Life Insurance for the Disabled

Life insurance guarantees a sum of money to be paid to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. With more than a quarter of U.S. adults living with a disability and needing insurance, the industry offers a number of options.

The primary purpose of life insurance is to provide for one’s family after death to pay off debt, cover funeral expenses, or leave a nest egg for beneficiaries. Buying life insurance can be a challenge for people with disabilities, but having a disability does not disqualify a person from obtaining life insurance. 

As with any insurance policy, the higher the risk, the higher the cost: the more severe the disability, the higher the premiums and fewer choices. To underwrite a policy—which means, determining the insurability of the individual and the risk—insurance companies weigh the following factors:

The Nature of the Disability

Some disabilities, such as loss of vision or hearing, have little effect on life expectancy. However, depending on the type of disability, how well it’s managed, and its likely impact on the lifespan of the insured, a disability or chronic condition can make it more challenging—i.e., more expensive—to get life insurance.

Medical Treatments and Medical History

A life insurance company will take into account current and past medical treatments; medications you’re taking; the surgeries or hospitalizations you’ve had. They gather this information through interviews, a questionnaire, and a review of the applicant’s medical history and prescription information. 

Employment

Being employed will count in the applicant’s favor. Life insurance companies view steady employment as a general indicator of health. Regular employment also means regular income that will show the applicant’s ability to make regular payments. 

Habits and Hobbies

As with anyone seeking life insurance, smoking, drinking, recreational drug use including marijuana, will affect an applicant’s insurability and the cost of the premium, as will risky hobbies. Many, but not all, life insurance policies require blood and urine analysis. 

The Plans

Term life insurance and permanent life insurance are the two main types of life insurance policies. Many different types of life insurance are available to meet all sorts of needs and preferences. Depending on the short- or long-term needs of the person to be insured, the major choice of whether to select temporary or permanent life.

Types of life insurance of special interest to the disabled:

While guaranteed-issue whole life insurance carries a higher price tag and death benefit cap, a medical exam is not required for this type of policy, making it easily accessible. It can be useful to pay for final medical bills, funeral, and related expenses. 

For those with high-risk disabilities affecting their life expectancy, an impaired risk life insurance policy is usually the better choice.

What to Know About Insurance Riders

While not specific to people with disabilities, insurance riders offer flexibility that can be especially useful to the disabled. Insurance riders allow policy holders to customize their insurance policy to meet their specific needs. Some riders must be added when the policy is initiated, some can be added afterward. Here are a few:

Child Rider

Many life insurance policies offer policies that cover children as well as the parent. The parent of a child with a disability may be able to have their child included on their policy. The actual terms of child riders vary greatly as to how long the child is covered, what health restrictions there may be, whether a medical exam is required, and other factors. Child riders are generally written to expire once the children become adults. At that point, in some cases, the rider can be converted into a permanent life insurance policy. The terms and costs will vary depending on the terms of the rider, health of the child, and other factors.

Accelerated Benefit Riders

These add-ons to a term life insurance policy allow the insured person—disabled or not—to use a portion of the death benefit before they die. This can be especially useful to cover medical bills or other eligible expenses at the end of life such as hiring a home health aide, paying for hospice, or nursing-home care. 

Different riders cover different circumstances. Terminal illness riders cover expenses related to illnesses that are incurable and allow policyholders to access a portion of the payout if diagnosed with a qualifying critical illness.

Chronic Illness Riders

Chronic illness riders pay out benefits while the policyholder is still alive but no longer able to perform at least two of the six recognized Activities for Daily Living—eating, bathing, getting dressed, toileting, transferring, and continence.

The Process

Insurance underwriters will examine written medical records and conduct a  medical exam checking blood pressure, heart rate, and weight, as well as testing blood and urine.

By law, the medical exam cannot be different from the medical exam the insurer conducts on non-disabled.

The application for a policy will be approved or approved with certain stipulations—for instance, a waiting period before the policy becomes active. This is to prevent people from buying life insurance when they know that they are mortally ill and have only a short time to live.

How Applicants Can Help their Case

Being denied by one insurance company can make it more difficult to be approved by other companies. Here are some steps applicants can take to boost their chances of being approved and, if approved, obtain lower premiums and better terms. 

Check medical records 

Applicants should request a copy of their medical records from their health care providers and review them for accuracy. Perhaps a medical issue in the past has been addressed and cleared up. If that’s the case, the applicant can provide a note with the application explaining that.

Keep Appointments

If  the applicant’s disability is a condition that requires regular check-ups and scheduled medications, the more they adhere to their treatment plans and appointments, the lower the perceived risk of insuring them. This is especially true if the applicant has a chronic condition like diabetes.

Consider Working With an Experienced Agent 

Working through an insurance agent who has experience with clients with disabilities can be helpful. Such agents will know which companies write the best policies for the disabled and can test the waters for their clients. They can do this by giving insurers a client’s anonymized medical profile to get the insurance company’s assessment as to the client’s insurability. A favorable response will help the agent decide to move to a formal application.

The Bottom Line

Life insurance plays an important role in someone’s financial protection. In recent years, the insurance industry has greatly expanded its life insurance options for the disabled and shown much greater flexibility in writing policies than was true in the past. As with any financial decision, it pays to do your research. There are life insurance companies that offer policies designed for people with certain disabilities, such as autism, Down syndrome, or cerebral palsy.