It wasn’t so long ago that people with HIV or AIDS couldn’t get life insurance. Or, if they could, their options were extremely limited, and their premiums would be very high.

Those days aren’t completely in the past, but the insurance industry has taken a large step forward when it comes to life insurance for HIV positive people. Prudential is chiefly responsible for that thanks to a move it made late last year.

The move in question saw Prudential, along with reinsurer Munich Re and an organization called Aequalis, start selling 10- and 15-year individual convertible term life policies to people who have HIV. (“Convertible” in this case means policyholders eventually can switch to permanent life coverage.)

That’s a big deal because a lot of Americans are living with HIV. Specifically, the Centers for Disease Control and Prevention estimates that number to be more than one million.

Another reason it’s both news- and noteworthy: the insurance industry has ignored the HIV-positive population for decades, says Mike McFarland, chief underwriting officer for Prudential Individual Life Insurance. “For 30-some years, the approach most insurance companies have taken has been: if you see an individual who is HIV-positive, you decline them because the life expectancy is too short to insure them.”

A ‘Daunting and Complex Proposition’

Along with the above, McFarland points out that offering life insurance to people with HIV is a “daunting and complex proposition” when asked why Prudential and other providers have taken so long to enter this market.

“If you’re going to do this, you need valid mortality data in order to price your products appropriately,” he explains. “And that’s very difficult to come by, as we found out.”

In fact, Prudential first considered offering life insurance to people with HIV four or five years ago. “We looked at the clinical data and then we carved out what we thought would be a profile of an insurable life,” McFarland says. “When we finished all of that work, though, we had no way to validate it. Because nobody in this marketplace had ever done it before.”

The regulatory environment surrounding the HIV-positive population and its size were issues too. In regard to the latter, Bill Grant, Aequalis’ president and one of its founders, shares that of the 1.2 million people living with HIV in the US, only about 900,000 are aware of it. And just 150,000 or so “have the need, financial resources, and good health to be in a position to acquire life insurance.” That’s not a very large market for carriers to target “given the time, work, and expense involved.”

Who Can Buy These Policies?

Not just anyone can buy Prudential’s policies, which offer death benefits between $100,000 and $2.5 million. For example, only people who are 30 to 60 years old are eligible.

Here are some of the other underwriting criteria people interested in this product have to meet:

  • It must have been more than a year since they were diagnosed with HIV
  • It has to have been more than six months since they started Antiretroviral Therapy
  • They can’t have had an "AIDS-defining condition" (which covers a number of opportunistic infections and cancers that are life-threatening for people with HIV)
  • They must be free of Hepatitis B, Hepatitis C, tuberculous, or nontuberculous mycobacteria

Additional underwriting terms are tied to blood cell counts and viral loads.

And then, of course, they have to be able to afford it. That’s sure to be easier said than done for some folks. Consider the following: Prudential says your average 45-year-old, non-smoking male pays about $750 for a comparable 10- or 15-year term life policy. The same person with HIV, though, pays around $6,000.

‘Just the First Step’

Wondering why Prudential limits its offering to people between the ages of 30 and 60? Aequalis Co-Founder and CEO Andrew Terrell shares that “few people under 30 purchase fully underwritten insurance of $100,000 or greater. And those who do “tend to do so using group plans offered by their employer, or smaller policies offered on a simplified issue, non-underwritten basis.”

As for the over-60 set, “there is a much higher degree of uncertainty as to their ultimate longevity,” he adds. Because of that, “pricing that risk on an affordable and value driven basis” is a challenge.

That’s unlikely to be true forever. Which explains why McFarland says, “this is just the first step. We expect to broaden this coverage. As the medical science and treatment protocols continue to improve and the life expectancy continues to improve, we’ll insure more people and we’ll offer them more products.”

In the meantime, McFarland and his colleagues at Prudential will work to mend relationships with the HIV-positive community. “If you look at this from their perspective, many people with HIV probably think, ‘I don’t trust insurance companies. They turned their backs on me for 30 years, why should I care about them now?’

“Changing those beliefs isn’t easy,” he adds. “It takes some time and some convincing. But we believe it can be done.”