Life Insurance for the Disabled

Life insurance guarantees a sum of money to be paid to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. With more than a quarter of U.S. adults living with a disability and needing insurance, the industry offers a number of options.

KEY TAKEAWAYS

• Having a disability does not disqualify you from getting life insurance.
• Some policies do not require a physical exam.
• Parents may be able to obtain life insurance for disabled children by adding them to their own policies.
• As with any insurance policy, the higher the risk, the higher the cost.

The primary purpose of life insurance is to provide for one’s family after death to pay off debt, cover funeral expenses, or leave a nest egg for beneficiaries. Buying life insurance can be a challenge for people with disabilities, but having a disability does not disqualify a person from obtaining life insurance. 

As with any insurance policy, the higher the risk, the higher the cost: the more severe the disability, the higher the premiums and the fewer the choices.23 To underwrite a policy—which means determining the insurability of the individual and the risk—insurance companies weigh the following factors:

The Nature of the Disability

Some disabilities, such as loss of vision or hearing, have little effect on life expectancy. However, depending on the type of disability, how well it’s managed, and its likely impact on the lifespan of the insured, a disability or chronic condition can make it more challenging (i.e., more expensive) to get life insurance.

Medical Treatments and Medical History

A life insurance company will take into account current and past medical treatments; medications you’re taking; and the surgeries or hospitalizations you’ve had. They gather this information through interviews, a questionnaire, and a review of the applicant’s medical history and prescription information. 

The primary purpose of life insurance is to provide for one’s family after death to pay off debt, cover funeral expenses, or leave a nest egg for beneficiaries.

Employment

Being employed will count in the applicant’s favor. Life insurance companies view steady employment as a general indicator of health. Regular employment also means regular income that will reflect the applicant’s ability to make regular payments. 

Habits and Hobbies

As with anyone seeking life insurance, smoking, drinking, and recreational drug use including marijuana will affect an applicant’s insurability and the cost of their premium, as will any risky hobbies. Many (but not all) life insurance policies require blood and urine analysis. 

The Plans

Term life insurance and permanent life insurance are the two main types of life insurance policies. Many different types of life insurance are available to meet all sorts of needs and preferences. Depending on the short- or long-term needs of the person to be insured, the major choice is whether to select temporary or permanent life insurance.

Types of life insurance of special interest to the disabled:

Though guaranteed-issue whole life insurance carries a higher price tag and death benefit cap, a medical exam is not required for this type of policy, making it easily accessible. It can be useful to pay for final medical bills, funeral expenses, and other related costs. 

For those with high-risk disabilities affecting their life expectancy, an impaired risk life insurance policy is usually the better choice.

What to Know About Insurance Riders

Though insurance riders aren't specific to people with disabilities, they offer flexibility that can prove especially useful to the disabled. Insurance riders allow policyholders to customize their insurance policies to meet their specific needs. Some riders must be added when the policy is initiated, while others can be added afterward.4 Here are a few:

Child Rider

Many life insurance policies offer policies that cover children as well as the parent. The parent of a child with a disability may be able to have their child included on their policy. The actual terms of child riders vary greatly as to how long the child is covered, what health restrictions there may be, whether a medical exam is required, and other factors.

Child riders are generally written to expire when the children become adults. At that point, in some cases, the rider can be converted into a permanent life insurance policy. The terms and costs will vary depending on the terms of the rider, the health of the child, and other factors.

Accelerated Benefit Riders

These add-ons to a term life insurance policy allow the insured person—disabled or not—to use a portion of the death benefit before they die. This can be especially useful for covering medical bills or other eligible end-of-life expenses such as hiring a home health aide or paying for hospice or nursing-home care. 

Different riders cover different circumstances. Terminal illness riders cover expenses related to illnesses that are incurable and allow policyholders to access a portion of the payout if diagnosed with a qualifying critical illness.

Chronic Illness Riders

Chronic illness riders pay out benefits while the policyholder is still alive but no longer able to perform at least two of the six recognized activities for daily living—eating, bathing, getting dressed, toileting, transferring, and continence.

The Process

Insurance underwriters will examine written medical records and conduct a medical exam checking blood pressure, heart rate, and weight, as well as testing blood and urine.

By law, the medical exam cannot be different from the medical exam the insurer conducts on non-disabled people.

The application for a policy will be approved or approved with certain stipulations—for instance, a waiting period before the policy becomes active. This is to prevent people from buying life insurance when they know that they are mortally ill and have only a short time to live.

How Applicants Can Help Their Case

Being denied by one insurance company can make it more difficult to be approved by other companies. Here are some steps applicants can take to boost their chances of being approved and, if approved, obtain lower premiums and better terms. 

Check medical records 

Applicants should request a copy of their medical records from their healthcare providers and review them for accuracy. Perhaps a medical issue in the past has been addressed and cleared up. If that’s the case, the applicant can provide a note with the application explaining that.

Keep appointments

If the applicant’s disability is a condition that requires regular checkups and scheduled medications, the more they adhere to their treatment plans and appointments, the lower the perceived risk of insuring them. This is especially true if the applicant has a chronic condition such as diabetes.

Consider working with an experienced agent 

Working with an insurance agent who has experience with clients with disabilities can be helpful. Such agents will know which companies write the best policies for the disabled and can test the waters for their clients. They can do this by giving insurers a client’s anonymized medical profile to get the insurance company’s assessment of the client’s insurability. A favorable response will help the agent decide to move to a formal application.

Can People With Disabilities Buy Life Insurance?

Yes, in most cases, people with disabilities can find some form of life insurance. Your eligibility and rates will depend on the type of disability, the severity of your condition, and your overall health, among other factors. Having a disability could mean higher premiums and fewer plan options.

Do Insurance Companies Always Require a Physical Exam?

No. Policies are available that don't require a physical exam. Two types of life insurance policy—simplified issue or guaranteed issue—are available with no need for a medical exam. Your premiums may be higher and coverage may be capped at a specific amount.

How Does a Life Insurance Medical Exam Work?

Medical exams are free and provided by your insurance company at their expense. A licensed medical technician will come to your home or your workplace to perform the exam. You’ll also get a copy of the results. The exam usually takes about 30 minutes.

How Can a Disabled Person Pick the Best Life Insurance?

Learn as much as possible about the different types of life insurance, including the kinds that don't require a medical exam and what the insurance company requires for each policy. Inform yourself about the benefits of different policies and how they differ so you can make the decision that's right for you.

The Bottom Line

Life insurance plays an important role in someone's financial protection. In recent years, the insurance industry has greatly expanded its life insurance options for the disabled and shown much greater flexibility in writing policies than was true in the past. As with any financial decision, it pays to do your research. There are life insurance companies that offer policies designed for people with certain disabilities, such as autism, Down syndrome, or cerebral palsy.