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Breathing Easy: Life Insurance With COPD

Chronic obstructive pulmonary disease (COPD) is a chronic disease that affects a person's ability to breathe. Symptoms range from mild to severe and eventually could lead to death. Life insurance policies may offer more than a death benefit depending on the type of policy you purchase. Permanent policies offer living benefits, and you can customize your life insurance policy using riders to cover medical bills as the condition progresses.

What is COPD?

Chronic obstructive pulmonary disease (COPD) is a broad term for chronic diseases that affect the lungs and cause difficulty breathing. Cigarette smoking is the leading cause of COPD diagnoses in the United States, but additional causes may be pollution, secondhand smoke, and chemical fumes.

The two basic types of COPD are:

  • Emphysema. When the air sacs in the lungs are damaged and may break and rupture lung tissue.
  • Chronic bronchitis. A condition where the airways to the lungs are regularly inflamed, causing an overproduction of mucus.
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COPD is a debilitating chronic illness. Those who suffer from the condition experience mild to severe symptoms and complications. The Global Initiative for Chronic Obstructive Lung Disease (GOLD) has arranged COPD into four stages.

  • Stage 1. Early COPD, the symptoms are mild and may go unnoticed. Symptoms include shortness of breath, wheezing, excessive coughing, fatigue, and excessive mucus.
  • Stage 2. Moderate COPD, symptoms include difficulty breathing, excessive coughing with mucus and phlegm, wheezing, and shortness of breath.
  • Stage 3. Severe COPD, complications encompass increased symptoms and respiratory infections like pneumonia, rapid heartbeat, tightening in the chest, and swelling of the ankles, feet, and legs.
  • Stage 4. Very severe COPD, complications include pulmonary hypertension, acute respiratory distress, bacterial infections, chest pain, coughing up blood, recurrent hospitalizations, and heart failure.

There is no cure for COPD, but treatments can ease the symptoms and the severity of complications. People with COPD should quit smoking; medications can alleviate coughing, wheezing, and mucus, avoid polluted areas, and get vaccinated for the flu, COVID-19, and pneumonia. Doctors may also prescribe a rehabilitation program or oxygen tank.

COPD progressively gets worse with time. It most commonly causes death due to complications that lead to heart conditions, infections, and respiratory failure. The average age of COPD death varies depending on your age at the time of diagnosis and the severity of symptoms.

What benefits can I claim with COPD?

The Social Security Administration (SSA) has included COPD on the list of disabling conditions.

To be eligible for Social Security Disability Insurance (SSDI), you must:

  • Have worked on a job long enough and earned enough social security credits
  • Meet the SSA's definition of a disability

Social Security work credits are tallied by total yearly earnings. You can earn up to four credits a year. Usually, to be eligible for SSDI, you need 40 credits, of which 20 were earned within the last 10 years.

The SSA defines disability as total disability, not partial or short-term disability. You must not be able to work at a substantial gainful activity (SGA) on your usual job or any other type of work. The condition must inhibit you from performing work-related duties, physical or mental, and the condition must have lasted a year or be expected to last a year or cause death.

To qualify for SSDI due to COPD, you must provide medical evidence of debilitation while under treatment. The SSA usually pays benefits after a five-month waiting period, on the sixth month after they conclude your disability started. If they find your disability began before you applied for SSDI, they may pay for up to a year of that time.

Because COPD may result in loss of life, you may want to consider a life insurance policy. Life insurance companies also offer long-term insurance, disability, and living benefit riders to cover the costs associated with chronic and terminal illnesses.

Life insurance eligibility with COPD

Life insurance provides money to the policy's beneficiaries upon the insured's death. Because the policy covers the life of the insured, the risk to the insurance company is when the policy will pay the benefit amount versus how many premiums were paid before the insured passes away. Because COPD is life-threatening, insurers will likely charge higher premiums to applicants who have COPD.

Underwriting is the process of determining the applicant's risk to the life insurance company. Underwriters evaluate whether the life insurance policy will be declined or issued during this process and at what risk classification. Underwriters use several sources to assess the application, including your age and gender, the agent's report, a physician's statement, the Medical Information Bureau (MIB), and a medical exam.

When applying for a fully underwritten life insurance policy with COPD, underwriters will need to know about your experience, symptoms, and conditions, including when you were diagnosed, if you've ever been hospitalized due to COPD, what medications you're taking, and level of debilitation

If the insurance company decides to accept the risk, it will be classified as a preferred, standard, or substandard risk. A preferred risk is when the applicant is in good health, makes healthy lifestyle choices, and has no history of serious family illness. This risk classification is issued the most affordable premiums.

A standard risk is an average risk to the insurer and issued a standard premium. Substandard risks are a high risk to the insurance company and are issued higher premiums. If you are an applicant with COPD, you may be approved for a life insurance policy, but you will be more likely to pay higher premiums.

Life insurance policies for insureds with COPD

Term life insurance policies are considered pure insurance because they do not allocate any premiums to a savings or investment feature. Term life insurance lasts for a determined number of years, usually in increments of five years, and then expires. Policies must be renewed to continue coverage. However, premiums increase as you age.

Insureds with COPD should ensure their term life insurance policy has a guaranteed renewability feature. With this feature, you do not have to provide evidence of insurability to renew your policy. Term life insurance may also offer a convertibility option. With this option, you can convert the policy to permanent life insurance, usually until a certain age.

Permanent or whole life insurance policies are traditionally more expensive than term life insurance because they last the insured's lifetime, and a portion of the premiums are deposited in a savings and investment feature to develop cash value. Cash value is a living benefit the insured may use for whatever they wish while alive. This may include medical expenses for insureds with COPD.

Permanent life insurance policies are categorized by the way they accumulate cash value. Universal and Variable life insurance policies are permanent policies that allocate some of the premiums to an investment where cash value relies on market performance.

Insurers may offer long-term care insurance as an individual policy or a rider. Riders are designed to allow life insurance applicants to tailor policies to fit their needs. They add additional insurance and are usually inexpensive. Long-term care protects the cost of long-term care including:

  • Diagnostic services
  • Therapeutic services
  • Treatment and preventative care
  • Curative services
  • Personal care
  • Rehabilitative services

For long-term care benefits to pay out for medical reasons, insureds must be unable to perform at least two activities of daily living, such as dressing and bathing. For the benefits to be paid for mental health reasons, the insured must prove their health and safety are at risk without supervision. Once the insured has met the conditions for the benefit to trigger, they have to satisfy the policy's elimination period, or waiting period defined in the contract.

COPD life insurance options: living benefits and disability protection riders

To ensure applicants can meet their needs, life insurance companies offer riders for additional protection in numerous forms. Life insurance applicants with COPD can purchase riders at a modest price to ensure their needs are covered as their condition progresses.

Accelerated benefits

Accelerated benefits may be offered as a rider or a provision within a life insurance policy. Accelerated benefits allow for a portion of the death benefit to be paid to the insured if they are diagnosed with a terminal illness or suffer from a catastrophic event that causes permanent disability that requires long-term care. Typically, accelerated benefits pay out 50% of the death benefit but may pay out up to 100%. Any amount of the benefit that is not paid to the insured remains payable to the policy's beneficiaries when the insured passes away.

Waiver of premium riders

Waiver of premium riders waives the insurance cost if the insured becomes disabled. Most of these riders have a waiting period of six months before the waiver begins. Premiums must be paid during the waiting period, but if the insured is still disabled by the end of the period, the insured refunds the premiums paid during the waiting period and waives future payments. Most of these riders have a maximum age restriction, usually 65–70.

Disability income benefit riders

Disability income benefit riders pay out the benefit of the policy as monthly income to insureds if they become completely disabled. The definition of total disability differs between insurers. Insurers design monthly income payments typically in one of two ways: as a percentage of the face amount or an amount of dollars per $1,000 of coverage.

COPD life insurance policies without medical exams

If you apply for a life insurance policy and your COPD symptoms have reached stage 4, chances are you will not qualify for a traditional life insurance policy. However, there are policies available with minimal or no underwriting but usually have higher premiums.

Guaranteed issue whole life insurance

Guaranteed issue whole life insurance is permanent coverage that does not require a medical exam or health questionnaire. These policies have graded death benefits, which means there is a waiting period, typically two to three years, before the full face amount will pay out. These policies are usually considered last resort insurance because premiums are expensive and only offer low benefit amounts, usually $20,000.

Simplified issue life insurance

Simplified issue life insurance has a minimal underwriting process. Insurers use a health questionnaire and third-party information like your driving record and prescription drug history to determine risk. These policies are less expensive than guaranteed issue life insurance and offer more coverage but are more expensive than traditional policies.

Group life insurance

Group life insurance is usually offered through employment. Underwriting of group policies focuses on the group and not individuals. Underwriting depends on a group of healthy insureds and those who may be uninsurable. Medical exams are usually not required, and when the employer covers all of the premium, noncontributory plans must cover the entire group.

Group life insurance offers a conversion privilege. If a participant leaves the group they have the right to convert their group policy to an individual policy of the same face amount without providing evidence of insurability.

Life insurance medical exams with COPD what to expect

When applying for life insurance with COPD, your medical records must be current. Insurers will want to know when you were diagnosed, the type of disease associated with your COPD, what medications you're taking, test results, and X-rays. Medical exams can be performed at a medical facility, or a representative can be sent to your home.

A medical exam consists of taking your height and weight, checking your blood pressure, providing blood and urine samples, and a possible EKG test. The less severe your COPD symptoms and conditions, the easier it will be to obtain a traditional life insurance policy with more affordable premiums. Following your doctor's advice, taking treatment to reduce symptoms and complications, not smoking, and staying out of polluted environments improves your chances.

COPD and the importance of disclosing health information for life insurance

Applying for life insurance with COPD may be intimidating, but it is essential to answer the health questionnaire honestly to avoid the application's rejection due to misrepresentations. If your application is accepted and your insurer finds that you withheld material facts on your application or committed fraud, they may void the contract or deny the claim.

Having a life insurance policy with COPD may take special consideration on your part to take advantage of all the benefits life insurance has to offer. When you're not feeling your best, it may be difficult to muster the energy to call your insurer or read through your policy. However, if you have permanent life insurance, you can borrow against the cash value of your policy for a medical emergency. If you have a long-term care life insurance policy or rider, it's important to stay up to date on the best times to utilize your benefits. Stay informed and learn the latest on the life insurance industry here at HealthNews.


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