Updated
Fact Checked
Eric McWhinnie
Life insurance for people with disabilities can be challenging to purchase. Insurers can take health status into account, which means a disability can affect coverage options and policy costs. However, policies may still be available. This guide to life insurance for disabled individuals will provide insight into options for getting covered.
Can you get life insurance if you have a disability?
When insurance companies issue life insurance policies, they consider the applicant's health status. If the insurer determines that the risk of someone dying during their coverage term is too high, the insurer may deny a policy entirely. If there is an elevated but still reasonable risk, an insurer may issue a policy but charge higher premiums.
In some cases, finding life insurance with pre-existing conditions can be difficult or impossible because of the underwriting process. Depending on the nature of a disability, it can be considered a disqualifying pre-existing condition.
If a disability does not affect life expectancy or general health, then an insurer may still offer affordable coverage. For example, a person who is deaf or blind but who has no other medical issues may not have trouble getting life insurance coverage. But if a disability makes a person more susceptible to an early death, life insurance coverage may be denied or very expensive or impossible to obtain from a standard insurer.
What do life insurance companies consider a disability?
A disability may be something a person is born with. Or it may be acquired due to illness or injury. The specific definition of a disability can vary by life insurance company. In general, any condition that impacts mental or physical health can be considered a disability. Common examples include:
- Mental health issues including anxiety, depression, or PTSD
- Conditions affecting hearing, vision, or other senses
- Medical issues that impact movement
- Conditions that impact thinking, remembering, or communication
Types of life insurance policies for people with disabilities
The two most common types of life insurance for disabled individuals are the same as those for people without disabilities. However, it may be more difficult for some people to find an insurer that offers these policies due to their condition.
Term life
A term life insurance policy provides coverage for a set period of time. For example, it could pay out a death benefit if the policyholder dies during a 10-year, 20-year, or 30-year term. If the policyholder does not pass away during the coverage term, no death benefit will be paid.
Whole life
A whole life policy is a type of permanent life insurance policy that provides indefinite coverage. The policy stays in effect as long as premiums are paid. There is also an investment component. Some of the premium money is invested. As a result, the policy accrues cash value.
Whole life is more expensive than term life. Usually, it's not worth the added cost. That's because at some point, your dependents will probably stop relying on your income.
How to qualify for life insurance with a disability
Qualifying for life insurance with a disability will depend on the nature and type of condition you have. While some factors that life insurance companies consider will be out of your control, there are some things you can do to increase your chances of being approved for coverage.
Take steps to improve your health
If a condition is well-managed, insurers are less likely to deny coverage due to a disability. If you can take action to improve your health, for example, by lowering your blood pressure or following your health regimen, insurers are more likely to approve your application. If your medical records and answers to health questions reveal that your disability is not likely to result in premature death, insurers are more likely to approve an application.
Shop around for insurance coverage
Some insurers have stricter limits on when they will issue life insurance for disabled individuals. However, being denied by one insurer will go on your records and can make it harder to get covered by a different insurance company. Consider working with a life insurance agent who knows which insurers are likely to approve your application and can anonymously shop for coverage on your behalf.
Be honest in your application
It's crucial to be completely honest about all medical issues in your application. Otherwise, your insurer could cancel your policy or refuse to pay the death benefit. Lying on an application could also be considered insurance fraud.
Other life insurance options if you are denied coverage
If a disabled person cannot qualify for a standard whole life or term life policy, there are still life insurance options that may be available. Some examples of life insurance for disabled individuals who cannot get a standard policy include the following.
Guaranteed issue
Some insurance policies are guaranteed issue life insurance, which means there's no medical exam required. Insurers also won't ask about your health history. These are whole life insurance policies with a small death benefit, often $25,000 or less. If standard insurance coverage is not available, these could be another option for life insurance for disabled individuals.
There is generally a graded death benefit, though. This means only a portion of the full death benefit will be paid out for the first several months or years the policy is in effect.
Final expense
Final expense insurance is basically a type of guaranteed-issue life insurance policy that's specifically marketed to cover funeral costs and other final expenses. It's possible to purchase this coverage regardless of disability status or pre-existing conditions. Policies generally have relatively low death benefits.
Group life insurance
If you're employed, you may qualify for basic group term life insurance through your job. The death benefit for these term life policies is typically capped at a year or two's worth of your salary. Coverage typically isn't portable, which means you can't take it with you if you leave your company.
Life insurance vs. disability insurance
Life insurance is not the same as disability insurance. Disability policies can pay out money to individuals who become disabled and who cannot work as a result. Life insurance policies, on the other hand, provide compensation to surviving loved ones after a death.
It is possible to add a disability income rider to most life insurance policies. This is an add-on coverage. It pays a monthly stipend to help cover lost wages if a disabling condition makes work impossible. However, a standalone disability policy will typically offer more coverage at a lower price than buying this type of life insurance rider.
Life insurance for disabled dependents
In some cases, individuals without disabilities may wish to purchase life insurance for disabled dependents. Guaranteed issue policies may be available or standard term or whole life policies may be an option depending on the nature of the disability. Or a parent may be able to get a life insurance rider known as a child rider that provides coverage for minor children.
Purchasing life insurance for a disabled child at a young age could help ensure they are able to have protections in place later in life. They can choose to maintain that policy.
FAQs
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Life insurance is intended to provide for surviving loved ones after you die. It doesn't pay out during your lifetime but provides a death benefit to your survivors when you die.
Disability insurance, on the other hand, is designed to replace your income if you become disabled and can no longer work
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When you apply for life insurance, you'll typically be asked about your medical history. It's important to be honest about all medical issues, including disabling conditions. Dishonesty on an application for life insurance could result in cancellation of the policy or denial of death benefits.
Typically, applicants also must undergo a medical exam. An undisclosed disability would likely be discovered at this exam before coverage is issued.
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As long as you continue paying premiums, your life insurance policy will remain in force for the coverage period if you become disabled. Many policies allow you to add a waiver of premium rider when you purchase the policy for an additional cost. This rider allows you to stop making payments if you become disabled while keeping the policy in force.
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If you receive a life insurance payout while receiving Social Security Disability Insurance (SSDI), your benefits shouldn't be impacted. However, life insurance benefits could affect Supplemental Security Income (SSI) benefits because SSI is a means-tested program. SSI recipients typically must have under $2,000 in countable resources.
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Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
Fact Checked
Eric McWhinnie
Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in Finance.
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