Life Insurance Blog

Does a previous illness make life insurance more expensive?

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Life insurance is designed to cover the family if a person dies or becomes disabled, and therefore the person’s life expectancy is very important. One of the main things that can influence a person’s life expectancy is their past health.

If a person has been diagnosed with a disease in the past, even if there’s been a full recovery, this tells a life insurance company two important things. The first is that this person is, on average, more likely to be diagnosed with this disease or another, related one in the future. The second is that this person may have, on average, a less healthy lifestyle or constitution. Statistically speaking, the effect from the previous disease may actually be quite minor for a single person. But it’s important to realise that these are averages rather than individual predictions, as life insurance only calculates from averages and not individual lives.

Life insurance can become more expensive if a serious disease has been diagnosed, but to a large extent it depends on what the disease was and how long ago the diagnosis took place. If the disease has a high probability of recurring, such as leukaemia that’s gone into remission, then the question on a life insurance application will be whether the disease has ever been diagnosed. But if there’s a lower probability that it will recur, such as an infectious disease, then there will be a time limit to the question, and it will be asked if the diagnosis happened in the last five or ten years.

There will also be questions about general health, such as the number of days the applicant has taken off due to illness, which could take the questionnaire down to very minor maladies over the last one, two, or three years.

It’s important to answer all of these questions accurately. Although truthful answers will increases a person’s life insurance premium, untruthful answers will put the person’s family at risk, as the payout is likely to be refused because the life insurance policy will be deemed to have been obtained by fraud.

If a person has been diagnosed with a disability, the payout may need to be reduced or the premiums may need to be raised. If a person is diagnosed with a condition after the life insurance policy has been written, and there was no previous indication that the diagnosis was likely, then the life insurance premiums and payout will remain the same.

It may be necessary for some people with a serious diagnosis to obtain life insurance from a specialist provider. This can often be done through life insurance brokers.

Stephen Handley
Stephen Handley
My name is Stephen Handley. I have over 20 years experience in IT, Project Management and Financial Services. By combining this experience, I hope to make it easier for Australians to find good quality and affordable life insurance. Furthermore, I am not connected to any life insurance company. So, in the unfortunate event of a claim, you'll have someone in your corner, representing your interests.