Life Insurance For The Disabled
In exchange for the premiums paid by the policyholder during their lifetime, life insurance guarantees a sum of money to be paid to named beneficiaries when the insured dies. With more than a quarter of all adults in the United States living with a disability and in need of insurance, the industry provides a variety of options.
The primary goal of life insurance is to provide for one's family after death by repaying debts, covering funeral expenses, or leaving a nest egg for beneficiaries. Purchasing life insurance can be difficult for people with disabilities, but being disabled does not preclude a person from obtaining life insurance.
The higher the risk, as with any insurance policy, the higher the cost: the more severe the disability, the higher the premiums and the fewer options. Insurance companies consider the following factors when underwriting a policy, which means determining the individual's and risk's insurability:
The Nature of the Disability
Some disabilities, such as blindness or deafness, have little impact on life expectancy. However, depending on the type of disability, how well it's managed, and its likely impact on the insured's lifespan, a disability or chronic condition can make getting life insurance more difficult (i.e., more expensive).
Medical Treatments and Medical History
A life insurance company will consider your current and previous medical treatments, medications, and surgeries or hospitalizations. Interviews, a questionnaire, and a review of the applicant's medical history and prescription information are used to gather this information.
Employment
Being employed will benefit the applicant. Life insurance companies consider consistent employment to be a general indicator of health. Regular employment implies regular income, which reflects the applicant's ability to make timely payments.
Habits and Hobbies
Smoking, drinking, and recreational drug use, including marijuana, will affect an applicant's insurability and the cost of their premium, as will any risky hobbies. Many (but not all) life insurance policies necessitate blood and urine testing.
The Plans
The two main types of life insurance policies are term life insurance and permanent life insurance. There are numerous types of life insurance available to meet a wide range of needs and preferences. The major decision is whether to choose temporary or permanent life insurance based on the person to be insured's short- or long-term needs.
Though guaranteed-issue whole life insurance has a higher price tag and death benefit cap, it does not require a medical exam, making it easily accessible. It can be used to cover final medical bills, funeral costs, and other related expenses.
An impaired risk life insurance policy is usually the better option for those with high-risk disabilities that reduce their life expectancy.
What to Know About Insurance Riders
Though insurance riders are not tailored to people with disabilities, they do provide flexibility that can be especially beneficial to the disabled. Insurance riders enable policyholders to tailor their insurance policies to their specific requirements. Some riders must be added at the start of the policy, while others can be added later. Here are a few examples:
Child Rider
Many life insurance policies cover both the parent and their children. A parent of a disabled child may be able to include their child on their policy. Child rider terms vary greatly in terms of how long the child is covered, what health restrictions may apply, whether a medical exam is required, and other factors. Child riders are typically written to expire when the children reach the age of majority. In some cases, the rider can then be converted into a permanent life insurance policy. The terms and costs will vary depending on the rider's terms, the child's health, and other factors.
Accelerated Benefit Riders
These additions to a term life insurance policy allow the insured person, whether disabled or not, to use a portion of the death benefit before dying. This is especially useful for paying for medical bills or other qualified end-of-life expenses, such as hiring a home health aide or paying for hospice or nursing-home care.
Different riders cover various scenarios. Terminal illness riders cover expenses for incurable illnesses and allow policyholders to access a portion of the payout if they are diagnosed with a qualifying critical illness.
Chronic Illness Riders
Chronic illness riders pay benefits while the policyholder is still alive but unable to perform at least two of the six recognized daily living activities—eating, bathing, dressing, toileting, transferring, and continence.
The Process
Insurance underwriters will review written medical records, perform a physical exam, check blood pressure, heart rate, and weight, and test blood and urine.
The medical exam cannot, by law, be different from the medical exam performed on non-disabled people.
The policy application will be approved or approved with conditions, such as a waiting period before the policy becomes active. This is to prevent people from purchasing life insurance when they are terminally ill and have only a few months to live.
How Applicants Can Help Their Case
Being turned down by one insurance company can make it more difficult to get approved by another. Here are some steps applicants can take to increase their chances of approval and, if accepted, to obtain lower premiums and better terms.
Check medical recordsÂ
Applicants should request and review a copy of their medical records from their healthcare providers. Perhaps a medical issue in the past was addressed and resolved. If this is the case, the applicant should include a note explaining this in their application.
Keep appointments
If the applicant has a disability that necessitates regular checkups and medication, the more they stick to their treatment plans and appointments, the lower the perceived risk of insuring them. This is especially true if the applicant suffers from a chronic condition like diabetes.
Consider working with an experienced agentÂ
Working with an insurance agent who has experience working with disabled clients can be beneficial. These agents will be aware of which companies write the best policies for the disabled and will be able to test the waters for their clients. They can accomplish this by providing insurers with an anonymized medical profile of the client in order to obtain the insurance company's assessment of the client's insurability. A positive response will influence the agent's decision to proceed with a formal application.
Can People With Disabilities Buy Life Insurance?
Yes, people with disabilities can usually find some form of life insurance. Your eligibility and rates will be determined by factors such as the type of disability, the severity of your condition, and your overall health, among others. A disability may result in higher premiums and fewer plan options.
Do Insurance Companies Always Require a Physical Exam?
No. There are policies available that do not necessitate a physical examination. There are two types of life insurance policies available that do not require a medical exam: simplified issue and guaranteed issue. Your premiums may be higher, and your coverage may be limited to a certain amount.
How Does a Life Insurance Medical Exam Work?
Medical exams are provided at no cost by your insurance company. The exam will be performed at your home or workplace by a licensed medical technician. You will also receive a copy of the results. The exam usually lasts 30 minutes.
How Can a Disabled Person Pick the Best Life Insurance?
Learn everything you can about the various types of life insurance, including those that don't require a medical exam and what the insurance company requires for each policy. Inform yourself about the benefits of various policies and how they differ so that you can make the best decision for you.
The Bottom Line
Life insurance is an important part of a person's financial security. In recent years, the insurance industry has greatly expanded its life insurance options for the disabled and demonstrated significantly greater flexibility in writing policies than in the past. It is important to conduct research before making any financial decision. There are life insurance companies that cater to people with disabilities such as autism, Down syndrome, and cerebral palsy.