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Recently, we answered a call from a nice gentleman named “Joe”. (Not his real name.) He was looking for life insurance to cover his burial and funeral expenses. He retired, and the life insurance from his company was not portable. Joe explained to us that he had a health condition, which is no big deal. We all have health conditions. And, burial insurance (life insurance designed to pay for your funeral and burial expenses) fits nicely for people with health conditions. However, he then told us about his oxygen use. Using oxygen changes your life insurance and burial insurance options. There are still options, but not as many.
In this article, we discuss affordable burial insurance for people who use oxygen. We first discuss burial insurance underwriting and then discuss your options for burial insurance for oxygen use.
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. You can also leave some money to loved ones, if you wish. To reiterate, burial insurance is a whole life insurance policy with a small face value.
Before we get into burial insurance for people who use oxygen, let’s talk about underwriting. Underwriting for burial insurance is much different than that for term life insurance, IUL, and even whole life insurance with larger face amounts. If you are looking for term life insurance or permanent insurance with a larger face amount, please contact us.
With burial insurance, the carrier doesn’t care about a paramedical exam or ordering your doctor’s records. They just want to know if you use oxygen or not.
That’s right. No blood test, urine sample, etc., etc…
They simply have you fill out a questionnaire. A “yes or no” question application. That is it.
If you are looking for term life or a face amount of $50,000 or larger, then contact us.
However, and we are being honest, it’s going to be tough to find a life insurance or burial insurance carrier that will cover you because of your oxygen use. We discuss more, next.
Burial Insurance Underwriting Health Questions Related To Oxygen Use
As we discussed, a typical burial insurance application asks you “yes or no” questions. Here are some of the ways carriers ask about oxygen use:
Within the last year, have you used oxygen due to a medical condition?
Is the proposed insured currently taking oxygen to assist in breathing?
These are real questions on a burial insurance application for oxygen use.
Truthfully, using oxygen is a knock out condition. What does this mean? It is a situation that “knocks you out” of obtaining different types of burial insurance options, namely those with a “level” or immediate death benefit. It doesn’t matter if you or your loved one is healthy every other way. We’ll explain what this means.
Every burial insurance carrier asks the oxygen use question. It is one of the first questions on the application. It is always a “knock out” question. That means, in other words, you will always be declined for an immediate death benefit.
However, if you use oxygen for sleep apnea, that’s another story. There are few carriers that will cover you if you use oxygen for sleep apnea. Otherwise, carriers decline you if you use oxygen because of COPD, emphysema, or another lung condition.
Not to worry, however, because we have other affordable options for you. First, let’s level-set and discuss the typical burial insurance options. We discuss those next.
Types Of Burial Insurance
There are a few types of burial insurance. They are:
(1) level benefit – those that provide an immediate benefit starting the first day of coverage. If you have level benefit coverage, and die the next day, the carrier pays the death benefit. People who qualify for level benefit usually are healthy with common, mild health conditions.
(2) graded benefit – are designed for people with moderate health conditions. This burial insurance type will either pay out a percentage of the death benefit or have a waiting period for the death benefit. An example will make this clear. Let’s say you have a graded benefit burial insurance policy that pays 15% if death occurs the first year and 75% if death occurs the second year of the policy. The carrier pays 100% of the death benefit beyond year 2. If you have a $10,000 policy and die in the first year, your beneficiaries will receive $1,500.
Conversely, some carriers have a “waiting period” on the death benefit. They may state that the waiting period is the first 2 years of the policy’s start date. If you die within the first 2 years of the policy, the carrier pays your beneficiary the premiums back plus interest. After 2 years, you receive the death benefit 100% in full.
Honestly, though, any life insurance can be used for your burial and funeral expenses. The simplified underwriting process makes burial insurance a nice fit for most people.
Only One Type Of Burial Insurance For Oxygen Use
Honestly, there is only type of burial insurance available for people who use oxygen. It’s called guaranteed issue life insurance. As we discussed, no burial insurance carrier will cover people who use oxygen (except in the case of sleep apnea use). The reason is that the proposed insured must have a serious health condition that warrants a decline. Hence, the knockout” question we described earlier.
Guaranteed issue means just as it sounds: you, or your loved one, 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. We will talk about that more in a minute.
Like graded benefit, guaranteed-issue coverage contains a “waiting period” death benefit, usually 2 years. We work with a few different guaranteed-issue carriers. You might be wondering if graded benefit and guaranteed-issue life insurance are the same? Essentially, yes, except for premium cost. Guaranteed-issue life insurance can be more expensive. However, we have a guaranteed issue life insurance policy that is affordable. Moreover, it cost less than a comparable graded benefit policy. Additionally, the plan costs even less than some immediate, level benefit products!
What if you die within the 2 year waiting period? Well, all is not lost. Your beneficiary receives the premiums back + interest. It is really a “no-lose” situation. There is no risk of losing your premium money.
Affordable Guaranteed Issue Life Insurance
Truth be told, guaranteed issue life insurance is more expensive than traditional, underwritten life or burial insurance. Why? There are no health questions. The carrier has no idea the risk it is taking. As such, premiums are higher. Additionally, the 2 year waiting period on the death benefit mitigates the carrier’s risk.
But, if you think you can’t afford guaranteed issue life insurance, think again. As we mentioned, we work with affordable guaranteed issue life insurance carriers. We can help.
Funeral Trust Could Work As Well
We also utilize a funeral trust. Funeral trusts pay the death benefit directly to the funeral home. More importantly, 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.
However, 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.
A word to the wise. If you or a loved one has existing whole life insurance and will ultimately need custodial care, Medicaid will force you to use the cash in the policy to pay for your care before it will pay. A funeral trust prevents this scenario from happening.
More On Burial Insurance Underwriting For Oxygen Use
Let’s say you or a loved one just started using oxygen. You want the best coverage available. You think to yourself, “Heck with this. I am just not going to state I use oxygen. There is no way the carrier will find out!“ You then apply for level (i.e. immediate) benefit coverage.
If you think you will lie on the application, or if you think you can trick the carrier, think again. On level benefit and graded benefit applications, the carriers 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. Using oxygen is prescribed by your physician. Carriers see that oxygen use.
Additionally, to obtain immediate death benefit, nearly all carriers require a phone interview with you. They’ll address these findings with you on the spot.
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 burial insurance policy if you use oxygen.
We hope you found this article informative. You can obtain burial insurance if you use oxygen. If you or a loved one uses oxygen, a guaranteed-issue life insurance policy should work just fine. As mentioned, we work with an affordable guaranteed-issue life insurance plan.
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. 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.