Understanding Binary Life Insurance And Its Benefits

Life insurance is a legally binding contract between an insurance company and a policy owner. The insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured person dies. The policyholder must pay a single premium upfront or regular premiums over time for the life insurance policy to remain in force. While life insurance is available to almost anyone, the application process can be more difficult for non-binary people. This is because many insurance providers have not updated their underwriting guidelines, and applicants are still asked to identify as either male or female. However, federal law prohibits life insurance carriers from discriminating against applicants based on gender identity, and companies are not allowed to prevent non-binary people from obtaining life insurance based on gender.

Binary life insurance applications

Impact of Birth Biology

An individual's biological sex at birth plays a notable role in their health and life expectancy, regardless of their gender identity. For instance, according to the National Cancer Institute, men have a roughly 20% higher risk of developing cancer than women. Similar gender discrepancies exist for heart disease, diabetes, and strokes. As a result, insurance companies consider biological sex a crucial factor in assessing coverage and underwriting policies.

Gender and Mortality

Life insurance companies typically ask applicants to disclose their gender because there is a statistically demonstrated correlation between gender and mortality rates. Women generally have longer life expectancies than men, which translates to lower premiums for women for all types of life insurance. This difference in life expectancy is a key factor in determining the likelihood of a life insurance policy payout.

Application Process for Non-Binary Individuals

Currently, most life insurance applications require individuals to choose between male and female options, even if they identify as non-binary. This limitation is due to outdated underwriting guidelines that have not kept pace with evolving gender identities. However, it is important to note that being non-binary or transgender does not disqualify an individual from obtaining life insurance. Federal law prohibits life insurance carriers from discriminating based on factors like gender identity, sexual orientation, or gender expression.

Choosing a Gender on the Application

Until life insurance companies update their definitions of gender, non-binary, transgender, and genderfluid applicants may face challenges in selecting their gender on applications. Some providers may ask applicants to indicate their gender at birth, while others may base the policy on the gender the applicant identifies with. In some cases, insurance providers may consider any gender-affirming treatments or surgeries the applicant has undergone.

Impact on Premiums

Life insurance premiums are influenced by various factors, including age, smoking status, health, lifestyle, and family medical history. Gender is one of those factors, with women often paying lower premiums than men due to their longer average life expectancy. However, it is worth noting that other factors may outweigh gender in determining premiums, and the impact of gender on premiums may vary across different insurance companies.

Options for Non-Binary Applicants

Non-binary individuals seeking life insurance coverage have a few options. They can choose an insurer that offers unisex rates, which are not based on binary gender distinctions. Employer-provided group life insurance is often a good option for non-binary employees, as it typically does not require a separate application process and offers unisex rates. Additionally, working with a broker can be beneficial, as they can help navigate the application process and identify LGBTQ+-friendly carriers.

In summary, while the life insurance industry is moving towards greater inclusivity, binary life insurance applications remain the norm. Non-binary and transgender individuals may face challenges when applying for coverage, but they are protected by law from discrimination and have options for obtaining the coverage they need.

Choosing a gender

Currently, life insurance applications require applicants to choose between male or female, despite the growing awareness that not everyone identifies as a binary gender. This means that non-binary individuals have to choose a gender that they might not identify with. While this is not meant to be a discriminatory process, it can be an unintended consequence as companies ask this question to calculate premiums.

Your Options

There are three options that may be presented to non-binary applicants:

• Your chosen life insurance provider may ask you to tick off your gender at birth in your application, regardless of your chosen identity.
• In some cases, life insurance companies will compute your policy based on the gender you identify as. If you want to avoid the binary choice, you can look for insurance providers who issue policies based on unisex rates, or blended male/female rates.
• Companies may base an applicant's choice on any gender-affirming treatment they have had, such as hormone therapy or breast reduction surgery. The date of your last surgical procedure or how long you’ve been taking drugs for hormone therapy can affect this choice.

What to Consider

When choosing a gender on your life insurance application, here are some factors to consider:

• Legal Requirements: Federal law prohibits life insurance carriers from discriminating against applicants based on gender identity. This means that as a non-binary person, you are protected by law and cannot be prevented from obtaining life insurance coverage.
• Impact on Premiums: Life insurance premiums are based on factors such as age, health, lifestyle, and family medical history. Gender is also a factor as it is correlated with life expectancy and the likelihood of developing certain health issues. Women generally have longer lifespans than men, so they usually pay lower premiums.
• Surgical and Medical History: Life insurance providers will ask about your surgical and medical history, including any gender-affirming surgeries or treatments. This information can affect your premiums as it relates to health risks.
• Carrier Considerations: Different life insurance carriers may have varying requirements for non-binary applicants. Some carriers may require you to choose your birth gender if you are not currently undergoing hormone therapy or if you plan to have confirmation surgery in the future. Other carriers may allow you to select your affirmed gender if you have been on hormone replacement therapy for a certain period.
• Consultation with a Broker: Buying life insurance through a broker can be helpful as they can guide you through the application process and advise you on which carriers are the most LGBTQ+-friendly. They can also answer any questions you may have about the process.

How binary life insurance is calculated

Binary life insurance is not a term that is in common usage. However, in the context of life insurance, binary can refer to the gender binary, which is the idea that there are only two genders: male and female. In this context, binary life insurance can be understood as life insurance that is calculated based on the gender binary.

Life insurance premiums are calculated based on various factors, including physical characteristics, lifestyle characteristics, and medical history. Here is how binary life insurance can be calculated, taking into account these factors:

• Physical characteristics: This includes age, height, weight, blood pressure, cholesterol levels, and chronic health conditions. Insurers use gender-specific tables to determine the risk associated with these physical characteristics. For example, an insurer might set different BMI thresholds for males and females, with males allowed a higher BMI before being charged higher premiums.
• Lifestyle characteristics: Tobacco use, occupation, illegal drug use, driving record, criminal record, and participation in high-risk activities can all impact life insurance premiums. Binary life insurance calculations may take into account gender stereotypes, such as assuming that men are more likely to engage in risk-seeking behaviour or binge drinking, and thus charge higher premiums for male applicants.
• Medical history: This includes physical and mental health history, surgical history, family health history, and prescription history. Binary life insurance calculations may consider gender-specific health issues, such as assuming that males are more likely to commit suicide or develop certain health conditions.
• Gender-based mortality rates: Life insurers often use gender as a factor in calculating premiums due to the correlation between sex assigned at birth and mortality rates. Since women generally have longer life expectancies than men, they are often offered lower premiums.

It is important to note that the calculation of binary life insurance is based on outdated notions of gender and does not take into account the diverse range of gender identities beyond the male-female binary. As a result, non-binary individuals may face challenges and higher premiums when applying for life insurance.

The impact of birth biology

Birth biology, specifically an individual's sex assigned at birth, has traditionally been a significant factor in determining life insurance rates. Insurance companies use mortality rates, which are generally higher for males than females, to calculate premiums. This means that women often pay lower premiums than men for the same type of policy. However, this binary approach to gender is evolving, and insurance providers are facing the challenge of how to underwrite policies for individuals who identify as non-binary.

The lack of a clear understanding of the life expectancy of non-binary individuals makes it difficult for actuaries to set premiums. As a result, insurance providers are often forced to rely on other factors, such as physical characteristics, lifestyle choices, and medical history, to determine rates. This can lead to higher premiums for non-binary individuals, especially if they have certain health conditions commonly associated with the non-binary community. Mental health issues, for example, are more prevalent among non-binary people due to the discrimination and microaggressions they face, and mental health diagnoses can result in increased insurance rates.

In addition, birth biology can impact the specific questions asked during the life insurance application process. For instance, applicants may be asked about their family's medical history, including any early deaths or diagnoses of certain conditions. An early death of a parent due to a heart attack at a young age may be seen as a higher risk factor than a parent who was treated for heart disease later in life. Similarly, a sibling diagnosed with cancer at a younger age may be considered a higher risk than an older parent with the same diagnosis. These factors can influence the insurance company's assessment of the applicant's risk level and, consequently, their premiums.

Furthermore, birth biology can also influence the type of life insurance policy that is most suitable for an individual. Permanent life insurance, which offers lifelong coverage and builds cash value over time, may be appealing to those who want a policy that can be borrowed against after a few years. On the other hand, term life insurance provides coverage for a set period and is generally more affordable, making it a popular choice for those with specific goals, such as covering expenses until a child reaches adulthood.

In conclusion, while birth biology continues to play a role in life insurance rates and underwriting, the industry is evolving to become more inclusive and accurate in its assessment of risk. As awareness of non-binary identities increases, insurance providers may update their definitions of gender and offer more tailored rates for these individuals. Additionally, the impact of birth biology on life insurance is just one of many factors considered in the application process, and each individual's experience may vary depending on their unique circumstances.

Buying binary life insurance through a broker

Life insurance is a financial safety net that can provide for your loved ones after your death. It can be purchased directly from an insurance company or through an agent or broker.

A life insurance broker is an independent salesperson who offers policies from multiple life insurance companies. They work for the buyer, not the insurance company, and should be able to make unbiased recommendations that suit each customer's needs.

If you are non-binary, you may find it easier to buy life insurance through a broker. They can help you navigate the application process and advise on which carriers are the most LGBTQ+-friendly. They can also answer any questions you may have about life insurance, including how much coverage you need and how long your policy term should be.

• Find a broker with the right credentials – Look for accreditations offered by industry groups, such as The American College of Financial Services and The Institutes (formerly the Insurance Institute of America). Common designations include CFP (certified financial planner), ChFC (chartered financial consultant), CLU (chartered life underwriter), and FSCP (financial services certified professional).
• Ask for referrals – Mention to friends and family that you're thinking of getting life insurance and ask if they know any brokers. A review from someone you know is always best.
• Check online broker reviews – While online reviews should be approached with a degree of caution, they can still be a useful source of information. If you know of a review site that you trust, start there.
• Consider working with a financial professional – While a broker will usually only be licensed to sell insurance, a financial professional will be licensed to sell a broader range of financial and investment products. Guardian Financial Professionals, for example, are licensed to sell life insurance.
• Be prepared to disclose your surgical and hormone treatment history – This is standard for all applicants, as it affects health risks and premiums. If you are non-binary, you may have had gender-affirming surgery or be taking gender-affirming medications, which can affect your premiums.
• Be aware that you will have to choose "male" or "female" on your application – Currently, insurance applications do not offer a non-binary option. If you are non-binary, choose the gender you were assigned at birth.

Remember, while a broker can offer guidance and support, they will earn a commission from the life insurance carrier for each policy they sell, which may add to the cost of a policy.

Frequently asked questions