If you have AIDS or HIV, you probably think you can’t get life insurance. That really isn’t true. Advances in medical treatment mean that people who follow treatment plans can live a normal life. However, many carriers will still decline life insurance applications from people who have AIDS, HIV, or ARC (AIDS-related complex). You can still obtain life insurance. You just have to know how and where. In this article, we discuss life insurance for people with AIDS or HIV. Specifically, we address burial insurance for people with AIDS or HIV and some discussion with burial insurance underwriting.
Burial Insurance Underwriting
Before we get into burial insurance for people with AIDS or HIV, let’s talk about underwriting. Underwriting for burial insurance is much different than that for term life insurance, IUL, and even large-case whole life insurance. Currently, there is one carrier that will offer term life insurance for people with HIV. These types of underwriting are going to want to know the severity of your condition. They will want doctor’s records and want to know your CD4. Carriers want to know if you have any other underlying health issues. If you have an interest in term life insurance for people with HIV, please contact us.
With burial insurance, underwriting is different. The carrier doesn’t care about all of that stuff. They don’t want you to go through a medical exam or anything like that. The health questions are all “yes or no”. They just want to know if you have AIDS, HIV, or ARC or not.
Once you apply, carriers will run your background through a few different databases to make sure what you say on the application matches to your records. One database is the MIB. The MIB shows your insurance application history. It will show when you applied for insurance in the last few years. If you applied to several life insurance carriers, the carrier will want to know why. It will also raise any red flags if what you said on your application does not match to any previously released information, through your application history.
More On Burial Insurance Underwriting
The carrier will also look at your prescription drug history. Carriers can see all of that. (Even the ones I take.) If an answer to an application question does not match a prescription drug you take, that will be a red flag. For example, if you take an inhaler for emphysema, but say no to the question, “in the last 2 years, have you been diagnosed or treated for emphysema?”, the carrier questions your truthfulness.
That’s why a majority of the carriers conducts phone interviews with an underwriter. They look all of that stuff up while on the phone with you. The interview usually lasts 10 minutes, sometimes less, sometimes more. An underwriter conducts the interview and will either approve or modify on the spot or a couple of days.
Back to the application questions, a question could be as simple as, “have you ever been medically diagnosed as having or been treated by a medical professional for acquired immune deficiency syndrome (AIDS), AIDS-related complex (ARC), or antibodies to the human T-lymphotrophic virus type III, or had a positive test for human immunodeficiency virus (HIV) antibodies?”
If you say “no” to a question, the carrier will either decline you or suggest another type of burial insurance called graded benefit coverage.
You probably know that if you have AIDS, HIV, or ARC, then these carriers will decline you for any coverage. But, you have a viable option. First, though, we discuss the types of burial insurance. Then, we discuss the types of burial insurance for people with AIDS or HIV after that.
Types of Burial Insurance
There are a few types of burial insurance. We will help you make sense of them. Even though you won’t qualify, it helps to know the differences for understanding.
The first one is called level benefit. This means the death benefit has “day 1” coverage. For example, let’s say Jim applies for $20,000 burial insurance. The carrier approves him with level benefit coverage. Six months later, Jim, unfortunately, dies suddenly. Jim’s beneficiary will receive the $20,000 to help pay for Jim’s funeral costs.
The second one is called graded benefit. Think of this as a “waiting period” for death benefit coverage. Depending on the carrier, the waiting period could be 2 years or 3 years. If you die within the waiting period, the carrier usually reimburses your premiums plus interest to your beneficiary. Carriers reserve graded benefit coverage for people with moderate to significant health conditions. In other words, the applicant says “yes” to a question.
An example will make this coverage clear. Let’s use the same example, except the carrier approves Jim for graded benefit coverage. The graded death benefit is 2 years. Should Jim die of natural or sickness within2-year year timeframe, the carrier will reimburse his beneficiary the premiums plus 10% interest. If Jim dies year 3 and after, the full death benefit paid to his beneficiary. One caveat: beneficiaries receive the full death benefit if death by accident.
Unfortunately, Jim unexpectedly dies by sickness 6 months later. His beneficiary receives the premiums back plus 10%.
As we said, people who have AIDS, HIV, or ARC are not eligible for level benefit or graded benefit coverage. However, there is one very viable and affordable solution that we discuss next.
Affordable Burial Insurance For People With AIDS Or HIV
There are two types of burial insurance for people with AIDS or HIV.
First, there is guaranteed-issue life insurance coverage available. This means just as it sounds: you automatically receive coverage. Just fill out an application and answer a few non-health questions. The carrier does not run your background through the MIB or prescription drug history.
Guaranteed-issue coverage contains a graded death benefit, usually 2 years. We work with a few different guaranteed-issue carriers. Eligible application ages range from 25 – 90, although we, at times, have availability for guaranteed issue life insurance coverage from newborn children age to age 25.
Here is the kicker: we described graded benefit coverage earlier. Sometimes, the cost of the guaranteed-issue life insurance coverage is less than that of a traditional graded benefit policy! And, most of the time, the carrier we like to use isn’t that much more expensive than level benefit coverage!
A Funeral Trust Can Work, Too
Here is another type of burial insurance for people with AIDS or HIV. We also utilize a funeral trust. Funeral trusts pay the death benefit directly to the funeral home. More importantly, they protect your policy from the Medicaid spend-down process. That is right. Whole life insurance, including burial insurance in most cases, is a spendable asset for Medicaid since it contains cash. That means if you need to go into a nursing home, Medicaid will force you to terminate your life insurance policy and use the cash for your nursing home care. If that happens, you have lost the initial intention of the life insurance.
We don’t let our clients get to that point. We expedite the transfer of the cash into the funeral trust. The trust protects that money from the Medicaid spend-down process.
There is one question to answer on the application. Most states don’t ask an AIDS/HIV question. If that is the case, then your coverage is day 1 (i.e. level death benefit). If they do ask the question, then your coverage is a “waiting period” (i.e. graded death benefit). Contact us to learn more.
A funeral trust can work well if you have disposable income available of money in an existing annuity, life insurance policy, CD, savings account, or a non-qualified brokerage account. All of these aforementioned savings mechanisms are considered spendable assets for Medicaid.
There is no reason that you have to pay an arm and a leg for burial insurance if you have atrial fibrillation. Even if you have additional health complications, we can likely find a policy that will meet your needs and budget.
We hope you found this article informative. You can obtain burial insurance if you have AIDS, HIV, or ARC. Are you ready to get started? Feel free to contact us or use the form below. We can find the right coverage for you. As with everything we do, we work with your best interests at all times. That means if there is a better option for you than what we can provide, we will help put you in touch with someone who can.