Why Does My Family History Affect My Life Insurance?

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Life insurance is one of the most selfless things you can purchase for your loved ones. No one wants to think about death, but planning for it to be better safe than sorry is important. By purchasing term life insurance, you are ensuring that the ones you love will not impacted financially if you died pre-maturely.

Many questions may go through your head as you shop for life insurance. One of the more common questions is: Why does my family’s health history affect my life insurance? You may think to yourself, I’m insuring me, not my parents. Why does it matter if they had health issues?

Your insurance policy premiums are determined during the life insurance company’s underwriting process. Insurance underwriters evaluate the risk to insure a person. They decide if you are insurable or not. The financial underwriting also decides how much coverage you can receive.

Underwriters determine their findings based off information calculated by actuaries. Actuaries (side note: if you’re trying to decide what to go to school for actuaries were ranked as top profession in 2015) use mathematics (probability and statistics) to estimate mortality based on a number of factors. Age, gender, and health are the main variables actuaries calculate. However, not only do they calculate mortality based on your direct health, they also calculate it based on your family’s health history.

What do the underwriters look for?

If anyone in your immediate family (mother, father, siblings) has been diagnosed with any serious conditions such as coronary heart disease, cancer, or diabetes the insurance underwriters would take a closer look at it. These inherited conditions may cause the life insurer to increase your premiums because there is a risk that you could also be diagnosed.

The insurer takes into consideration how many family members were affected with the condition and their age when it was diagnosed. If only one of your relatives was affected, it may have very little, if any, impact on your premiums. If any of these conditions were diagnosed late in life (after age 60 or 65) most insurers would completely disregard them and it would have no impact on your premiums. Another instance in which a diagnosed hereditary condition would not affect your life insurance is if the condition is sex-related. For example, if there is a history of ovarian cancer in your family but you are male, underwriters would not consider this an issue.

While “calculating mortality” sounds grim and it may seem cruel to raise your life insurance premiums because of your family, this is the world of insurance. If your father had heart disease, there is a higher risk associated with you. You may consider this to be unfair, but, like any business, insurance companies need to price their products appropriately in order to survive. They would lose money quickly if they gave a person with no family history of cancer the same premium as someone whose sibling was diagnosed with cancer.

What if I am adopted?

If you are adopted and are not sure of your family history, you would just need to inform the insurance company on your application that you are adopted. They will not penalize you for this. They would underwrite your application based off of your health history alone.

What if I omit family health issues?

Do not attempt to falsify or purposely omit medical issues from your life insurance application in hopes of getting cheaper life insurance premiums. The insurance companies have access to MIB (Medical Information Bureau) reports. In these records from your health providers it is very likely the missing information from your life insurance application would turn up, including your family medical history. When the insurance company discovers the information, they are just going to raise your premiums anyway. In the extreme, they may decide to decline the application altogether if it’s revealed that your application has many missing disclosures. If you do get away with lying on your application and it’s approved, keep in mind that the insurance company also investigates death benefit claims. If it is discovered that you lied to get your policy, the insurance company can reduce or even completely deny any payout to your beneficiaries. The best thing to do when applying for life insurance is to be honest and assume that everything you put on your application will be investigated.

Does underwriting family history vary by insurance carrier?

Yes, all insurance carriers follow a different set of underwriting guidelines. For instance, some insurance carriers may only underwrite taking the parents’ history into consideration and your siblings’ medical issues won’t impact your premiums. Some life insurance carriers will give you a Preferred Plus rating even if one of your parents had a serious medical condition but did not die from it before the age of 60, while another carrier may tell that same applicant that they are a standard rating.

These few examples are why it’s best to be completely honest on your life insurance application in all regards including your family’s medical history. If you are currently shopping for life insurance, there are great websites like Quotacy where you can get free term life insurance quotes instantly without having to give up any personal contact information. The longer you wait to get life insurance, the more costly it’s likely to become. Term life insurance is extremely affordable, so don’t wait. This is one thing that you may wish you didn’t put off until tomorrow.

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