Howard Ublansky had no idea how much the simple task of taking out an insurance policy would change his life. In 2002, the 37-year-old owner of a book distribution company purchased a house in Thornhill, Ont., north of Toronto. As the family’s main breadwinner, he applied for $500,000 in mortgage life insurance to protect his wife and three young children if anything should happen to him. In keeping with the standard insurance process, he underwent a medical exam and provided some blood samples. No problem—until Ublansky received a letter from the insurance company denying him coverage. It turned out he had diabetes. “I had no idea,” he says. “My wife was very upset. She was saying, ‘What am I going to do if you die? I’m going to be out on the street.’”

Paul Knapp got a similar shock early in 2007. The 41-year-old wanted half a million dollars in life insurance to supplement the group coverage he gets through his employer, a downtown Toronto law firm. Knapp has an 11-year-old daughter who has lifelong special needs and “I wanted to make sure that there were funds available in the future should I not be on the scene anymore,” he says. But Knapp flies planes for a hobby. “That had a dramatic effect on the premiums,” he says. His quotes were at least double the standard rates, and one was almost triple. Knapp was left debating whether he was willing to give up the flying hobby he loved to get the insurance he needed.

Such situations are more common than you may realize. About one in 10 people who apply for life insurance are deemed to be higher than normal risk because of a medical condition or lifestyle choice. What can you do if you find yourself—like Ublansky and Knapp— being declined for coverage or quoted rates you can’t afford?

It helps to learn how life insurance works. Unlike property insurers, who can always raise your rates after you file a claim or two, life insurers are locked into whatever rate they quote you when you take out a policy. If you develop cancer six months after signing up for a 20-year term policy, your premiums for the rest of the term don’t go up after the diagnosis. The insurer is on the hook—and thus the insurer tends to be very cautious when you first apply for a policy.

Life insurers begin by asking your age, your sex, and whether or not you smoke. They use this information as a first step to determining whether you qualify for standard insurance rates. You can do this yourself at websites such as Kanetix.com or Insurance Direct Canada. If you’re a 42-year-old female non-smoker who wants a 20-year term policy for $500,000, you’ll find that your standard rate is approximately $60 a month. If you smoke, you can double that.

To actually get a policy, you will have to answer many more questions about your health, your family medical history, your use of alcohol and tobacco, your financial status and any dangerous activities you’re involved in. For large policies, the insurance company will require a medical exam, including a blood test. An underwriter will then decide whether to offer you the standard rate. In 60% of cases, that’s exactly what the underwriter does. If you are exceptionally healthy and have no family history of serious illness, you may even qualify for preferred rates, which are lower than standard. That happens in about 30% of cases.

But not all people are so lucky. If the underwriter feels you’re more likely to die than others of your age and sex, you’ll either be denied coverage (this happens in about 3% to 6% of cases), or you’ll get a “rating” that leads to higher premiums. These are expressed as a percentage: if you get a 50% rating, you’ll pay 50% more than the standard rate, while a 100% rating means your premiums will double. “Usually the ratings are from 50% to 400% more than standard,” says Lorne Marr, an independent broker in Markham, Ont. In other words, being labelled high risk can lead to premiums four or five times higher than standard—sometimes even more.

Life insurers consider many factors before slapping a rating on you. Smoking is the biggest single risk factor, though alcohol is important as well. “If you drink three glasses of wine a day, as opposed to one, you might pay an extra premium,” says Marr. “If you’re an alcoholic, you won’t get coverage at all. If you’re a recovering alcoholic, you should be able to qualify at the standard rate after a certain amount of time—usually in three to five years.”

As Knapp discovered, recreational activities such as flying, skydiving, scuba diving and rock climbing can also make you a high-risk case. Whether this results in a rating depends on your level of involvement—how many hours you fly or where you do your climbing, for instance.

With medical conditions, it’s not as simple as saying high blood pressure equals a rating of so many percentage points. “Very few conditions are cut and dried,” says Brian Baxter, chief underwriter at Wawanesa Life in Winnipeg and chair of the Canadian Institute of Underwriters. While recently diagnosed cancer or heart disease results in automatic declines, other conditions—including diabetes, obesity, high blood pressure and high cholesterol—can result in a rating, but the ultimate effect depends on the severity of the condition. Ublansky was turned down for insurance because his blood sugar was three times normal, he was overweight and didn’t even know he had diabetes. However, a person within the normal weight range who can demonstrate that his condition is under control may receive no rating at all. “I’ve had all kinds of people with high blood pressure approved at standard rates,” Marr says.