Getting life insurance with a pre-existing medical condition

What is a pre-existing medical condition?

A pre-existing medical condition is generally considered to be a medical condition that existed before you signed up for any new life insurance policy. It could be something that has happened to you and has been resolved, or something that’s ongoing and requires treatment.

Former Financial Services Council’s Policy Director for Life Insurance, Nick Kirwan, told Canstar it was up to individual life insurance companies to determine what they consider as a pre-existing medical condition. The Financial Services Council (FSC) is a peak body in Australia that sets the standards and policies for a range of financial services, including life insurance.

What might be considered a pre-existing medical condition?

Typical conditions, ailments and illnesses that might be considered a pre-existing medical condition include asthma, cancer, depression, diabetes, high blood pressure, heart disease, kidney or liver disease, certain mental health conditions, or a stroke. But it’s up to individual providers to determine.

The important point is that you must disclose any such condition at the time you are seeking a life insurance quote from a provider. And here is where the reforms in legislation, prompted by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, came into effect from 5 October 2020, and are now enforceable.

“The duty of disclosure is changing to a duty to take reasonable care not to make a misrepresentation,” said Mr Kirwan.

“That’s a bit of a mouthful, but we shorten that to a duty to take reasonable care, and essentially that means that a pre-existing medical condition is defined by the questions that the life insurer asks a potential customer. The duty is to answer those questions carefully and to the best of the person’s knowledgeable belief, so if you get asked, ‘Have you ever had a heart attack or cancer?’, that’s what you need to answer.”

That allows a life insurance provider to consider what sort of cover they are willing to offer. They may require you to take a medical examination and tests, such as a blood test. The FSC says a potential provider will normally ask you some questions about your health, lifestyle, occupation and family medical history when assessing your application.

Can you get life insurance with pre-existing conditions?

Pre-existing conditions are dealt with on a case-by-case basis by life insurance providers. It will be up to your provider to determine what level of cover they are willing to provide, whether there may be exclusions, and at what cost in premiums will apply to you.

Diabetes Australia Chief Executive Officer (2012-2021) Professor Greg Johnson told Canstar that life insurance for people with diabetes can be difficult and expensive.

“People with diabetes are encouraged to contact multiple insurers to get the best policy, and those with diabetes may be asked to provide more medical reports and detail than people without diabetes. This additional medical information may help you get the best policy if the insurer understands that your diabetes is being well managed.”

A spokesperson for the Heart Foundation urged people to seek advice from their doctor or health care provider as to the state of their health condition when seeking life insurance.

“Cardiovascular disease is used to describe many different conditions affecting the heart and blood vessels and a person’s diagnosis and prognosis would depend on individual circumstances and the treatment and advice provided by a medical professional.”

How can you apply for life insurance if you have a pre-existing medical condition?

It pays to be upfront about any pre-existing medical condition you think a potential life insurer should know about in advance. Otherwise, in the event of any potential claim, if a provider discovered you had a condition you failed to declare, you or your family may find any payment is reduced or declined.

“It means your loved ones are not going to get that money that you wanted them to have and that’s a terrible outcome,” said Mr Kirwan.

It’s a point echoed by Professor Johnson.

“It is important to be honest and upfront about living with diabetes when applying for life insurance,” he told Canstar. “Failure to disclose a diabetes diagnosis and/or other relevant medical history can void an insurance policy.”

If you accidentally forgot about a condition you later find you should have disclosed, then Mr Kirwan’s advice is to contact your provider as soon as possible. That will allow a potential renegotiation of any life insurance cover.

What if life insurance is declined due to a pre-existing medical condition?

There is always the risk a provider may decline to offer you cover. That could also make it difficult for you if you seek cover elsewhere, because you may be asked by other providers if you have ever had cover declined.

But Mr Kirwan told Canstar there are ways you may be able to get an idea of your likelihood of getting cover in advance, to reduce your risk of having an application declined. His advice is to use an independent financial adviser who has a good knowledge of the various providers offering life insurance and the potential risk they are prepared to take.

“It’s quite common for financial advisers to contact the life insurer’s underwriting team with anonymous details of their customer,” he said.

Potential providers may indicate that, based on the details provided, they would offer life insurance at an increased premium, or they may decline to offer cover. Either way, he said, the decisions are based solely on anonymous information.

“That’s quite common market practice for financial advisers to do that to help their customers,” he told Canstar.

You might find you can still get life insurance cover but that may exclude anything to do with the pre-existing medical condition. Again, that’s why it pays to shop around.

How can you get your own pre-assessment of life insurance?

You may be able to get your own pre-assessment from a potential provider by making an anonymous phone call or online enquiry to a potential provider to outline your pre-existing medical condition. Again, it’s important you be honest about your own health and any family history you think might be relevant to a provider.

You can do this with several potential providers to get an idea of what sort of cover they may be prepared to provide, what premium they may charge or an indication as to whether you’d be declined. But note, this is only a guide based on an anonymous pre-assessment. You may get a different result when you apply in person.

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