Woman on computer taking notes on life and disability insurance.

6 minute read

Life and Disability Insurance: What You Need to Know

Can being on disability prevent you from getting life insurance? Educate yourself and know your options for life and disability insurance with this guide.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

Buying life and disability insurance is an invaluable step in securing both an estate plan and the financial future of loved ones. Unfortunately, however, life insurance moonlights as more of a luxury than a right for anyone with a disability. It is unequivocally more difficult for someone with a disability to receive approval for a life insurance policy than someone without a disability. Due to the greater risk to their bottomline, insurance companies will either refuse to provide coverage or offer less-than-suitable alternatives.  

Despite actions taken by insurance companies, it’s no less important for someone with a disability to be able to take care of their loved ones. Everyone should have the ability to acquire the “peace of mind” they deserve and promise their family a financially secure future.   

While they may be harder to find, there are viable coverage options for those with disabilities — as long as they know where to look. This guide will tell you everything you need to know about buying life and disability insurance for any end-of-life planning on your to-do list, including:

Can You Qualify for Life Insurance with a Disability?

You can qualify for life insurance with a disability, as long as the disability isn’t directly correlated with a shorter life expectancy. In other words, disabilities that do not impact your life expectancy may not prevent you from receiving coverage, but those that do can result in the denial of an application. Ultimately, the severity and nature of the disability will dictate whether or not you qualify for life insurance.

What qualifies a person to be disabled?

Traditionally, any condition of the body or mind that impairs one’s ability to conduct certain activities and interact with the world around them may be considered a disability. However, the Americans with Disabilities Act (ADA), which was signed into law in 1990, expanded on the parameters which qualify a person as disabled. 

“An individual with a disability is defined by the ADA as a person who has a physical or mental impairment that substantially limits one or more major life activities, a person who has a history or record of such an impairment, or a person who is perceived by others as having such an impairment,” according to the ADA.   

What conditions are considered a disability?

According to the Social Security Administration, the following conditions will consider adults eligible for disability:

  • Musculoskeletal disorders

  • Special senses and speech

  • Respiratory disorders

  • Cardiovascular illnesses

  • Digestive system disorders

  • Chronic kidney disease

  • Hematological disorders

  • Skin disorders

  • Endocrine disorders

  • Congenital disorders that affect multiple body systems

  • Neurological disorders

  • Mental disorders

  • Cancer (malignant neoplastic diseases)

  • Immune system disorders

Medical conditions that could prevent you from getting life insurance

For the most part, conditions that do not impact your life expectancy won’t impact life insurance for disabled people. However, all insurance agencies have their own unique underwriting strategies, making it difficult to compile a universal list of conditions that will automatically disqualify you from receiving life insurance. Having said that, the most common conditions which may prevent you from getting life insurance include, but are not limited to:

  • Amputation

  • Chronic joint pain

  • Spinal disorders

  • Impaired hearing, sight or speech

  • Asthma, chronic obstructive pulmonary disease (COPD) and cystic fibrosis

  • Arrhythmia, congenital heart disease and heart failure

  • Bowel and liver disease

  • Kidney disease

  • Sickle cell disease, bone marrow failure and hemophilia

  • Burns on the skin, dermatitis and ichthyosis

  • Diabetes and thyroid issues

  • Down syndrome

  • amyotrophic lateral sclerosis (ALS), epilepsy, multiple sclerosis, Parkinson's disease and traumatic brain injuries

  • Bipolar disorder, dementia, depression, anxiety and schizophrenia

  • Human immunodeficiency virus (HIV), inflammatory arthritis and lupus

Whether or not these medical conditions will disqualify you from receiving life insurance is entirely dependent on the particular insurance provider you apply to. That said, life and disability insurance providers have demonstrated an increased propensity to deny or restrict coverage for those with the conditions listed above.

How Is Life Insurance Impacted by Disability?

Make no mistake about it, life and disability insurance companies are in the business of making money. Each insurance plan offered to a potential policyholder is designed to do one thing: optimize profits. Consequently, one of the best ways for insurance companies to improve their bottom lines is to mitigate as much risk as possible in the underwriting process. 

The greatest risk to a life and disability insurance company’s bottom line is unproportionate payouts, relative to incoming premiums. In other words, the more money an insurance company pays out for the services it provides, the less free cash flow it has. Ironically enough, the worst thing an insurance company can do for its business is to fulfill the service it offers, and life and disability insurance companies are no exception.    

In order to protect their bottom line, life insurance companies will draft underwriting that mitigates the risk of distributing money back to policyholders. In doing so, they are more inclined to extend the best offers to otherwise “healthy” individuals because they are less likely to be paid out. Healthier policyholders should ultimately collect fewer death benefits, resulting in higher profit margins.  

On the other hand, disabilities which decrease life expectancy — or hinder it in any way —  inherently increase the risk of distributing death benefits. The increased risk exposure threatens profitability, which calls for stricter underwriting, higher rates, and —in severe cases — coverage refusal. 

Can I get life insurance if I’m receiving disability benefits?

Individuals receiving disability benefits from the Social Security Administration may still qualify for life insurance. That isn’t to say recipients of disability benefits are guaranteed life insurance coverage, but rather that disability benefits do not automatically disqualify them. Instead, the disability benefits will be factored into the insurance company’s decision making and underwriting. 

Generally speaking, applicants receiving disability benefits in relatively good health should be able to receive approval for life insurance. However, the underwriting on the policy will vary, depending on the severity of the disability and the reason for missing any work. If for nothing else, the inability to work full-time may prevent policyholders from keeping up with  premium obligations. In response to taking on the added risk, the insurance provider may increase rates accordingly.   

Types of Life Insurance for People Who Have Disabilities

Is there life insurance for adults with disabilities? The simple answer is “yes,” but it’s more useful to know the different types of life insurance for people who have disabilities. That way, prospective policyholders will know where to begin their search or which life and disability insurance company will cater to their specific needs.  

Coverage is entirely dependent on the severity of the disability. As a result, those with relatively minor disabilities and who remain in good health may qualify for today’s most popular plans. If the disability does not impact life expectancy, there’s no reason someone couldn’t apply and be approved for both conventional term and permanent life insurance.  

If, however, the disability is deemed more severe, conventional policies may no longer be in play. For those with more serious pre-existing conditions, life insurance for adults with disabilities may come in the form of: 

  • Final expense insurance: Only made available to those who are fifty and older, final expense insurance may be more limited than conventional alternatives, but it can help cover things like funeral costs and medical expenses.

  • Simplified issue insurance: This particular policy uses a health questionnaire —instead of a physical exam — to assess the applicant’s risk level. As a result, death benefits are limited, but can be approved in a relatively short period of time. 

  • Guaranteed issue insurance: Typically reserved for applicants who have been turned away by other insurers, guaranteed issue insurance remains true to its name. In return for guaranteed coverage, however, policyholders will pay higher premiums and lower coverage amounts.

How to Get Life Insurance With a Disability

As previously discussed, buying life and disability insurance is at least possible for anyone with a pre-existing condition. That said, there are steps you can take to place the odds more in your favor, not the least of which are outlined below.

Work on improving your health, if possible

Life insurance for adults with disabilities doesn’t need to be a foregone conclusion. In fact, those who are able to improve their own health may be able to greatly increase their odds of receiving coverage. While health improvements aren’t an option for everyone, those who can look better in the eyes of their insurer on a physical exam will have a better chance of receiving better underwriting. 

Consult with a life insurance agent

There are several life and disability insurance options made available to those with pre-existing conditions. However, not all of them are advertised as much as the more popular alternatives. It may be worth your while to consult a life insurance agent — someone who knows exactly where you should be looking. With an experienced professional in your corner, you won’t waste time on policies that are out of your reach. Instead, you will be guided to the plans and companies that suit your needs the most.

Apply for a justified amount of life insurance

Life and disability insurance companies pride themselves on taking everything into consideration during the application process. Not surprisingly, the overwhelming majority of their considerations have to do with the health of the applicants. However, there are times where a person’s net worth may play a role in receiving approval. If your own net worth can justify the amount of life insurance you are asking for, there’s a better chance you’ll receive approval.

Know & compare your options

Sometimes the best way to get life insurance with a disability is also the easiest way. Improving your chances of receiving coverage may be as simple as shopping around. Not unlike every other industry, the life and disability insurance industry is wildly competitive. It is entirely possible that some companies will ease their underwriting guidelines to take on more clients. 

Educate Yourself on Life Insurance & Protect Your Family

Life insurance is a great safety net for those looking to protect the financial future of loved ones. However, the ease of receiving coverage is not extended to everyone on a level playing field. Life and disability insurance companies make it easier and more affordable for “healthy” individuals. Life insurance for adults with disabilities, on the other hand, can be harder to come by. 

While it may be harder for disabled individuals to receive affordable life insurance, it isn’t impossible. With the information found in this guide, life insurance for disabled people may be just a few steps away.

Here at Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement options today! 

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