value of the coverage you have requested, a person purchasing whole life insurance for grandchildren or who has a chronic condition, for instance, may have a lower life expectancy than a younger applicant – and thus their premiums would likely be higher because they would, in theory, pay for the policy for less years. 

If the insurer does not anticipate that the person will have sufficient life expectancy to complete the premium payments needed to purchase the requested level of coverage, they may decline to offer the policies or may need to increase the premiums.

Depending on your selected life insurance policy and carrier, you may be asked to disclose any health conditions. Alternatively, you might be asked to complete a questionnaire that asks if you have been diagnosed with or have a family history of specific conditions, which could include:

• Heart disease 
• Asthma 
• Diabetes 
• High cholesterol 
• Any mental health conditions 
• Arthritis 
• Parkinson’s disease 
• Cancer 

A pre-existing medical condition may mean that whole life assurance will cost more, but you may also be able to purchase a type of guaranteed life insurance policy that is less impacted by your health status.

Is life insurance a business expense for self-employed policyholders? Not in most cases, as the IRS excludes life coverage premiums from its permitted tax-deductible expenses, unlike health insurance. That said, if a company decides to purchase whole life coverage as an employee benefit, it may be able to offset the policy premiums against business taxation obligations–provided the business and owner do not directly benefit. 

We would advise seeking advice from a professional tax adviser should you wish to examine the options in greater detail because, in general, life insurance is not treated as a cost of doing business.