Autism's Role In Life Insurance Underwriting Guidelines

Autism is a factor in life insurance underwriting guidelines. Individuals with autism may struggle to obtain life insurance due to their lower life expectancy compared to neurotypical individuals. This is influenced by a combination of autism and other medical conditions. Underwriters assess the risk of insuring applicants with autism by evaluating their ability to perform activities of daily living, severity of autism, and the presence of other health conditions. The availability and cost of life insurance for autistic individuals depend on the severity of their condition and their overall health.

Autism and life insurance underwriting

Overview

Autism is a factor in life insurance underwriting guidelines. Individuals with autism may face challenges in obtaining life insurance coverage due to the perceived risks associated with the condition. However, it is important to note that each application is evaluated individually, and the presence of autism does not automatically result in a rejection. The underwriting process involves a comprehensive assessment of the applicant's medical history, current health status, functionality, and associated risks.

Underwriting Factors

Several factors are considered during the underwriting process for individuals with autism:

• Severity of Autism: The severity of autism plays a significant role in the underwriting evaluation. Individuals with mild autism who can perform activities of daily living (ADLs) independently and maintain employment have better life insurance options available to them. Those with severe autism may have limited options and may require a guaranteed issue policy.
• Health Conditions: Underwriters also take into account any other health conditions or comorbidities that the applicant may have. Obesity, type 2 diabetes, and mental health conditions can impact the underwriting assessment and increase the perceived risk.
• Functionality and Independence: The ability to perform ADLs independently is an important factor. Carriers may view the inability to perform ADLs as a potential indicator of a shorter lifespan. Individuals who require assistance with daily activities may have fewer life insurance options and could face application rejections.
• Employment Status: Carriers often consider employment status as a positive factor. Gainful employment demonstrates the ability to interact socially, maintain relationships, and function independently. Lack of employment or financial dependence on others may be viewed negatively and could impact the underwriting decision.
• Age: The age of the applicant is also considered. For children with autism, carriers typically require a minimum application age of around 8 years old, as it provides a better understanding of the child's prognosis and future development.
• Social Interaction: Underwriters may consider the level of social interaction and communication skills of the applicant. Individuals with limited social interaction or difficulty in communicating may have fewer life insurance options.
• IQ and Neuropsychological Evaluations: Carriers may request information on documented IQ tests and neuropsychological evaluations to assess cognitive functioning. Lower IQ scores or certain evaluation results may impact the underwriting decision.
• Medical History and Records: Underwriters conduct a thorough review of medical records, treatment histories, and specialist reports to understand the applicant's overall health and any associated risks.

Available Life Insurance Options

The availability of life insurance options depends on the severity of autism and other underwriting factors:

• Fully Underwritten Life Insurance: Individuals with low to mild autism who are high-functioning may qualify for fully underwritten life insurance plans. This includes whole life, index universal, and term life insurance options.
• Guaranteed-Issue Whole Life Insurance: For individuals with moderate to severe autism, a guaranteed-issue whole life insurance policy may be the only option available. These policies typically have a waiting period of 2 years before the full death benefit is payable.
• Life Insurance with Child Rider: Parents or caregivers can consider obtaining life insurance on themselves with a child rider that provides coverage for their autistic child. This option does not require underwriting for the child and can provide a guaranteed benefit.

Case Studies

• Case Study 1: A 23-year-old female diagnosed with autism at age 8 was initially denied life insurance coverage. However, after waiting for her condition to stabilize and reapplying, she received a Standard rating as her autism had not developed into other problems.
• Case Study 2: A 25-year-old male with Asperger's syndrome since the age of 10 and a history of depression was initially rated substandard. After receiving treatment for depression and obtaining a note from his therapist, he reapplied and received a better rating.

Tips for Applicants

When applying for life insurance with autism, it is important to:

• Understand the underwriting guidelines and criteria used by different carriers.
• Be transparent and provide complete information about your condition and any associated health issues. Incomplete applications may be rejected.
• Seek professional help from independent agents or brokers who have experience in working with individuals with autism. They can guide you through the process and recommend the most suitable carriers.
• Consider the impact of life insurance policies on government assistance programs like Medicaid. Ownership of certain policies may affect eligibility for these programs.

Severity of autism

The severity of autism is a key factor in life insurance underwriting guidelines. The severity of autism plays a significant role in determining the insurability and premium rates for individuals with autism. The higher the severity, the fewer life insurance options are available, and the higher the premiums are likely to be.

In 2013, the American Psychiatric Association (APA) introduced three levels of severity for autism spectrum disorder (ASD) in the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5):

• Level 1 ("requiring support"): Individuals at this level have low support needs and may struggle with communication and social interactions. They may have difficulty understanding social cues and forming relationships. They may also experience behavioural inflexibility, such as switching between tasks or staying organized.
• Level 2 ("requiring substantial support"): Level 2 indicates more significant challenges in verbal and nonverbal communication, as well as reduced or abnormal responses to social cues. Individuals at this level may exhibit repetitive behaviours that are noticeable to casual observers and have difficulty coping with changes in routine.
• Level 3 ("requiring very substantial support"): Level 3 represents the most severe form of autism, with individuals experiencing severe deficits in social communication and extremely inflexible behaviour. They often have limited initiation of social interactions and minimal responses to social approaches from others. Changing focus or action can cause great distress and difficulty.

The severity of autism affects the insurability of individuals with autism. Those with mild to moderate autism may be eligible for fully underwritten life insurance, while those with severe autism may only qualify for guaranteed-issue whole life insurance, which typically has a waiting period before the full death benefit is paid out.

Underwriting guidelines for autism also consider various factors, such as the ability to perform activities of daily living (ADLs) independently, employment status, and the presence of other health conditions. These factors, along with the severity of autism, help insurance carriers assess the risk and determine the availability and cost of life insurance for individuals with autism.

Other health conditions

When it comes to life insurance, health is a key factor in determining an applicant's eligibility for a policy. This includes an assessment of any pre-existing conditions or chronic health issues that could impact an applicant's life expectancy. These conditions may include high blood pressure, heart disease, diabetes, mental health issues such as depression and anxiety, and even obesity, with a Body Mass Index (BMI) over 40 often leading to further medical inquiries and a BMI over 45 often resulting in rejection of the application.

• Hospitalisations: Any recent or frequent hospitalisations can be a red flag for insurers and may lead to further inquiries or impact the risk assessment.
• Chronic Conditions: Applicants with chronic conditions such as diabetes, heart disease, stroke, cancer, or psychiatric illnesses may face higher premiums or even rejection.
• Medication Usage: The use of prescription medications, especially those related to mental health or chronic conditions, can impact an applicant's risk assessment.
• Lifestyle Choices: Lifestyle choices such as smoking, alcohol consumption, diet, and physical activity can influence health evaluations and, consequently, insurance rates.
• Family Medical History: A family history of health conditions like heart disease, high cholesterol, or cancer can also be considered, as it may increase the applicant's chances of developing these conditions.

It is important to note that each insurance company has its own underwriting guidelines and policies, and the impact of these health conditions may vary. Applicants should be forthcoming and accurate when disclosing their health information to ensure a smooth underwriting process and avoid potential issues with their policy or claims in the future.

Life insurance options for children with autism

Fully Underwritten Life Insurance

If your child has low to mild autism and is high-functioning, they may be eligible for a fully underwritten life insurance plan. This includes whole life, index universal, and term life insurance. Children with Asperger's syndrome or high-functioning autism are typically eligible for this type of insurance. While underwriters will classify your child at a standard rate, they won't require a medical exam as your child is too young for that.

Guaranteed-Issue Whole Life Insurance

If your child has moderate to severe autism, a guaranteed-issue whole life insurance policy is available. This type of policy has a two-year waiting period, meaning if your child passes away within the first two years of the policy, you will receive the premiums paid plus interest. After two years, the death benefit is paid in full. This is likely the best option if your child has moderate to severe autism.

Life Insurance with a Child Rider

Another option is to get life insurance on yourself with a child rider. This additional policy can be intended for your child, and the death benefit can be used to fund your child's future needs. The life insurance should be placed in a special needs trust, and the proceeds can be paid out to your child upon your passing without affecting their Medicaid qualification or SSI assistance. Many carriers offer child term riders that are guaranteed issue, meaning no health questions or underwriting are required. These riders provide immediate benefits and can usually be converted to whole life insurance when the child becomes an adult.

Children's Life Insurance

Children's life insurance is specifically designed to cover children and is usually purchased by parents for two main reasons: to provide a death benefit in the unfortunate event that the child passes away before the parent, and to help the child get insurance coverage when they become an adult. Most children's life insurance policies can be started as early as 15 days after birth. Autistic children under the age of eight may struggle to get standard insurance, but they can still get guaranteed issue coverage.

Factors Considered by Carriers

When considering life insurance for autistic children, carriers will look at various factors, including:

• Whether the child is in a mainstream classroom
• If the child needs an aide
• If the child can communicate via spoken language
• If the child has relationships with peers
• If the child can perform activities of daily living (ADLs) independently
• If there are any documented IQ tests or neuropsychological reports
• Any other health conditions, medical history, and previous injuries

Cost of Life Insurance for Autistic Children

The cost of life insurance for autistic children will depend on the severity of their autism and the type of insurance chosen. For a high-functioning child with low to mild autism, you can expect a standard rate to table 2 on life insurance. For example, $50,000 of whole life insurance on a one-year-old boy may cost around $30 per month, while term life insurance may be even cheaper. If your child has moderate to severe autism, a guaranteed issue plan is likely the only option, and it will come with a higher price tag. For example, a $25,000 guaranteed issue whole life insurance policy on a five-year-old boy may cost around $95 per month.

Considerations for Older Children

As autistic children approach adulthood, there are some additional considerations to keep in mind. At the legal adult age, typically 18 or 21, the child technically becomes the owner of the life insurance policy. If they have moderate to severe autism, they may not be able to make decisions about the policy, which can create a complicated situation. Additionally, owning a life insurance policy with cash value may disqualify them from receiving state assistance through Medicaid. To navigate these challenges, it's recommended to consult with a qualified attorney specializing in special needs children and consider options such as power of attorney, guardianship, or creating a special needs trust.

Life insurance options for adults with autism

Underwriting for Adults with Autism

During the underwriting process, insurance carriers will assess whether the applicant is an insurable risk. If the applicant is in good health, with no or minor health conditions, the carrier will likely approve them. However, if the applicant has moderate to severe health conditions, the carrier may place a table rating or even decline the application.

The same is true for adults with autism. Carriers view people with autism as having a lower life expectancy than the general population. Additionally, carriers take into account the applicant's ability to perform activities of daily living (ADLs) independently and their employment status. If the applicant cannot perform ADLs independently or is not employed, their life insurance options may be limited, and their application may be declined.

If an adult with autism needs assistance with daily activities and does not have gainful employment, their only option may be a guaranteed issue life insurance policy. Guaranteed issue life insurance is available for both whole life and term life insurance policies.

However, if an adult with autism is high-functioning, with a typical life, gainful employment, and a family, any life insurance options may be available to them. If their condition no longer poses an issue in their life, and they no longer require testing or therapy, they may be able to qualify for a standard rate or better. Additionally, depending on how the question is worded, they may be able to answer "no" to any question implying autism.

Impact on Medicaid

Many adults with moderate to severe autism utilise government assistance programs such as Medicaid, Supplemental Security Income (SSI), and other resource programs. If an autistic adult owns a whole life insurance policy, the cash value of the policy may negatively impact their eligibility for these programs. Therefore, it is important for families to consult with a qualified attorney to determine the best way to structure the ownership of the policy to avoid disqualifying their family member from necessary assistance.

Frequently asked questions