People with disabilities may feel life insurance is out of reach.
That’s not entirely true.
If you have a disability, or you support someone with a disability, life insurance is available. While a disability could mean disclosure on a life insurance application, the disability is not, by any means, a decline. You just need to know what your options exist for your situation.
- The type of life insurance depends on your situation
- Types of life insurance for people with disabilities
- What if you work?
- Life insurance for people who receive SSDI
- Life insurance for people who receive SSI
- Options for children
- Now you know people with disabilities can obtain life insurance
The type of life insurance available really depends on your situation. Let’s discuss that first.
It Really Depends On Your Situation
Contrary to popular belief, and from many other agents, people with disabilities can obtain life insurance. The amount of life insurance and type depends on your condition and disability. And, one more thing matters:
Do you work?
For example, many carriers allow a high-functioning adult with autism, who is independent and maintains a job, obtain life insurance.
At the other end, many carriers will decline a person with down syndrome.
Why? The difference has to do with the person’s life functionality and longevity. A high-functioning adult with autism, independent and holding a job, should live a normal age life than a person with down syndrome, in which the life expectancy is age 60.
These examples bring us to an important point. Carriers look at life functionality and longevity when reviewing someone with disabilities. Oftentimes, the disability has no effect on the health classification. A disabled person can even obtain preferred best rating depending on the condition and situation.
An example: A carrier will likely approve a person disabled, in a wheelchair, who maintains a healthy lifestyle and job. It is the condition behind the disability that carriers look at.
So, again, how you live your life with your disability matters to the life insurance carriers.
Of course, declines happen. If you can’t work due to your disability, that in itself can have a negative effect. The inability to work due to PTSD, depression, anxiety, drug abuse, or anything else has an effect. However, life insurance options exist.
Moreover, if you have additional health conditions including your disability, such as smoking while diabetic and disabled, the carrier will likely decline you. Co-morbidities, as the industry calls them, have a drastic, negative effect.
Life Insurance Options For People With Disabilities
Term Life Insurance For People With Disabilities
As we indicated earlier, the type of life insurance available depends on the disability. If you are able-bodied and fully working, then carriers should offer you a complete array of term life, whole life, or any other type of life insurance.
Remember that term life insurance contains level premiums for a “term” such as 10 years, 20 years, or 30 years. Term life insurance costs the least per dollar of death benefit coverage. We believe term life insurance is the most appropriate life insurance coverage.
Depending on your disability, you may have to pay an extra premium, called a table rating.
A rating should be the least of your concern. What matters the most is getting the coverage in place, first, to protect your family. You can discuss premiums later. By working with an agency like My Family Life Insurance, which must keep your best interests first, you can be certain you’ll receive the right life insurance for your situation.
Permanent Life Insurance
Then, there is permanent insurance. These are types of life insurance that last your entire lifetime. Whole life insurance is the most common permanent insurance.
Whole life is more expensive than term life insurance for the same dollar death benefit. Why?
(1) Premiums last your “whole life”. In other words, whole life insurance policies are underwritten to pay a death benefit
(2) Contains cash value
Then, universal life comes into play. We aren’t huge fans of universal life, but a guaranteed universal life policy can work really well for those seeking long-term protection (almost or nearly permanent) without the whole life insurance premium cost.
Burial insurance is a type of whole life insurance policy. It contains a small death benefit.
Just how it sounds, people use burial insurance to fund their burial, funeral, and end-of-life expenses.
Contrary to what people may say, people with disabilities can obtain burial insurance, and rather easily.
Usually, carriers that offer burial insurance require a health questionnaire filled out and/or a phone interview with an underwriter.
There are two subcategories of burial insurance. Those policies that offer an immediate benefit. Then, there are those that offer a delayed or graded benefit.
Obviously, obtaining an immediate benefit is your priority. If you have a policy with an immediate benefit and die the next day, your family receives the death benefit money.
A policy with a delayed, or waiting period, benefit pays the full death benefit after a period of time has elapsed. Some carriers pay a percentage of the death benefit each year. Others wait, say two years. After the waiting period, the death benefit is available in full.
Usually, people with more severe disabilities obtain these types of life insurance.
Guaranteed Issue Life Insurance
I wrote about the 5 types of burial insurance not to buy, and I listed guaranteed issue life insurance as one of them.
I like guaranteed issue life insurance. It fills a need for many people. However, I included it in that article because most people opt for a guaranteed issue life insurance policy when they could qualify for something better.
A guaranteed issue life insurance policy is simply a whole life insurance policy with no health questions. The issuance is guaranteed. You apply, pay the first month’s premium, and you have life insurance.
However, it can be expensive. Additionally, a waiting period comes standard on every guaranteed issue life insurance policy.
Nevertheless, a guaranteed issue life insurance can prove valuable for people with disabilities, depending on their situation. I discuss this further in the article.
To get right to the point, a funeral trust creates a separate entity. This entity holds the life insurance policy on your life. The owner of the policy is the trust and the beneficiary is the trust, which pays the death benefit amount directly to the funeral home.
If that seems very easy, it is.
We have written extensively about funeral trusts. Because these are separate entities, the value inside the trust will not affect your eligibility for government assistance. In other words, people on Medicaid or receiving SSI would qualify.
The illustration below shows the protective nature of the trust.
State law governs funeral trusts. Many states allow a maximum of $15,000 in the trust. Other states are less. There are a few states that do not recognize funeral trusts. Contact us to fund the parameters of your state.
Simply put, in most states, the life insurance in the trust is not an asset for Medicaid purposes. Again, seek legal advice for certainty.
I know what you are thinking. John, where does the “affordability” come into play in all of this, you wonder. Well, we work with so many carriers (over 60), we are likely to find you affordable coverage.
The takeaway here: many carriers underwrite differently, particularly with disabilities, so finding affordable coverage for you should be no problem. We just match your disability to the right carrier.
Life Insurance Options If You Work
People who work full-time with a disability likely will have many life insurance options including term life insurance.
As I mentioned earlier, your working ability matters to life insurance carriers.
It is really the best situation.
Depending on your situation, you might have a table rating.
For example, we have insured many adults with high-functioning autism. Technically, they are disabled.
We have also helped working professionals who are deaf or blind obtain life insurance.
If you work full-time, chances are term life is available.
You can check out some example premium rates. Feel free to input your information. (Of course, we reserve the right to give you a call or email and say thanks for coming to our site. But, we don’t sell your information or call you 1,000 times.)
The best thing to do is to contact us about your situation. We can help.
“Almost” Guaranteed Issue Life Insurance
We do work with a carrier that offers “almost” guaranteed issue life insurance of up to $100k.
You can purchase up to $100,000 of either term life or universal life. You just need to be actively at work and performing the normal duties of someone of like age.
However, you do need to participate in a limited partnership in order to have the life insurance. I explain this all and how it works in the link above.
If you are disabled, but do actively work and perform normal activities of someone your age, this might be a viable option.
Life Insurance Options For People Receiving Disability Benefits Or Social Security Disability Income (SSDI)
At this point, you hopefully understand that nearly all disabilities are insurable. If you suffer from depression, for example, but work and regularly visit your doctor, you are eligible for life insurance. Depending on your condition and other factors, maybe there is a rating, but generally no decline. That is why we search and work with over 60 carriers, because all the carriers underwrite your disability differently.
Here’s a problem some people run into.
If you don’t work, are receiving disability benefits, or are receiving social security disability income (SSDI), your life insurance options are limited.
In these cases, the fact that you are receiving SSDI indicates you have a long-term and debilitating disability in which affects your everyday lifestyle. You aren’t working. Most term life insurance carriers will decline you.
For example, a person with diabetes (type 2) called us recently. He was looking for $250,000 of term life insurance. Nowadays, carriers insure people living with diabetes all the time. The problem: he was receiving SSDI benefits and disabled due to his diabetes. No chance a carrier covers him for that amount.
But other options exist.
Before we get into those options, people with SSDI can obtain life insurance. Many agents say otherwise. Having life insurance does not prevent you from receiving your disability benefit. There is no asset or resource test with SSDI.
Burial Insurance Available For People On SSDI
You can still obtain life insurance, though. If you are receiving SSDI, you could obtain burial insurance as we described earlier.
Depending on your age and your condition, you could receive an immediate benefit. We’ve worked with many individuals with disabilities and on SSDI.
We would pick the carrier based on your situation and disability.
Feel free to check out estimated quotes. (Again, we reserve the right to send you a thank you email or say hello via phone, but we don’t sell your info or bombard you a billion times a day with phone calls.)
Guaranteed Issue Life Insurance For People On SSDI
Guaranteed issue life insurance could likely be the best choice for you if you have a severe disability. There are a number of these plans available. These plans are traditionally whole life insurance policies. Maximum death benefits of up to $25,000 usually. All you need to do is apply and voila, you have life insurance.
Feel free to check what a guaranteed issue life insurance policy may cost in your state. Just select “poor health” for the health class. Again, we may give you a call or send you an email to see if you would like our help. “No” is an answer 🙂
Unlike other agencies, we have access to guaranteed issue life carriers for people under age 40. Additionally, we work with guaranteed life insurance carriers with affordable rates.
Life Insurance Options For People On SSI – Supplemental Security Income
If you receive SSI, supplemental security income, your options are very limited, but by no means a dead-end.
If you receive SSI, you are likely on Medicaid. As we wrote before, you can receive Medicaid and purchase life insurance. You just need to go about it the right way.
You see, receiving SSI is based on an asset and resource test. To make a very long story short, if you earn income and have assets above the SSI threshold, you will likely lose your SSI benefits.
Many agents get this wrong, to the detriment of the insured-applicant. I’m floored about that. Even the social security administration states that cash-value life insurance is an asset resource. The same for burial contracts, which are also an asset.
Whole life insurance is an asset. That means a whole life insurance policy, guaranteed issue or a traditional burial insurance policy, could negatively impact your SSI benefits.
There’s a couple of ways around this. You could:
(1) have someone else, like a son or daughter, own the policy. He or she would be the owner. Having someone else own the policy on you does not affect your SSI benefits. We have helped many people in this regard.
(2) open a funeral trust and transfer or pay money into the trust. Medicaid can’t get at the money in the trust. It is not an asset. It will not affect your SSI benefits.
(3) utilize term life insurance. We work with one term life insurance plan that works well with people receiving Medicaid.
(Note: we are not experts with estate planning or Medicaid law. We recommend consulting with a lawyer who is an expert in this area in your state.)
What About Children Who Are Disabled And Life Insurance?
We all want the best for our children. Purchasing life insurance on a child is one of the ways people like to insure the next generation.
You may think children with disabilities are unable to obtain life insurance. That is not true. We have helped many families obtain life insurance on their disabled children.
The right type of life insurance, as we have said, depends on your situation. For example, we have helped many families obtain life insurance for their autistic children. We have also helped many families obtain life insurance on children with down syndrome.
We work with many carriers that work great in the children’s life insurance market, even those children who are disabled. And, if a traditional policy is unavailable, we do work with a carrier that offers guaranteed issue life insurance for children, even newborns. As you can imagine, premium rates tend to be affordable.
Now You Know People With Disabilities Can Obtain Life Insurance
There are many life insurance options for people with disabilities. The right plan for you depends on the nature of your disability, if you are working, and how the disability affects your everyday life.
If you work and independent, your disability likely won’t affect your life insurance options. You may have to pay an additional rate because of your disability. However, a decline is unlikely to happen.
If you are on SSDI or on SSI, your options are limited. Moreover, people on SSI should consider someone else to own the policy or utilize the funeral trust we described. The trust protects your money from Medicaid and other entities. In fact, we generally recommend a funeral trust to anyone who has a growing cash value close to 70% of the policy’s death benefit.
Don’t know what to do or where to start? That is why we are here. Contact us or use the form below. We would be more than happy to help you with your life insurance needs. As usual, we only work in your best interest and nothing less. That means if there is a plan or policy elsewhere which works better in your situation, we will direct you to that solution. Working in your best interest is the only way we know how to work with our clients.