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How to Buy Life Insurance When You’re Disabled

Learn how people with disabilities should consider when buying life insurance, especially when dependents' financial livelihoods are at stake.

People buy life insurance to protect their family financially in the unfortunate event that the insured individual passes away.

For you to get a life insurance policy to help your family, you usually need to undergo a medical exam.

Even if you don’t choose a policy that requires a medical exam, you have to provide personal information about your health and medical conditions.

This may give pause to those with disabilities that want to buy life insurance.

Can someone with a disability, either partial or totally disabled, qualify for a traditional life insurance policy? And if so, does it cost more?

Here’s what you need to know about life insurance for people with disabilities.

Can You Get Life Insurance If You’re Disabled?

Having a disability doesn’t mean there is no way to get life insurance.

Many people with disabilities can and do get life insurance.

Sadly, some people with disabilities will get denied coverage.

Now:

Ultimately, your insurability depends on your particular disability. It also depends on all other factors life insurance companies usually consider.

Life insurance companies sell life insurance policies to make money. For this reason, they don’t typically insure people that have a higher chance of dying earlier in life.

If you have a short-term disability that makes you unable to work, such as a broken foot, that won’t likely be a big problem for a life insurer. Having a broken foot is something that will heal. After it heals, your life will likely return to normal.

Other disabilities are long-term disabilities. They may have much more severe health consequences. These are the types of disabilities that could result in costlier premiums. You may even get denied coverage.

What to Expect When Applying for Life Insurance With a Disability

People with disabilities go through the same life insurance application process as everyone else.

You provide basic information to get an estimate of the price your policy will cost you.

This information includes your name, height, weight, basic health information, family health history, and more.

Once insurance companies have this information, you get a preliminary quote.

Next, you start the process of a formal life insurance application.

This asks for more detailed information to help the life insurance company understand any risks they may face by insuring you.

You include medical information during this step, which may include information about your disability.

Medical exam and medical records

Life insurance companies will likely require you to take a medical exam to check your current health.

The medical exam usually records measurements such as your height, weight, and blood pressure.

The person giving the exam will likely ask you a long list of medical questions, including questions about any disabilities you have. Expect to give a blood and urine sample, as well.

Insurers will also take a look at your medical records to look for any potential risks.

After evaluating all of this information, they’ll formally present you with a final quote and insurance policy to sign if you’re approved.

If you get denied, they will not offer you coverage.

Does Getting Life Insurance Make Sense for Those With Disabilities?

Before you try to get life insurance, you should first decide if it makes sense.

This has nothing to do with you having a disability or not having a disability.

Life insurance provides one thing--a death benefit payment to beneficiaries.

In some cases, you may not need life insurance.

Final expenses

If you have no dependents and no one relies on you for income or support, the only costs after your death would be your final expenses.

Many people may have enough cash saved up to pay for these expenses. In this case, it doesn’t make sense to buy life insurance.

You may want to get a small life insurance policy if you have no cash. This way, your final expenses won’t be a burden to someone after you pass away.

Dependents

Some people may have dependents in the legal sense of the word but those dependents may not rely on them.

If you provide no income and no direct support, your loved ones shouldn’t have a financial need arise from you passing away other than your final expenses.

People that have dependents relying on them for income or support are a different story entirely.

In these cases, purchasing a life insurance policy usually makes sense.

A life insurance death benefit can provide money to replace your income that disappears when you die.

Similarly, the money can be used to hire services to replace the support you once provided, such as child care or household duties.

Types of Life Insurance to Consider

The type of life insurance policy you choose depends on your situation.
Here are a few common types and when they may make sense:

  • Term life insurance
  • Permanent life insurance
  • Group life insurance
  • Guaranteed issue life insurance

Term life insurance

Term life insurance is generally one the cheapest forms of life insurance available.

It also fits a wide variety of circumstances.

These policies are in effect for a term, or set length of time.

If you die during the term, the life insurance company pays the death benefit to your beneficiaries.

These terms can be as long as 30 years or as short as a few years.

You can take advantage of the lower premiums this insurance offers and invest to build wealth.

Hopefully, you have built up enough wealth to self-insure by the time the term expires.

If you haven’t, you may be able to get a new policy. It will depend on your health and other circumstances at the time.

In some cases, you may get denied if you are too old or have developed severe health conditions.

Permanent life insurance

Permanent life insurance may make sense if you have a disability that gets worse as you get older.

Permanent life insurance lasts your entire life as long as you continue making premium payments.

The downside is this life insurance is much more expensive than term life insurance.

That said, a payout is guaranteed as long as you keep your policy in effect until you die.

Permanent life insurance has several ways policies can be modified, such as adding a waiver of premium rider or other riders.

These riders may help you feel more at ease with the policy you choose.

Whole Life vs. Term Life Insurance

Whole Life Term Life
Time frame Permanent Temporary, generally 5 to 30 years
Premium level Fixed for life of the policy Fixed for the term
Cash value Yes No
Interest-bearing Yes No
Loan provision Yes No
Cost High Roughly 10% of the cost of an equivalent amount of whole life insurance
Cannot be canceled except for nonpayment Yes Yes

Group life insurance

Group life insurance is typically available through workplaces and may help those that can’t get insured elsewhere get coverage.

Generally, these policies will accept anyone who applies for coverage up to a specific limit, such as $50,000 or two times your salary.

Once you exceed the limit, you may be able to buy more coverage. You usually have to submit to a medical exam, though.

The downside to this insurance is it terminates when you leave your job in most instances.

It cannot be taken with you.

Guaranteed life insurance pros vs. cons

Pros Cons
  • Almost anyone can get it
  • No medical exam
  • No long health history questionnaires
  • The money can be used for expenses after you pass away
  • Very limited death benefit limits
  • Premiums are high for the amount of coverage offered
  • You must survive the waiting period for the death benefit to be paid
  • Your beneficiary may only get premiums refunded, plus interest, if you die during the waiting period

Guaranteed acceptance life insurance, sometimes called guaranteed issue life insurance, can typically be purchased by anyone.

These policies are for small amounts, such as $25,000. They’re designed to pay for your final expenses.

Because anyone can buy these policies, they’re usually bought by people in poor health. Insurance companies know this.

To qualify for a death benefit payout, you must outlive a waiting period that may be two or three years.

If you die during the waiting period, your premiums are returned to your beneficiaries with no death benefit payout.

The cost of this insurance is extremely high, so it’s typically viewed as a last resort.

Consult an Expert

If you want to see if you can get life insurance with your disability, it’s best to consult an expert.

Life insurance brokers work with several life insurance companies. Life insurance agents typically only work for one company.

Brokers understand which companies may write a policy based on your circumstances and which won’t.

However, these brokers and agents get paid on commission, so they may not give you the best advice on what type of life insurance to get.

If you aren’t sure what type of life insurance you need, consider consulting a fiduciary fee-only financial planner.

These advisors don’t take payment from commissions. Instead, you pay them directly for their advice. This way, you know it is unbiased and based on your best interests.

When consulting an expert, don’t accidentally use the term disability insurance instead of life insurance.

This is a separate type of coverage that offers different benefits.

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