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Inclusive Coverage: Life Insurance for People With Disabilities

Life insurance is available and offered by many insurance companies for people with disabilities. You can qualify, provided your disability doesn't impact your life expectancy. The cost will depend on how the insurance company rates the risk. This article explains the available options and what to expect when shopping for a life insurance policy.

Life insurance guaranteed options for people with disabilities

Life insurance companies offer various types of guaranteed policies for people with disabilities. The most common types are:

  • Guaranteed renewable. In life insurance, it means as long as the insured pays the premium and follows the contract guidelines the policy won't be canceled. The policy is renewed on the anniversary date each year. However, the premium can increase if the company determines the risk has changed for a class of policyholders. Individual policy amounts and exclusions or restrictions may apply, but the applicant is aware of them before acceptance of the policy.
  • Guaranteed issue. A policy issued without a medical exam or health questions. The policy restricts the coverage amounts purchased, and the premiums will likely be higher due to the lack of medical underwriting. The policy cannot be canceled as long as the insured pays the premium. The disadvantage may be age restrictions to apply for coverage.
  • Impaired risk. A specially designed life insurance policy geared to people with a disability. People who have been denied life insurance due to medical history can purchase a life insurance policy with a low coverage limit but should expect the premiums to be relatively high compared to other policies.
  • Non-Cancellable. The insurance company agrees not to change or increase the premiums on the policy. The coverage benefits remain the same until the insured passes away or decides they no longer need the coverage and cancels the policy.

Note that each state may have some specific laws that guide the issuance of each of these guarantees. The NAIC creates a model law that gives individual states the ability to adapt laws on life insurance to the environment in their state. This protects disabled people from being discriminated against or denied a policy tied to a disability without notification of the denial reason.

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Group life insurance and disability

Group life insurance is an option for those with a disability in the workplace. There is no individual underwriting in a group policy. The employer determines coverage options and limits, and employees may be able to purchase additional coverage for a competitive price. One disadvantage is the coverage may not be transferable when the employee leaves employment. However, group life insurance policies that do allow an automatic transfer to an exiting employee may find the new premium higher than expected. Consumers should not rely on group life insurance alone to meet their financial needs due to the uncertainty of employment and changing employer benefit options.

Life insurance and specific disabilities

Each life insurance company may approach your disability differently after reviewing the medical history. The Centers for Disease Control and Prevention (CDC) shared that approximately 27% or 1 in 4 adults have some type of disability. That means life insurance companies are familiar with underwriting coverage for people with disabilities, but it doesn't tell us the whole story. Each company will review your medical records to see if any other medical history may complicate your disability or life expectancy, like diabetes, heart disease, smoking, or obesity. The final offer of coverage may include higher premiums or restrictions and exclusions for specified health conditions. As the applicant, you can accept or decline any offer.

Disability categories

A life insurance company creates guidelines utilizing many resources. When considering disabilities, life insurance defines the potential risk of a disability along with other risk factors. The Centers for Disease Control and Prevention notes the following disabilities:

  • Mobility. Serious difficulty walking or climbing stairs.
  • Cognition. Serious difficulty concentrating, remembering or making decisions.
  • Independent living. Difficulty doing errands alone.
  • Hearing. Deafness or serious difficulty hearing.
  • Vision. Blindness or serious difficulty seeing.
  • Self-care. Difficulty dressing or bathing.

Applicants should be aware that the level of disability will impact the policy cost. This is an important factor when a life insurance application is reviewed.

Life insurance disability and activities of daily living (ADL)

Life insurance companies may review an applicant's ability to manage the activities of daily living (ADL) based on medical history. This basic set of skills we need to care for ourselves is outlined by the National Institute of Health, Library of Medicine, and Center for Biotechnology Information. While it is not as common in life insurance as in long-term care or disability insurance, ADLs may impact premiums and create restrictions on coverage in conjunction with a disability and other complicating health conditions.

Factors that impact life insurance and disabilities

The coverage options for someone with a disability vary with each life insurance company. The application review includes the disability severity, life expectancy, and other complicating health conditions. They are categorized accordingly and impact the final offer from the life insurance company.

  • The severity of a disability
  • How the disability may impact life expectancy
  • The impact it has on a person's daily activities
  • The likelihood the disability increases the risk factor for other complicating health conditions

Key medical records and life insurance for disability

Ensuring your medical team keeps current, up-to-date, and accurate medical records can be vital to streamlining the application process for life insurance. An applicant who documents a healthy lifestyle despite their limitations and can show they follow the medical team's advice regarding their disability improves the overall underwriting review for a competitively priced life insurance policy. Be sure to respond promptly to any request from the life insurance company for more information, which may include a request to ask your medical professional to expedite records.

Buying life insurance with a disability

Take some time to learn about life insurance and your specific disability. Start with an online search. There are plenty of reputable sites that can help you learn about insurance in general. Get familiar with the types of coverage and options for life insurance and disability. Keep your medical records current, and do what you can to present a healthy lifestyle. Be honest and truthful about your condition, and consider using a life insurance professional to guide you in the decision-making.

Life insurance estate planning with a disability

Learning how to set up an estate plan can be daunting for anyone. Beneficiary designations, trust set-up for minors, will completion, estate planning, power of attorney, and a guardianship requirement or role are decisions you'll need to make once you've purchased life insurance. If your estate is large in value or you have very specific details about who will benefit when you are gone consider consulting an expert. A professional may be the answer to assist you with deciding who will manage or receive the life insurance benefit after you are gone.

Beneficiary decisions for life insurance and the disabled

Once you've decided on the beneficiary, be sure to inform them of your decision and how to proceed in the case of your passing. A beneficiary should be reviewed annually along with your other insurance to make sure you haven't changed your mind about the person who receives the benefit.

Regulations on life insurance for people with disabilities

Each state has a department of insurance to ensure life insurance companies follow the rules and don't discriminate against someone with a disability. The National Association of Insurance Commissioners creates model law infrastructure on a variety of insurance topics. Lawmakers use the infrastructure to then create insurance laws and regulations that make sense for their state and will protect consumers from predatory or discriminatory practices in the purchase of life insurance by disabled applicants.


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