Life insurance for people with disabilities can be more challenging to purchase. Life insurance companies are able to take health status into account. This means a disability can affect coverage options and policy costs. However, policies may still be available. This guide to life insurance for disabled individuals can provide insight into options for getting covered.
Can you get life insurance if you have a disability?
When insurance companies issue life insurance policies, they are allowed to take health status into account. Insurers assess the risk of a person passing away during their coverage term. If the risk is too high, the insurer may deny a policy entirely. If there is an elevated but still reasonable risk, an insurer may issue a policy but charge higher premiums.
In some cases, finding life insurance with pre-existing conditions can be difficult or impossible because insurers go through this underwriting process to assess risk. Depending on the nature of a disability, it can be considered a disqualifying pre-existing condition.
If a disability does not affect lifespan or general health, then an insurer may still be willing to provide coverage at an affordable price. For example, a person who is deaf or blind but who has no other medical issues may not have trouble getting life insurance coverage. But if a disability makes a person more susceptible to an early death, life insurance coverage may be denied or very expensive or impossible to obtain from a standard insurer.
What do life insurance companies consider a disability?
The specific definition of a disability can vary by life insurance company. In general, any condition that impacts mental or physical health can be considered a disability. Common examples include:
- Mental health issues including anxiety, depression, or PTSD
- Conditions affecting hearing, vision, or other senses
- Medical issues that impact movement
- Conditions that impact thinking, remembering, or communication
A disability may be something a person is born with. Or it may be acquired due to illness or injury over the course of their lifetime.
Types of life insurance policies for people with disabilities
The types of life insurance for disabled individuals fall broadly into two categories. These are the same types of life insurance plans available to those without disabilities. However, it may be more difficult for some people to find an insurer that offers these policies due to their condition.
Term life
A term life insurance policy provides coverage for a set period of time. For example, it could pay out a death benefit if the policyholder dies during a 10-year, 20-year, or 30-year term. If the policyholder does not pass away during the coverage term, no death benefit will be paid.
Whole life
A whole life policy, also called a permanent life insurance policy, provides indefinite coverage. The policy stays in effect as long as premiums are paid. There is also an investment component. Some of the premium money is invested. As a result, the policy accrues a cash value.
Whole life is more expensive than term life. Usually, it is not worth the added cost. That's because most people become self-insured at some point. Their dependents stop relying on their income or services.
How to qualify for life insurance with a disability
A person's ability to qualify for life insurance with a disability is going to depend on the nature and type of condition. While it can be out of a person's control, there are things that can sometimes be done to increase the chances of being approved for coverage.
Get your condition under control
If a condition is well-managed, insurers are less likely to deny coverage due to a disability. Insurers will want to see medical records. They will also ask detailed health questions. If this information reveals that a disability is not likely to result in premature death, insurers will be more likely to approve an application for a policy.
Shop around for insurance coverage
Some insurers have stricter limits on when they will issue life insurance for disabled individuals. That's why it is especially important to shop around among different insurers to explore coverage options. Those who are disabled and who are interested in buying a policy should check with as many insurance companies as they can to find affordable protection.
Be honest in your application
It is crucial to disclose a disability upfront. It is also essential to be completely honest about all medical issues. This will help to avoid cancellation of a policy later.
Consider a policy that doesn't require a medical exam
Some insurance policies are guaranteed issue. There is no medical exam required. Insurers will also not ask about health history. If standard insurance coverage is not available, these could be another option for life insurance for disabled individuals.
Other life insurance options if you are denied coverage
If a disabled person cannot qualify for a standard whole life or term life policy, there are still life insurance options that may be available. Some examples of life insurance for disabled individuals who cannot get a standard policy include the following.
Final expense
Final expense insurance is a type of life insurance policy. It's designed to pay funeral expenses. It is possible to purchase this coverage regardless of disability status or pre-existing conditions. Policies generally have relatively low death benefits.
Guaranteed issue
Guaranteed issue coverage is also available to individuals regardless of their health status. The policy limits may be lower than with standard term or whole life coverage. However, there should still be money for funeral expenses and to provide loved ones with some small degree of support. There is generally a graded death benefit, though. This means only a portion of the full death benefit will be paid out for the first several months or years the policy is in effect.
Life insurance vs. disability insurance
Life insurance is not the same as disability insurance. Disability policies can pay out money to individuals who become disabled and who cannot work because of it. Life insurance policies, on the other hand, provide compensation to surviving loved ones after a death.
It is possible to add a disability income rider to most life insurance policies. This is an add-on coverage. It pays a monthly stipend to help cover lost wages if a disabling condition makes work impossible. However, a standalone disability policy will typically offer more coverage at a lower price than buying this type of life insurance rider.
Life insurance for disabled dependents
In some cases, individuals without disabilities may wish to purchase life insurance for disabled dependents. Guaranteed issue policies may be available or standard term or whole life policies may be an option depending on the nature of the disability. Or a parent may be able to get a rider on their own coverage to add their child.
Purchasing life insurance for a disabled child at a young age could help ensure they are able to have protections in place later in life. They can choose to maintain that policy.
Author: Christy Beiber
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