Does my family health history affect my Life Insurance?edit
Life Insurance is a way to protect the financial future of your dependents – usually your children. It is a policy designed to pay out a lump sum, or regular amounts, in the event of your death.
There are various things that can affect the cost, and the amount the policy pays out. Clearly, your age and current health status are significant. However, one of the most common questions is, does my family health history affect my Life Insurance?
Reminder of what Life Insurance covers
Before exploring why your family health history matters, here’s a quick reminder of what Life Insurance involves.
The fundamental principle is that you make regular payments. The level of these dictates the cover you receive, and the amount of money your Life Insurance policy pays out when you die. You can also set a term for the policy, such as 5 years, 10 years or 25 years. If your death occurs within that timeframe, your dependents can make a claim.
One of the ways to tailor a Life Insurance policy is to structure your level of cover to decrease year on year; usually in relation to a mortgage that is reducing in size. You can also increase your cover year on year, to make sure the money paid out keeps pace with inflation.
Another option is a whole of life policy, that pays out no matter when you die, as long as you make your regular payments. Some people choose this as a way to save for funeral costs or inheritance tax, to reduce the financial burden on their children. Also, keep in mind that Life Insurance can cover just you, or a joint policy covers you and your spouse or partner.
What affects cover in Life Insurance policies?
Your financial goal
One of the things to consider when taking out Life Insurance is how much you can afford to pay each month. You also need to establish a claim amount that will be appropriate.
To be clear, this is not the same as critical illness cover and similar policies that provide you with money when you are unable to work. So, think about how much money would be needed to pay off a mortgage or to provide your partner with an income after your death, for example.
Would a policy that covers funeral expenses be all that is required?
Setting insurance cover is all about ‘risk’. Life insurance providers will look at the factors that increase the risk of you dying within the policy’s term. The risk of you dying clearly increases as you get older and if you have certain existing medical conditions. You will also be asked about lifestyle choices, especially whether you smoke. Even the job you do can affect the cost and cover.
Other information you will probably be asked to provide is the number of dependents you have, and your financial status (in terms of any lending and sources of income.
What about family health history and my Life Insurance?
Another set of questions you will answer when taking out Life Insurance is your family’s health history.
Why do insurance providers need this information?
Again, this is the sort of detail an insurance provider uses to measure ‘risk’. There are some medical conditions classed as hereditary, and others that indicate you have an increased chance of becoming ill due to genetics.
This is the sort of decision made by medical underwriters, who set the terms of Life Insurance policies. For example, if your parents or siblings died of heart conditions or cancer, it could be seen as a measure of your risk and would increase the amount of money you would pay into a Life Insurance policy. Sometimes, the fact that your family members died of significant illnesses after the age of 60-65 makes it less of a concern to insurers.
Also, insurers are usually only interested in the family health history of your parents and siblings. They may not ask for information that stretches back to your grandparents, for example.
One quick tip on making your Life Insurance a reliable source of money for your dependents. You must provide honest and complete medical information when you apply. Including your own situation, and your family’s health history.
If you fail to disclose something, it is one of the main obstacles to successfully claiming Life Insurance.
Finding the best Life Insurance
If you have a life-limiting condition – or a hereditary medical issue in your family – then an insurance provider may decline your application altogether. Every insurance provider has its own criteria and list of pre-existing medical issues that affect policy costs and claims.
If this sounds overwhelming and complicated, it doesn’t need to be. We have partnered with Watts Mortgage & Wealth Management who have a specialist Life Insurance team on hand to offer expert advice on insurance of this type. Including Life Insurance cover that is proportionate to any medical conditions you have, or which feature in your family health history. This enables us to advise you on the best Life Insurance policy to match your needs and expectations.