Can You Get Life Insurance If You Have A Disability?

Life insurance is a valuable resource for people with disabilities, but it can be challenging to obtain. While a disability does not automatically disqualify a person from life insurance coverage, insurance companies consider multiple factors for eligibility, including the nature of the disability, overall health, and life expectancy. This means that a disability can impact the availability and cost of life insurance, with higher-risk applicants facing higher premiums and fewer choices. However, there are alternative options, such as guaranteed acceptance life insurance, which offers coverage regardless of health conditions, and simplified issue policies, which do not require a medical exam.

The Americans with Disabilities Act (ADA)

The ADA is divided into five titles or sections, each addressing a specific area:

The ADA plays a crucial role in ensuring that individuals with disabilities have equal opportunities and are protected from discrimination in various aspects of public life. It provides civil rights protections and guarantees equal access, empowering individuals with disabilities to fully participate in society.

Life insurance options for disabled people

According to the Americans with Disabilities Act (ADA), a disability is "a physical or mental impairment that substantially limits one or more major life activities". Despite this legal definition, people with disabilities may still face challenges when applying for life insurance. However, it is important to note that having a disability does not automatically disqualify an individual from obtaining life insurance. The options and premiums available depend on several factors, including the type and severity of the disability, overall health, and life expectancy.

Traditional Life Insurance Options

People with disabilities can apply for traditional life insurance policies, such as term life or final expense insurance. The eligibility and premium rates are determined by factors such as age, medical history, sex, lifestyle, and occupation, in addition to health and life expectancy. If a disability is caused by a physical impairment, such as blindness or deafness, traditional term policies may be an option, especially if the applicant's spouse also has life insurance.

No Medical Exam Requirements

For individuals who have difficulty qualifying for traditional life insurance due to their disability, there are policies that do not require a medical exam, such as:

• Simplified Issue Life Insurance: These policies are similar to traditional term and permanent life insurance but do not mandate a medical exam. They usually include health-related questions in the application and tend to be more expensive with lower coverage amounts.
• Guaranteed Issue Life Insurance: These policies do not require a medical exam or health-related questions. They are more expensive and offer limited coverage, but they can be a viable option for disabled individuals who face challenges in obtaining traditional insurance.

Riders for Additional Support

Adding riders to a life insurance policy can provide valuable support for adults with disabilities. Some useful riders include:

• Accelerated Death Benefit Rider: Allows the insured person to access a portion of the death benefit while alive if diagnosed with a qualifying serious or terminal illness.
• Term Conversion Rider: Provides the option to convert a term life insurance policy into a whole life policy, extending coverage for life and adding a cash value feature.
• Guaranteed Insurability Rider: Offers the opportunity to increase the death benefit at certain life stages without undergoing an additional medical exam.
• Long-term Care Rider: Allows the insured to use the death benefit for qualifying long-term care costs.

Group Life Insurance

Group life insurance offered through employers can provide affordable coverage for disabled individuals. It often does not require an extensive underwriting process and may include add-ons such as a waiver of premium for employees who become totally disabled.

Guaranteed Acceptance Life Insurance

If traditional life insurance is not an option due to health reasons, guaranteed acceptance life insurance offers coverage regardless of health conditions. However, it generally comes with higher premiums.

Final Expense Insurance

Final expense insurance covers basic end-of-life expenses as long as the insured pays the premiums.

Joint Life Insurance Policy

A traditional "joint life insurance policy" can be purchased with a spouse, providing coverage for both partners.

Veterans Affairs Life Insurance (VALife)

Disabled military veterans may be eligible for VALife, which offers guaranteed acceptance whole life coverage in increments of $10,000 up to $40,000.

Credit Life and Disability Insurance

Credit life and disability insurance are offered by lenders to cover debts in case of the insured's death or disability. However, these policies are generally more expensive and do not allow beneficiaries.

Life Insurance for Disabled Children

Parents may be able to obtain life insurance for their disabled children by adding them to their own policies through child riders. These riders vary in terms of coverage duration, health restrictions, and the need for a medical exam.

Applying for life insurance with a disability

Having a disability does not automatically disqualify you from obtaining life insurance. According to the Americans with Disabilities Act (ADA), insurance companies cannot deny someone a life insurance policy solely because of a disability. This law ensures that disabled people have equal access to life coverage.

However, insurance companies do factor in life expectancy when evaluating your risk, and certain disabilities can affect this. If your disability impacts your overall health and life expectancy, it may result in higher premiums or limited coverage options.

Be transparent about your disability

Full disclosure is essential when applying for life insurance. Failing to disclose your disability or any pertinent information can be considered life insurance fraud. Be honest during the application process, medical exam, and health questionnaire.

Choose the right policy type

There is no separate life insurance specifically for disabled people. Instead, you need to decide on the best policy type and coverage amount for your needs. Traditional life insurance types, such as term life or final expense insurance, may be suitable for some individuals with disabilities. These policies take into account various factors beyond health, including age, medical history, sex, lifestyle, and occupation.

Consider policies without a medical exam requirement

If your disability makes it challenging to qualify for traditional life insurance, you can explore policies that do not require a medical exam. These include:

• Simplified issue policies: These policies work similarly to traditional life insurance but do not require a medical exam. They typically include health-related questions in the application and may be more expensive with lower coverage amounts.
• Guaranteed issue policies: These policies do not require a medical exam or health-related questions. They tend to be more costly and provide less coverage, but they can be a viable option for disabled adults who struggle to qualify for other policies.

Work with an experienced agent

Engaging the services of an experienced life insurance agent can be beneficial. They can guide you toward insurance companies that offer the best policies for your specific condition. An agent can also anonymously shop your application to multiple insurers to increase your chances of finding suitable coverage.

Improve your overall health

If possible, focus on improving your health before applying for life insurance. Insurance companies favor applicants in good health, so following medical treatments, eating well, exercising, and quitting smoking can enhance your eligibility and potentially lower your premiums.

Explore alternative options

If traditional life insurance is not an option due to your disability, there are alternative types of insurance to consider:

• Guaranteed acceptance life insurance: This option offers coverage regardless of your health condition but usually comes with higher premiums.
• Final expense insurance: This type of insurance covers basic end-of-life expenses as long as you pay the premiums.
• Joint life insurance policy: You can also consider a traditional joint life insurance policy with your spouse.

In conclusion, while having a disability may present challenges when applying for life insurance, it does not preclude you from obtaining coverage. By being transparent, choosing the right policy, working with an agent, and exploring alternative options, you can secure the life insurance protection you need.

Factors affecting life insurance premiums

While having a disability does not automatically disqualify you from obtaining life insurance, it can impact the cost of your premiums. This is because insurance companies view applicants with disabilities as a greater risk. The nature of your disability and its effect on your overall health and life expectancy will be factored into your eligibility and premium rate.

Nature of the Disability

The type of disability you have will play a significant role in determining your life insurance premium. Disabilities that are expected to shorten your lifespan, such as advanced stages of multiple sclerosis, will likely result in a higher premium. On the other hand, disabilities such as loss of vision or hearing that do not impact life expectancy may not affect your premium.

Medical Treatments and History

Insurance companies will consider your current and past medical treatments, medications, surgeries, and hospitalizations when evaluating your application. They will gather this information through interviews, questionnaires, and a review of your medical records and prescription history. The more severe your disability and associated medical issues, the higher the premium and the fewer the insurance choices available to you.

Employment Status

Being employed will generally count in your favour when applying for life insurance. Insurance companies view steady employment as an indicator of good health. It also demonstrates your ability to make regular payments, as you have a regular income.

Lifestyle Factors

Factors such as smoking, drinking, recreational drug use, and risky hobbies will affect your insurability and premium cost. These factors are considered risky behaviours that can negatively impact your health and, consequently, your life expectancy.

Type of Insurance Policy

The type of life insurance policy you choose will also impact your premium. Term life insurance and permanent life insurance are the two main types of policies available. Within these categories, there are various options, such as simplified issue and guaranteed issue policies, which do not require a medical exam but may be more expensive and provide less coverage.

Additionally, certain riders (add-ons) to your life insurance policy can also affect your premium. For example, an accelerated death benefit rider allows you to access a portion of the death benefit if you are diagnosed with a serious illness. This adds flexibility to your policy but may increase the cost.

In summary, while a disability may not preclude you from obtaining life insurance, it can impact your premium rate and the availability of certain policy options. Insurance companies will consider the nature of your disability, your overall health, and other lifestyle factors when determining your eligibility and premium. Working with an experienced agent who understands the needs of disabled clients can help you navigate the different options and find the best coverage for your specific situation.

Alternative life insurance options

If you are unable to qualify for traditional life insurance, there are still options available to you. These include:

• Guaranteed issue life insurance: This type of insurance does not require a medical exam or health questions, and you cannot be turned down. However, coverage limits are low, typically ranging from $5,000 to $25,000. These policies also have graded death benefits, meaning your beneficiaries will not receive the full death benefit if you pass away within two to three years of taking out the policy (unless you die from an accident).
• Service-Disabled Veterans Life Insurance (S-DVI): This option is available to disabled veterans through the U.S. Department of Veteran Affairs. It provides low-cost coverage to eligible service members with a service-related disability. S-DVI offers up to $10,000 of coverage, with an additional $30,000 of supplemental coverage for those who are totally disabled and unable to work. To qualify, veterans must be in good health, have not received a dishonourable discharge, and apply within two years of being granted a service-connected disability or by December 31, 2022, whichever comes first.
• Veterans Affairs Life Insurance (VALife): Starting on January 1, 2023, VALife replaced S-DVI. It offers guaranteed acceptance whole life coverage to veterans with service-related disabilities. Coverage is available in $10,000 increments up to $40,000, and goes into effect two years after enrolment as long as payments are kept up. If you pass away during the two-year waiting period, your beneficiary will receive premiums paid plus interest. All veterans age 80 and under with a VA disability rating are eligible, with no time limit to apply.
• Group or supplemental life insurance: Many employers offer group life insurance plans that provide affordable coverage to their workers, often with no underwriting process required. Some group life policies also include add-ons such as a waiver of premium for employees who become totally disabled.
• Funeral and burial insurance: These policies are designed to help beneficiaries pay for final expenses such as funeral costs and typically do not require a medical exam or health questions.
• Joint survivorship life insurance: Also known as second-to-die insurance, this type of policy insures two lives and only pays out the death benefit when both policyholders die. It is often used to pay estate taxes, fund a trust for a child with special needs, or leave a legacy to heirs.

Additional tips for obtaining life insurance with a disability:

• Work with an experienced professional: An experienced life insurance agent will know which companies are most likely to offer coverage for your specific condition and can shop your application around anonymously.
• Apply for an appropriate amount: The amount of coverage you apply for should be justified by your financial situation. For example, if you have a high net worth, you will likely have a better chance of obtaining a high amount of coverage.
• Focus on your health: Insurance companies favour applicants who are in good health despite their disability. This may include following medical treatments, eating well, exercising, regulating blood pressure, and quitting smoking.

Frequently asked questions