You’ve been told that people with Down Syndrome can’t get life insurance. However, that is not true.

People with Down Syndrome can obtain life insurance. That is right.

If you have a relative or loved one with Down Syndrome and are thinking about obtaining life insurance on their life, you have come to the right place. We have helped many families with children, young adults, and older adults with Down Syndrome obtain life insurance.

Not all types of life insurance are available, though. Moreover, there is a process if you want to obtain life insurance for someone who has Down Syndrome. We explain all of this and a major pitfall many people, families, and even agents overlook.

In this guide, we describe how you can obtain life insurance for your loved one or relative with Down Syndrome. Specifically, we tell you:

• Why Is It Hard To Obtain Life Insurance
• Options For People With Down Syndrome
• Guaranteed Issue Life Ages 0 to 17
• Guaranteed Issue Life Ages 18 to 75
• A Major Pitfall To Watch Out For!
• Now You Know You Can Obtain Life Insurance

(If you want to watch an abridged version of this article in 3:34, click on the video below.)

Let’s start and answer the question, “Why is it so hard to get life insurance for someone with Down Syndrome?” It’s an honest and good question.

Why Is It Hard For Someone With Down Syndrome To Get Life Insurance?

Many people tell us that carriers declined their loved one life insurance.

Why is it so hard to obtain, they ask? They tell us that their son or daughter is healthy every other way.

Here’s why it is hard. People with down syndrome, as you know, may have additional health concerns as well as a life expectancy that is shorter than the average person. According to the National Association For Down Syndrome,  the average life expectancy of a person with Down Syndrome is 60 years old.

Moreover, people with down syndrome could face additional health conditions including congenital heart problems among other things.

Finally, many people with Down Syndrome do not have the cognitive ability to enter into an insurance contract. This is actually a very important step in the application process. If you don’t have, or if carriers feel you don’t have, the cognitive ability to know what life insurance is, the purpose of it, know what a contract is, and sign your name, the carrier declines your application.

Moreover, carriers consider a person’s “life’s functionality”. People with Down Syndrome usually can’t work full-time. Usually, they are on social security disability or supplemental security income.

Having the ability to employ and work is a component of the life insurance underwriting process.

Additionally, so is the ability to live independently. Not necessarily by oneself, but having the ability to dress oneself, carry a conversation, manage a checkbook, and other everyday activities.

These are the reasons why people with Down Syndrome have a hard time obtaining life insurance through a traditional underwriting process.

Let’s be clear. This means that traditionally underwritten life insurance is hard to obtain for people with Down Syndrome. However, life insurance options exist. Let’s talk about those options next.

Life Insurance Options For People With Down Syndrome

There are several life insurance options available for people with Down Syndrome. However, don’t expect to obtain a large death benefit.

Generally, a person with Down Syndrome can’t obtain a life insurance policy with a large death benefit. The reason is gainful employment (as we outlined in our life insurance for people with disabilities article).

However, he or she can obtain some amount of life insurance such as $25,000. This amount can be used for burial needs and final expenses. That should give you peace of mind.

The life insurance market for people with Down Syndrome changed considerably. However, we still have options. We discuss these options next.

#1 Group Employer Life Insurance For People With Down Syndrome

Group employer life insurance is an option; however, it usually is available if your loved one has a low to a mild form of Down Syndrome. He or she must have the cognitive ability to understand and sign financial documents. If that is the case, and your loved one qualifies for group life insurance, this is a viable option. Typically, with group life insurance, the application asks no health questions.

In most cases, the person with Down Syndrome must work full-time. With most group employer carriers, that requirement is a minimum of 30 hours per week. As you are aware, many people with Down Syndrome do work, but likely not as much as 30 hours per week.

Again, it must be noted that in this case, your loved one must have the ability to sign and understand what he or she is signing. If you have guardianship or Power of Attorney on your loved one, then likely the group employer life insurance is unavailable.

Nevertheless, this might be an option if your loved one qualifies. However, if not, we still have options for you as you can read next.

#2 Guaranteed Issue Life Insurance For People With Down Syndrome

Guaranteed issue life insurance is likely the option for your loved one with Down Syndrome. What is guaranteed issue life insurance coverage? Here it is in a nutshell:

• Typically, a whole life insurance plan with a small death benefit, usually not more than $25,000.
• no health questions. Just have a couple of administrative questions to answer.
• a waiting period on the death benefit. More on that in a minute.

As I mentioned earlier, these policies have, what I call, a “waiting period” on the death benefit. Some policies have a two-year waiting period. Others have three. What does this mean? If your loved one dies within the waiting period from illness or natural causes, you will receive your premiums back plus interest.

After the waiting period, the carrier pays the death benefit 100%.

Death by accident is covered 100% anytime, even during the waiting period.

Why do the carriers have a waiting period? They must mitigate their risk. They know people who apply for guaranteed life insurance usually can’t qualify through traditional underwriting. When you think about it, however, receiving your money back is a no-money-loss situation for you.

The guaranteed issue life insurance market has changed quite a bit. In early December 2022, a popular carrier, offering guaranteed issue life insurance to people under the age of 40, terminated their guaranteed issue product.

However, we still have options.

If your relative is a child, then a parent or grandparent can apply for a policy him or herself and add a guaranteed issue child rider to the policy.

Many carriers offer a child’s rider, but it is underwritten. However, a handful of carriers don’t underwrite the child’s rider.

We discuss these options next.

Guaranteed Issue Life Insurance For People With Down Syndrome Ages 0 To 17

I know what you are thinking…

John, I would like to purchase some life insurance for my (child or grandchild) with Down Syndrome, but all the companies decline.

We talked about this earlier. It is true. Most carriers do. Down Syndrome is a high-risk life insurance situation.

Just look at this question from a real-life insurance application here. Here’s the thing. Many applications don’t directly ask about Down Syndrome. The carrier asks about “mental incapacity”.

You have to say “yes” to this question, and then the carrier declines the application.

This is the unfortunate situation for many families who have children or grandchildren with Down Syndrome.

However, as we pointed out earlier, guaranteed life insurance exists. As mentioned earlier, a carrier we typically liked to use for children with Down Syndrome no longer offers a guaranteed issue product.

But, here at My Family Life Insurance, we have options for you. As mentioned earlier, these options may require the parent or grandparent to obtain life insurance on themselves and then add a child rider which is underwritten at guaranteed issue. The benefit of this path is that there is no waiting period on the death benefit for the child.

Here are the options:

As you can see, none of these plans have a waiting period. The reason why is that you as the parent or grandparent are being underwritten.

One whole plan is available on a stand-alone basis, but the carrier only offers the plan every couple of years.

Contact us and we can help.

Guaranteed Issue Life Insurance For People With Down Syndrome Ages 18 To 75

People with Down Syndrome who are between the ages of 18 and 75 have different life insurance options.

Obtaining life insurance for an adult with Down Syndrome requires an extra step – generally speaking, a proper POA or guardianship form (read below for more information about this.)

These options will include a waiting period.

The first one available is a guaranteed issue term policy that is term to age 80, but the application ages are between 18 and 75.

The plan is available through an association. You have to pay an association fee. You can self-enroll your loved one here.

The life insurance rates are fixed for 5 years and then increase as your loved one enters age bands.

You can purchase between $10,000 and $50,000 of term life in $10,000 increments.

Unlike other carriers and plans, this one doesn’t require a POA or guardianship to enroll on behalf of your loved one.

We then have a guaranteed issue whole life plan that is available for people between the ages of 40 and 90.

You can apply on behalf of your loved one with Down Syndrome provided you have the proper POA or guardianship paperwork.

You can purchase up to $25,000.

We also have the $10,000 whole life plan described in the earlier section. A POA or guardianship form is required.

So, you do have options.

We will update this article accordingly as new information becomes available.

In summary, your options include:

• guaranteed issue term
• guaranteed issue whole life up to $25,000
• guaranteed issue whole life up to $10,000

As we said, the guaranteed issue market changed in early December 2022. Many other websites may suggest that the guaranteed issue product that insures people less than age 40 is still available. It is not.

What If My Loved One Has A Mild Case Of Down Syndrome? 

Every once in a while, we receive a phone call from a parent or a loved one who says their child or relative has a low to mild form of Down Syndrome.

The loved one wants to know if traditional underwritten life insurance is possible. The person with Down Syndrome works, doesn’t receive SSI or SSDI, and lives independently among other positive characteristics.

Traditionally underwritten life insurance on people with low to mild cases of Down Syndrome is possible. Yet, it is still very tricky, too.

Your relative needs to have the cognitive ability to know what a life insurance contract is and what he or she is signing.

Moreover, he or she would need to independently answer the health questions.

Additionally, your loved one would need to qualify in other ways for underwritten life insurance. For example, he or she would need to have a good height/weight (BMI) and generally free from other ailments.

Finally, your loved one may need to complete a phone interview with an underwriter.

Having said this, yes, it is possible for your loved one with Down Syndrome to obtain underwritten life insurance. We are happy to say that we have helped some families this way.

However, the options discussed earlier are available.

Watch Out For This Major Pitfall! 

Before you decide to sign up, make yourself aware of a major pitfall. I can almost guarantee you won’t hear about it elsewhere.

The pitfall is having your loved one with Down Syndrome as the owner of the life insurance policy.

Why is that, John, you ask?

If a person with Down Syndrome has any assets in his or her name, then likely he or she loses valuable public assistance and other types of resources. Assets include cash value whole life insurance. The guaranteed issue whole life insurance we described contains cash value.

State law determines how much assets and income a person can have to qualify for public and government assistance (including Medicaid). Typically, this amount is $2,000. It’s not much. Anything above this amount, and the person loses valuable aid.

You don’t want that to happen, right? What can you do?

Thankfully, there are a few ways around this. We will give a general overview next. However, if you have specific questions, I highly recommend you speak to an estate planning attorney who specializes in special needs situations.

The Fix – Change Ownership

There are a couple of ways your loved one can still qualify for valuable aid and have a life insurance policy.

The two ways include:

• you can be owner of the policy, or
• you can have a trust as the owner of the policy.

If you are the owner, you will need legal guardianship and/or power of attorney. This allows you to sign and execute the insurance application on your loved one’s behalf.

We get this statement a lot, “John, I’m the mom (or dad). I have been the guardian of (insert person’s name) since she was a baby.”

I am sorry to say, but that is not guardianship.

You see, when your loved one turns 18 or 21 (depending on the state), he or she becomes an adult.

Your state doesn’t see your loved one’s disability or Down Syndrome. The state sees a person who, as an adult and by state law, can now enter into contracts and sign his or her name. He or she has the cognitive ability to enter into contracts.

The problem is, your loved one likely can’t (as we discussed earlier).

However, the guardianship or power of attorney designations allows you to sign and enter into legal contracts on behalf of your loved one. Just make sure your designation allows you to do that.

If you establish a trust for your loved one, the trust can be the owner and (usually) beneficiary, for the benefit of your loved one.

I recommend speaking to a qualified estate planning attorney if you have additional questions about this.

What Is The Problem If My Child With Down Syndrome Owns Life Insurance?

Purchasing life insurance on a child is very easy to do. Carriers don’t require a guardianship form, power of attorney, or trust. As long as you have an insurable interest (as such with a parent-child relationship), you can sign as the owner easily. It is very easy to do!

However, a big problem arises when your loved ones are adults. When they are adults, usually 18 or 21 (but check your state), they automatically become the owner of the life insurance.

You will want to make sure you have the guardianship, Power of Attorney, or trust in place before this happens. Otherwise, your loved one runs the risk of losing valuable resources, programs, and aid as we described earlier. The reason is that they automatically become the owner of the life insurance policy. Unless, of course, you show you have legal ownership of the policy.

Again, I am not an estate planning lawyer, so I recommend contacting one in your state for more specific information.

Now You Know People With Down Syndrome Can Obtain Life Insurance

If someone says you can’t purchase life insurance for someone with down syndrome, you now know they are wrong. People with Down Syndrome can obtain life insurance. There are many options.

Don’t know what to do next? Need our help? We would be more than happy to help you secure life insurance coverage for your loved one. Simply contact us or use the form below. You can also schedule a no-pressure call with us through our calendar. We can discuss your situation and see how we can help.

As with everything we do, we only work in your best interest only. That means if there is a better solution available that we can’t provide, we will point you in the right direction as best we can. Do you think most agents and agencies do that? Likely not. There is no risk to contacting and speaking with us.