Life Insurances are important financial tools that help us manage the inevitable ups and downs of life, love and business. They're an easy cost-effective way to safeguard our unpredictable futures, just in case.
But many people leave it too late to prepare for the unexpected and get their insurances in place, many suddenly finding themselves Uninsurable.
So when might it be too late to get insurance?
Read in this article
- Life in plastic always looks fantastic
- More Australians are finding out they're fast becoming Uninsurable due to surprise health conditions and late decisions to get their personal insurances in place
- Protecting yourself from life's big risks - that’s personal
- When you’re told you're Uninsurable - that’s not personal, just statistical
- Why should you care?
- Imagine if you could never get Car or Home Insurance to reduce your financial risks.
- Imagine if you could never get Travelers Insurance to reduce your financial risks.
- Imagine if you could never get Life Insurance and how that could affect your life and relationships.
- What are fast becoming the Uninsurable Health Conditions of 2023?
- Understand COVID-19 does not affect everyone equally
- Case studies with COVID-19 implications:
- Love takes action
- What can you do today?
- FAQ's
- I'm young and healthy. Why should I worry about getting life insurance now?
- What does it actually mean to be 'uninsurable'?
- Will a minor health issue stop me from getting insured?
- You talk about a "Ken & Barbie lifestyle of denial." What do you mean by that?
- If I've been declined for insurance once, does that mean I can never get it?
- Sources & Further Reading
Life in plastic always looks fantastic
The famous Barbie doll was first released by the American toy company Mattel, Inc. in March 1959 and Ken, her male counterpart, was introduced as Barbie's boyfriend on March 11, 1961.
In 1984, Ken got his very first car, the Dream 'Vette. In 2004, Barbie and Ken broke up after 43 years of dating. And lastly, after seven years apart, Barbie and Ken got back together on Valentine's Day 2011 — and they have been together ever since.
For many people growing up in the 80's, the enviable future for anyone was a Ken and Barbie lifestyle. For the rest of us, life happens and we have to adapt.
More Australians are finding out they're fast becoming Uninsurable due to surprise health conditions and late decisions to get their personal insurances in place
The problem of becoming ‘officially uninsurable’ is a growing threat for many Australians, their families and businesses, but many just don't know it yet.
Protecting yourself from life's big risks - that’s personal
Life Insurance policies are designed to financially compensate you and your family against the possible future loss and financial impact a sickness or injury, (or even an unexpected death), can have on you, your loved ones, and even your business.
Life Insurances can financially compensate you for:
- Temporary loss of income, due to an unexpected sickness or injury
- Permanent loss of ability to work, due to an unexpected disability
- Major medical crisis events (from breast and prostate cancers, strokes and heart attacks, to advanced dementia), even
- Unexpected Terminal Illness or Loss of Life.
Pro Tip: Insurance is designed to protect us all before the unexpected occurs. This creates a problem for those folks who think they can time the investment markets, guess when they might get sick or injured or have an advanced warning when they might unexpectedly pass away believing they will always have sufficient time to make backup plans, just in time.
When you’re told you're Uninsurable - that’s not personal, just statistical
People use Life Insurances to help protect against the unknown risks of life, but once those risks become known and predictable, we all can find ourselves becoming partially or totally uninsurable.
People usually only find out they’ve become uninsurable after they’ve applied for and been declined cover for a particular type of insurance.
- This bad news can have a terrible impact on how we live our life, how we see future opportunities, and our ability to protect and provide for those we love or may later love.
- It can also play havoc with protecting business loans, and partnerships and even securing finances for a franchise or a large business loan.
Why should you care?
Taking out some form of insurance to offset our day-to-day risks of life is something most Australians take for granted.
Whether that's insurance for a new phone, a car, or something bigger, using insurance to safely manage our risks is part of what we do.
Imagine if you could never get Car or Home Insurance to reduce your financial risks.
- If you were unable to insure a car, you probably would never drive a car on the street.
- If you couldn't ever get a Compulsory Green Slip Third Party insurance policy, you wouldn't even be allowed to register a car in your own name
- If you couldn't ever get insurance for your home, you probably would think twice about getting a mortgage for a big fancy home, living in a flood or bushfire risk area or ever leaving home to go to work.
Imagine if you could never get Travelers Insurance to reduce your financial risks.
- If you were unable to get Travel Insurance, you’d have to think twice about the risks of getting sick or injured in a foreign country with no health care available. A broken leg in the USA (without traveler's insurance) could see you going bankrupt. A broken leg in a developing country (with a resulting bone infection) means you risk being unable to fly home. And if you couldn't travel for work, would that impact your employability?
Imagine if you could never get Life Insurance and how that could affect your life and relationships.
- If you were unable to get Income Protection Insurance, how would your spouse feel about taking out a joint mortgage, especially if they only worked part-time so they could be a carer and homemaker?
- If you were unable to get Permanent Disability Insurance, how would a potential future business partner feel about choosing to work with you but having to shoulder all the risk of a business debt themselves?
- And if you were never able to get Income Protection Insurance cover, how would you manage to pay the rent, the mortgage or credit card, and car payments when they fell due if an unexpected sickness or injury stopped you from working? You could be living just one missed loan repayment away from losing everything
When you stop and think about it, not being able to get a Life Insurance policy can be a disturbing thing to consider, and you can see how tempting it would be to start to live a smaller life?
What are fast becoming the Uninsurable Health Conditions of 2023?
The current health conditions that can make you uninsurable include;
- Unstable type 1 Long Term Diabetes - HbA1c readings higher than 7 and the longer the diagnosis, make you harder to insure
- Past cocaine use and current high blood pressure - expect at least 6 years of required non-use and a clear heart scan, before you may even consider qualifying for limited insurance cover
- Long COVID-19 Fatigue - as fatigue can be a claimable event for Income Protection or TPD insurances - this can make you uninsurable
Understand COVID-19 does not affect everyone equally
The COVID-19 virus has created an additional layer of scrutiny by Life Insurance Underwriters for people with;
- heart related risks or known issues,
- people who were previously using cocaine (due to benzene and lymphoma complications being seen in the big data - a growing COVID-19 survivor related risk),
- people with a Long COVID-19 related ongoing fatigue.
All Life Insurance companies have different commercial limits and when something has an unknown origin or outcome, they usually don't like to insure that scenario.
Case studies with COVID-19 implications:
The problem of waiting too long to get Life Insurance
A client's daughter was starting school in 12 months' time so they decided to wait 12 months before getting life insurance in place.
- But during the 12-month wait, the client changed their long-term medications and sadly suffered a mini-stroke as a result. While they recovered, the new stroke event, in combination with other health issues, meant they were now classed as uninsurable.
The problem of past partying and current COVID-19
A client has previously used cocaine and other recreational drugs but later changed their life after they changed relationships and joined a gym.
- While a number of years had passed since their last recreational drug use, because they were now vaping and had recently tested positive for COVID-19, they were classed as having a heightened risk for lymphoma - statistically common for cocaine users - and therefore in combination, were classed as uninsurable.
The problem of a partial recovery
A professional emergency worker tested positive for COVID-19 but later more or less recovered and returned to work. Months later after the arrival of a new child, they decided it was time to get their Life Insurances, sorted.
- But while they had recovered from COVID-19, they still had residual long COVID-19 fatigue and therefore were classed as uninsurable.
- A partial recovery is not a full recovery
Love takes action
The easiest way to make sure we all have a backup plan in place to protect us against the overwhelming risks of life, is to insure against those common risks - but first, we must acknowledge that they actually exist, are a risk to our lives and need us to take action.
What can you do today?
COVID-19 does not treat everyone equally and when combined with other health events long COVID-19 fatigue can make it difficult - if not impossible - to secure a Life Insurance policy today.
- If 2021 has taught us anything, it's that anything can happen to anyone - life comes at you fast and we all need a backup plan, just in case.
If you have people depending upon you, if your income drives your lifestyle, if you have debts and dependants, if you're in business and are part of a team, take action today to make sure you have a backup plan in place, while it's still available to you.
Don't put off making important life decisions and expect a ‘wait and see attitude’ will be in your best interests.
Talk with the experts at Sapience Financial, about your options today.
FAQ's
Your Personal Uninsurability Questions, Answered. Here’s a quick summary of what you need to know about the problem of becoming personally uninsurable.
I'm young and healthy. Why should I worry about getting life insurance now?
That's the best time to get it! Think of it this way: you can only insure against the unknown. Once a health issue pops up—whether it's a surprise diagnosis, a mental health condition, or even something like long COVID—the risk is no longer unknown. At that point, an insurer may see you as too high-risk and either charge you a fortune or, worse, decline to cover you altogether. Securing comprehensive cover when you're young and healthy is the smartest and most affordable way to protect your financial future against whatever life throws at you.
What does it actually mean to be 'uninsurable'?
Being uninsurable simply means that insurance companies have assessed your health and lifestyle and decided the risk of you making a claim is too high for them to take on. This isn't just for major, life-threatening diseases. It could be due to a combination of factors, like a history of mental health issues, a chronic condition like poorly managed diabetes, past drug use, or even new and unpredictable conditions like post-COVID fatigue. It means the door to getting new life, disability, or income protection insurance is effectively closed, and you're left to face any future financial shocks on your own.
Will a minor health issue stop me from getting insured?
Not necessarily. A minor, well-managed condition might not prevent you from getting cover, but it often results in a "loading" (a higher premium) or an "exclusion" (where the policy won't pay out for claims related to that specific condition). The real danger is in the unexpected. A routine doctor's visit could uncover something you never saw coming, and that's when the door to insurance can slam shut. That's why we say the time to act is always now, while your health is good.
You talk about a "Ken & Barbie lifestyle of denial." What do you mean by that?
It’s a metaphor for the tendency we all have to think "it won't happen to me." We plan our careers, our holidays, and our mortgages, but we often put off planning for the unexpected because it's unpleasant to think about. We live as if we're invincible, like Ken and Barbie, denying the reality that anyone's health can change in an instant. This denial is incredibly dangerous because it leads to inaction, and people often only realise the importance of insurance when it's already too late.
If I've been declined for insurance once, does that mean I can never get it?
Being declined once makes it much harder, but not always impossible. It depends heavily on why you were declined and whether your circumstances have changed. For example, if you were declined due to unstable blood pressure that is now well-managed, there might be an opportunity to re-apply. However, this is a complex process and requires a specialist adviser who knows how to present your case in the best possible light. But honestly, the far better strategy is to get your cover in place before anything gives an insurer a reason to say no.
Sources & Further Reading
- Moneysmart - What you need to tell your insurer This guide from ASIC explains the legal 'duty to take reasonable care not to make a misrepresentation'. It highlights why you must disclose your full health history when applying, as failing to do so can result in your policy being cancelled or a claim denied.
- APRA - Life insurance claims and disputes statistics The Australian Prudential Regulation Authority (APRA) publishes official data on the life insurance industry. These statistics provide context on claim admittance rates and disputes, reinforcing the importance of having a valid and secure policy in place.
- Parliament of Australia - Inquiry into Long and Repeated COVID This report from a parliamentary inquiry details the debilitating and unpredictable nature of long COVID. It provides an official source supporting the article's use of long COVID as a key example of a new, unforeseen health condition that can make a person uninsurable.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
