Purchasing a traditional life insurance policy may feel out of reach for anyone living with a disability or caring for someone who is disabled. But it doesn’t need to be. While you’ll need to disclose certain information about your disability and its impacts on your life, simply letting an insurance company know you have a disability doesn’t mean you’ll be rejected. Here’s what you need to know about the types of life insurance for people with disabilities.
Considerations For Life Insurance With A Disability
Life insurance companies will consider your health and life expectancy when deciding how much insurance to offer you and what premiums to charge. Since the insurer takes on greater risk if a disability is directly tied to decreased lifespan, they’ll likely need to ask you a series of questions about your disability, including:
- What caused the disability?
- Are you still able to work?
- How does the disability affect your health now and in the future?
Depending on the answers to questions like these and general information about your lifestyle, like if you’re a tobacco user, the life insurance company will create a quote that’s commensurate with their perceived risk. And while some disabilities will cost much more to insure, others may not change the cost of coverage at all.
Types Of Life Insurance For People With Disabilities
For those with disabilities, the primary purpose of securing a life insurance policy is often to provide financial support for loved ones. And there are two popular types of life insurance to accomplish that goal: term life and whole life.
Term Life Insurance
With a term life insurance policy, you’re covered for a set period, typically between 10 and 30 years. After the term expires, you’ll choose to either live without coverage or renew the term, likely at a higher premium. The benefit of a term life policy is that you often get more bang for your buck in terms of a higher death benefit for what you pay in premium.
Whole Life Insurance
A whole life insurance policy is a more complex policy than term life as it begins to retain cash value as time goes on. That means you can then take money from the policy if needed during your life, but you may end up paying a penalty to do so. And while a whole life policy may cost up to ten times more than term life, you’ll receive lifelong coverage, and the premiums won’t change for the life of the policy.
Benefits Of A Term Life Insurance Policy For People With Disabilities
There are several benefits of term life insurance policies, including:
- You can choose the term that works for you. If you secure a policy to provide financial security for young children, you may want to choose a term that ends when those kids are grown and living on their own. Likewise, if you’re using a term policy to cover a specific debt, like a mortgage or business loan, you can choose a term that will end around the time the debt is fully paid.
- Less expensive than whole life. Since the coverage is for a specific term and does not accrue cash value like a whole life policy, the cost of term life is much less. For a term life policy, you could end up paying only a fraction of what you would for whole life.
Benefits Of A Whole Life Insurance Policy For People With Disabilities
Whole life insurance has several benefits for people with disabilities, including:
- You’ll receive lifelong coverage. If your disability may worsen as you get older, a whole life policy is a great option to lock in a set rate. As long as you continue to pay the premiums, coverage is for life.
- Ability to accrue cash value. While the cost of coverage is higher for whole life policies, some of that premium will accrue as cash value in the policy. And the insurer will often provide a return on that money, though it will likely be at a low rate. That payout, called a dividend, can be reinvested in the policy or taken out as cash.
The Bottom Line
Specific disabilities may change the cost of a life insurance policy, but simply having a disability does not mean you won’t qualify. In fact, each insurer will assess risk differently, so it’s wise to get quotes from multiple life insurance companies and compare them to choose the right option, whether that’s term life or whole life insurance. When in doubt, reach out to a qualified financial professional who can help you assess options and choose the right policy for your unique situation.
SUBSCRIBE FOR MORE! HERE'S WHY:
1. You get 7 free books
2. You get the best money & productivity articles
3. You get the latest updates - all in one email per week