Life Insurance for the Disabled
By
Updated August 30, 2022
Reviewed by Eric Estevez
Fact checked by
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.1
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.2
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.
Important
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.3 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.3
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.5
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.6
