INSURANCE GUIDE

If you are disabled, fear not you can still get coverage with a life insurance policy.  Depending upon your exact condition and the prognosis for your disability, you may not even need to pay a higher price for life insurance than your non-disabled counterparts!  There are many different dimensions to consider if you are looking at life insurance, whether you are disabled or not.  Here is a good primer for how to get the lowest cost policy that you can if you are disabled, and what to expect and know about as you go through the process of buying a policy.

Why You Can Still Get Coverage

The good news is that many disabilities do not significantly reduce your life expectancy as long as you don’t have other risk factors for dying such as obesity or high blood pressure.  This is the biggest reason why.  If you’re relatively healthy aside from your disability, a life insurance company is happy to easily issue a policy to you.

Some disabilities do affect your life expectancy significantly of course, and they may place you at a higher risk for health complications or sudden death.  Don’t worry if you think this is you.  Even if your condition could be life threatening, it’s usually still possible to get a life insurance policy issued but it may (or may not) cost a little more money.

As morbid as it sounds, life insurance companies are simply looking at the cold hard statistics behind your chances of dying, no matter who you are.  They operate by a doctrine called “the law of large numbers”, which simply means if you put a lot of people in a group, you can accurately predict the percentage of (well almost anything but this is about life insurance) of people who will have a life insurance claim made every year (meaning people who die).  Life insurance companies group people together that they perceive as having a similar risk of dying, and price each policy at such a level so that statistically, they make money as long as the group’s mortality levels are normal (aka people die about as often as the insurance company would expect).

That’s a long way of saying that as long as the insurance company prices a policy high enough, they can make money overall as long as they have enough customers and they can accurately predict the chances of someone dying.

Americans are also of course protected by the Americans with Disabilities Act passed in 1990, which legislatively prevents insurance companies from denying coverage or discriminating against someone specifically because they are disabled.  In reality insurance companies are happy to make money so they have very little incentive to deny coverage due to a disability.

How to Get the Best Rates if you are Disabled

Disability is such a wide term, that there is no one secret to getting the lowest prices on insurance.  Depending upon the severity and complications associated with your disability, and the length of time that you want coverage, there are a wide variety of solutions available to you.

Life Ant specializes in getting our clients the best prices and coverage, and we would be happy to work with you to get you the perfect policy to fit your needs.  We work with a lot of different providers which allows us to compare prices and benefits and get you the best rates.  We never charge our clients directly.  We only get paid standard commission rates directly from the insurance companies, so our only incentive is to get you the best policy for you and we only get paid if you buy a policy.

The most important thing is to be completely honest and forthcoming with any medical information the insurance company needs.  If you don’t tell them the truth or withhold information, they could deny a claims payout later.  That defeats the whole purpose of insurance coverage in the first place so you definitely should avoid putting your beneficiaries in that position.

Important Tips

Just like we recommend with all our clients, but this is all the more important if you have a disability, make sure that you cut out any other potential risk factors of a pre-mature death.

  • Make sure that if you have high blood pressure or high cholesterol, you are controlling them with medication. Take your medication exactly as prescribed and don’t miss doses.  Having any condition under control with medication is usually enough mitigation for the insurance company to look past the issue.
  • Lose weight if you are overweight. It can be very difficult to exercise if you have a disability, and we are sensitive to that.  You can still control your weight with diet, and if you have excess pounds you can bet that the life insurance company will view you as being at a great risk of health complications from them.
  • Eating a healthy diet can improve other medical conditions too! Eat well and give yourself the best chance of living as healthy of a life as you can.
  • Stop smoking! Smoking is one of the greatest risk factors for pre-mature death from cardiovascular issues and cancer.  It is also one of the most controllable, though addiction is difficult to break.  If you stop smoking you may also experience lower blood pressure and higher lung function, so it may improve other risk factors that you have as well.  Other tobacco usage can be just as harmful, so you should try to cut out any dip, snuff, cigar smoking, or vaporizing if you partake in these activities.  If you can’t quit, see this article on reducing your premiums as a smoker.
  • Work with an agent that can go to more than just one life insurance company for coverage. Many agents work directly for one insurance company and either get paid the most or are only allowed to issue policies from their employer.  Life Ant is not obligated to go to any one insurance provider for instance, which helps lower your cost.

What to Do and What to Expect

If your disability is not especially life threatening, your best bet is to have your advisor (or Life Ant advisors) compare quotes given your age and apply to a major life insurance company such as New York Life, John Hancock, Northwestern Mutual, SBLI, or any number of providers.  The life insurance company will require access to your medical records, likely perform a regular medical exam, and the underwriter for your case may have additional questions for you regarding your disability.  The whole process should be pretty routine and painless.

You will need to decide if you need coverage for a short period of time or for your entire life.  Some providers are less expensive for term policies than others, and some insurance companies pay much higher dividend rates on whole life policies than others so again, the specifics of your case will decide your best course of action.  One of the first steps you will need to define is if you are going to be purchasing a term life insurance policy, what the length of the term that you need is, or if you need a whole life policy.  Once you do this, it will further narrow your options.

If your disability puts you at a higher risk of dying, there are some insurance companies that handle these high risk policies specifically.  If you have a high risk of dying a life insurance company terms you a “sub-standard risk”, and they usually don’t want their sub-standard risk pool to grow too large.  Depending upon their current numbers, it may be advantageous to go to one insurance company over another simply based on when you catch them.  An agent may be able to speak to the underwriting department and decide their current appetite for risk, which helps save you time from applying to a company that will likely reject you.

Other Options

If life insurance companies all decide that you are too big of a risk for them to issue a standard policy, there are still some very good options available.  Read below to review other options that may be available to you, depending upon your needs and circumstances.  As always, we can help answer any questions or guide you to the best policy, so don’t hesitate to ask.

Guaranteed Issue

You can apply for what is known as a “guaranteed issue” or “guaranteed acceptance” life insurance policy.  Like the name implies, essentially a life insurance company has to issue the policy to you no matter how big of a risk you represent.  There are some caveats when you use this type of life insurance though.  For one, it will be a bit more expensive than going through a normal application process.  You also are usually restricted to smaller face amounts (usually $50,000 or $25,000 or $15,000 depending upon the company).  You usually must also survive for at least 2 years or the policy does not pay out a claim.  Usually they will refund part or all of the premiums that were paid to the beneficiaries or owner, but not the face amount.  You don’t need to go through a medical exam when you apply for guaranteed issue life insurance.

Second to Die Insurance

You could also apply for a survivorship policy, also known as joint survivorship or second to die insurance.  Basically this works by naming 2 joint insured people.  The policy does not necessarily pay out when you pass away, it pays a claim when both parties pass.  This is most often used if a husband and wife want to provide for children in the case that both spouses pass away before the children are financial independent.  This type of policy can be even less expensive than a normal standard issue policy and can be a good option in some cases.

Veterans

Disabled veterans may qualify for life insurance through the US Department of Veteran Affairs.  Check with them for their rules and regulations, but usually for a policy to be issued the veteran must be in good health besides the disability, the disability must have been directly caused by service in the military, and you must apply within two years of the disability being recognized officially the they Department.

Group or Employer Offered Life Insurance

One option that can work in some cases is to get a policy issued through your employer or other group in which you are a member that provides life insurance as a benefit.  The face amount is restricted, but this is usually very affordable, you don’t usually need to go through any underwriting, and there aren’t usually any stipulations.  Make sure that if you work or below to any clubs that you check with them regarding life insurance offerings.  In some cases this benefit is so inexpensive your employer may even add it for you.

Pre-Existing Condition Exclusions Rider

This isn’t a great option, but you can get some protection by adding a rider (which is like a contract clause) into your life insurance policy which precludes claims payouts from being made if you pass away from a specified pre-defined condition.  Normally this would relate to your disability (but not necessarily) and represents your largest risk factor for dying.  If you still want some coverage, you may be able to approach an insurance company about writing this clause into your life insurance contract through.

Medicaid

If you qualify for Medicaid you may be able to get a policy issued through Medicaid.  This is less than ideal due to the high costs and the low protection it provides from small face amounts, but it may be worth looking into.

Burial Insurance

A “burial insurance” policy is essentially a small life insurance policy whose benefit is meant to cover the costs of a funeral, but not anymore more.  These are usually about $10,000 face amounts, or they can be less.  Usually these are close to guaranteed issue and there is no medical exam.  You will be required to fill out a questionnaire regarding your health.  For elderly or disabled people worried about saddling their heirs with the cost of a funeral, it can be a good option for protection though it is often quite expensive compared to the amount of coverage offered.

Life Insurance Before Disability- 2 Riders to Know

If you already have a life insurance policy before you get disabled, or you are thinking about buying a policy, there are two important riders that deal directly with disability that you should know about.

The first is called a “waiver of premium rider”, and this pays your life insurance premiums if you are fully or partially disabled.  This is valuable because you may not be able to work, or earn as much income as you used to before you became disabled.  When this happens, many people can’t afford to make their life insurance premium payments and they lose the coverage, right when they need it the most.

The second rider to know is called a “disability income rider”, and this actually pays a benefit in addition to paying for premiums.  If you have this rider and become disabled, your life insurance policy will actually provide a source of income for you.  You can have this in addition to a disability policy, or without one.

If you have a life insurance policy prior to a disability happening, check your policy to see if it has either of these provisions.  If your disability happens prior to the policy being issued, unfortunately you cannot add these.

As you can see, there are many options to get life insurance if you are disabled.  If you are confused, don’t worry!  Give us a call or fill in the quote form, and we can get in touch with you to help you get the perfect policy for the right price.