What is High-Risk Life Insurance?

High-risk life insurance is a type of life insurance coverage that provides benefits to individuals who do not qualify for other types of life insurance plans, owing to some factor or factors that make the risk of insuring the individual a greater risk than insurance carriers are willing to assume. In some cases, the risk involved may have to do with a present and ongoing health condition that the individual currently lives with, or even the type of work or hobbies that the individual engages in on a daily basis. Life insurance rates for this type of coverage is usually higher, and the terms and conditions of the policies are typically more detailed in terms of what type of events are covered and to what degree.

With high-risk life insurance, the scope of coverage for certain known events may be limited for a period of time. For example, if the individual has a medical condition that could result in death, the amount of benefits paid out if death attributed to that condition occurs within the first several years of the coverage may be reduced. In like manner, if the insured party engages in potentially risky tasks as part of his or her profession, death resulting from performing those tasks may result in a reduction of benefits, if death occurs within a time frame defined within the terms of the policy.

Many people with certain health conditions or who engage in certain types of careers may find it difficult to secure standard life policies and turn to high-risk life insurance as a means of providing for loved ones in the event of their death. For example, if work responsibilities consistently place the individual in life-threatening situations, many insurance providers would decline to extend coverage to that individual. By contrast, high-risk life insurance companies would provide the coverage, while taking steps to help minimize the risk involved.

A typical high-risk life insurance plan will require the payment or premiums that are significantly higher than those found with other types of life policies. In addition, the terms and conditions will often be customized to cover the health issues or events that are the source of the additional risk. Those specific issues are still covered from the start date of the policy, but are likely to only be covered for reduced amounts if they result in the death of the insured party within a specific number of years after the policy is written. For example, if the insured party is a rock climber and dies as the result of a fall during a rock climbing expedition during the first five years of the policy, the insurance company may pay a reduced benefit to the designated beneficiaries.