Chronic Obstructive Pulmonary Disease, also known as “COPD”. If you have COPD, you probably think that you can’t obtain burial insurance. That is simply not true. Sure, there might be life insurance carriers that decline you, but there others that won’t. You just need to know where to look. In this article, we discuss affordable burial insurance for people with COPD. We first discuss burial insurance underwriting and then discuss your options for burial insurance if you have COPD.
Burial Insurance Underwriting
If you did not know, burial insurance is a whole life insurance with a relatively small face amount up to $25,000 or $50,000. It is designed to help pay for your funeral and burial expenses. Additionally, a burial insurance policy allows you to leave some money to your loved ones, if you wish.
Before we get into burial insurance for people with COPD, 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. These types of underwriting are going to want to know the severity of your COPD. They will want to know FEV1. Likely, you will have to undergo a paramedical exam. Carriers want to know if you have any other underlying health issues. (If you have COPD and need term life insurance, whole life, or an IUL, contact us, and we will discuss the steps and process with you.)
With burial insurance, underwriting is different if you have COPD. The carrier doesn’t care about all of that stuff. They don’t want you to go through a medical exam or know your FEV1. The health questions are all “yes or no”. They just want to know if you have COPD or not.
That’s right. No blood test, urine sample, etc., etc…
Let’s talk about the health question application in more detail.
Burial Insurance Underwriting Health Questions Related To COPD
As we discussed, a typical burial insurance application asks you “yes or no” questions. For questions related to COPD, the questions are structured like this:
Have you ever been diagnosed, treated, tested positive for, or been given medical advice by a member of the medical profession for Chronic Obstructive Pulmonary Disease (COPD)?
In the past two (2) years, has the Proposed Insured had, been told they have, been treated for, or been prescribed medication for emphysema, or any other chronic respiratory or lung problem excluding allergies or asthma?
In the past two years, have you been diagnosed or treated for lung disease (except for mild asthma not requiring hospitalization)?
Yep… the last two questions refer to COPD as well, in case you were wondering…
This brings us to a couple of points. If you have another health condition, such as congestive heart failure, that condition might preclude you from your optimal burial insurance choice. Carriers look at ALL of your health conditions combined. Sure, burial insurance is still available, but the chance that a carrier will cover COPD AND congestive heart failure is low.
Moreover, if you take oxygen for COPD, the carrier will likely decline you. This is also known as a “knockout” question as it “knocks you out” of approval. It means you are automatically declined.
Not to worry, though, because we have other affordable options. We discuss those later.
More On Burial Insurance Underwriting For COPD
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.
They 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 in a couple of days.
Remember that lying on a life insurance application constitutes fraud. Obviously, fraud is a bad thing. There is no need to lie. We will find you the lowest cost policy for your situation, which we discuss next.
Let’s recap. If the carrier doesn’t ask about your condition (in this case COPD) on the application, then likely it won’t be considered, even with a prescription drug history.
Burial Insurance For People With COPD
There are a few types of burial insurance for people with COPD. We will help you make sense of them.
Not to worry. We can and will find you an affordable burial insurance plan.
Fair warning: the industry uses a lot of technical jargon, but we will explain them.
Let’s discuss the types of burial insurance for people with COPD next.
The first one is called level benefit. This means the death benefit has “day 1” or immediate coverage. Level benefit coverage is what you want. If you have the policy in place and die the next day, the carrier pays the death benefit. Level benefit is also, generally, the least expensive burial insurance option. 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.
As we said, a policy with level benefit (i.e. immediate death benefit) usually commands a lower monthly premium.
The second one is called graded benefit. Simply stated, a graded benefit policy delays the full value of the death benefit.
There are a couple of options within the graded benefit category. One option delays the release of the death benefit to your beneficiaries. 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 by illness or natural causes, 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 within 2-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 anytime.)
Unfortunately, Jim unexpectedly dies by sickness 6 months later. His beneficiary receives the premiums back plus 10%.
Another option allows you to receive a percentage of the death benefit. For instance, if you die within the first year, your beneficiary might receive 15% of the death benefit. If you die within year 2, your beneficiary might receive 60%. After year 2, the policy pays 100%.
People with many health complications usually end up with graded benefit coverage. It is, by no means, bad. However, we aim to find level benefit coverage when possible. Level benefit coverage usually means the lowest cost for you.
Other Types Of Burial Insurance For People With COPD
There are a couple more types of burial insurance for people with COPD.
One option is guaranteed issue life insurance. This means just as it sounds: you automatically receive coverage. Just fill out an application and answer a few non-health questions. Send in the application with the premium draft information, and you now have life insurance. The carrier does not run your background through the MIB or prescription drug history.
Guaranteed-issue life insurance makes sense for people with moderate to severe health conditions. They usually don’t qualify for level benefit policies.
Guaranteed-issue coverage contains a “waiting period” death benefit, usually 2 years. We work with a few different guaranteed-issue carriers. Sometimes, the cost of the guaranteed-issue insurance coverage is less than that of a traditional graded benefit policy. If that’s the case, it makes sense to apply for the guaranteed-issue coverage. It’s true; we have a guaranteed issue life insurance policy that is affordable. Most times, the cost is less than that of a comparable graded benefit policy. Moreover, it is less than an immediate, level benefit product!
Funeral Trust Can Work, Too
We also utilize a funeral trust. Funeral trusts pay the death benefit directly to the funeral home. They also 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 in your burial insurance policy into the funeral trust, where it will be protected. Contact us to learn more.
Do you need a funeral trust right away? Maybe…maybe not. Just know that your burial insurance policy is transferable to a funeral trust if you and your family are in need of nursing home services.
Carriers That Offer Burial Insurance For People With COPD
Now that you know the types of burial insurance available to you, which type do you think we will choose? That’s right. The one with the lowest cost and that best fits your situation. People with COPD can obtain level death benefit burial insurance coverage. As we said earlier, however, there may be other health conditions that affect your approval. If you are overweight, have diabetes or cancer, or smoke, or have some other significant health condition in addition to COPD, the chances of a level death benefit coverage are much lower.
That is where we come in. We have helped people with COPD AND some other health conditions obtain proper coverage, usually at level death benefit coverage.
Having said that, many carriers offer burial insurance for people with COPD at the graded benefit level. A few burial insurance carriers will offer people with COPD at an immediate, level benefit.
That is right! However…
Remember we said there is the oxygen “knock out” question? One of their first questions is if you use oxygen. If you do use oxygen, the carrier declines you.
There is no reason that you have to pay an arm and a leg for burial insurance if you have COPD. 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 COPD. Are you ready to get started? Feel free to contact us or use the form below. We work with many carriers in the burial insurance area and know 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.