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Up to 27% of American adults have a disability, according to the Centers for Disease Control and Prevention. For those Americans who have a disability, qualifying for life insurance often poses a challenge. Because insurers view applicants with disabilities as a greater risk, it can be harder to find suitable coverage options.
But there are coverage options within reach. If you have a disability, here’s how to qualify for life insurance—and some alternative options if you find you can’t qualify.
Can You Qualify for Life Insurance with a Disability?
Even if you have a disability, you can still qualify for life insurance as long as your disability doesn’t impact your life expectancy. And the nature of your disability will affect the available policy choices.
“If you are disabled due to a physical impairment like blindness or deafness, you may be able to qualify for a traditional term policy, especially if your significant other has life insurance. In this situation, most life insurance providers will allow you to purchase a policy that offers at least half of the coverage your spouse has for you,” says Cliff Pendell, vice president of marketing at JRC Insurance Group.
If your disability affects your life expectancy, it can impact a life insurance policy in these ways:
Higher premiums
Limiting life insurance options
Denial of coverage
If your disability is severe enough, or if you have other compounding health problems such as cardiac issues, most traditional life insurance providers will likely deny your application.
What Do Life Insurance Companies Consider a Disability?
A disability may be physical or mental, and it may be caused by an illness or injury, or something you were born with. Common disabilities can include:
Cognitive conditions that impair communication, thinking and memory.
Hearing and vision problems.
Medical issues that affect movement.
Mental health conditions, such as post-traumatic stress disorder.
A back injury that doesn’t affect your life expectancy won’t likely affect your life insurance rates. But conditions such as PTSD, anxiety, or depression could, says Mike Raines, owner of Raines Insurance Group.
Since underwriting processes vary among life insurance companies, it’s challenging to pinpoint disabilities that will automatically result in an application denial. However, these conditions will likely affect your rates or your ability to get coverage at all:
Advanced stages of multiple sclerosis.
Anxiety.
Cerebral palsy.
Depression.
PTSD.
But generally, if you’re in good health aside from your disability, insurance companies might be willing to approve a life insurance policy—unless you’re on high doses of pain medications or narcotics that you may be addicted to.
While underwriting guidelines vary among companies, the life insurance underwriting process revolves around predicting your life expectancy (called mortality by insurers). You’ll be grouped into a life insurance underwriting class depending on your health and other factors that can affect your lifespan. The underwriting class will help determine your rate.
How to Qualify for Life Insurance With A Disability
You can do a few things to increase your chances of receiving a more affordable rate and qualifying for the coverage you need.
Work With an Experienced Professional
The best strategy is to work with an experienced life insurance agent who will know which companies are most likely to offer coverage for those with your condition. They should be able to anonymously shop your application around to see who’s willing to offer coverage.
Life insurance buyers with disabilities should not try to go it on their own by getting quotes online and submitting applications that might be denied. Denials go on your record and can make it even more difficult to buy life insurance.
Apply for an Appropriate Amount of Life Insurance
Suppose someone had a back injury and they are now disabled. Let’s say they were only making $20,000 a year before their injury and are now on disability. In that case, the insurance company may limit the coverage to a small amount.
On the other hand, suppose someone runs a family business and has a net worth of $2.5 million. In this case, you would have a much better chance of getting a high amount of life insurance to cover financial obligations and business succession.
“If you can show good financial justification for coverage, you may have a greater chance of approval,” says Raines.
Work on Your Health
It’s important to focus on your health if you’re applying for life insurance. Since insurance companies favor those in good health despite a disability, it’s wise to get as healthy as possible.
Here are a few ways you can get healthier:
Follow your medical treatment. Insurers favor applicants who have medical conditions under control. So if you’re not following medical recommendations, it’s wise to start.
Exercise and eat well. Exercise helps regulate your health and overall well-being. But, if it is difficult to excess due to a disability, focus on eating healthy.
Regulate your blood pressure. If you have high blood pressure, make sure you are taking the proper measures to keep it regulated.
Quit smoking. Smoking is a significant risk factor in premature death. While it can be hard to quit this nicotine, quitting may help improve other risk factors you may have as a result.
Types of Life Insurance for People with Disabilities
The types of life insurance available for people with disabilities will depend on each individual’s risk, including overall health and life expectancy. Here are some traditional life insurance options that may be available to you.
Term Life Insurance
Term life insurance is a policy where you choose the length of the level term period, such as a 20-year term. Your rates do not change during the level term period. You’ll also choose your coverage amount, such as $500,000. If you die while the policy is in force, your beneficiaries will receive the payout. The policy expires if you outlive the length of your term without renewing the policy.
Term life insurance can be a good choice if you are looking for income replacement for your dependents to pay expenses for a certain number of years. For example, a term life insurance death payout could help cover mortgage payments or college tuition.
Permanent Life Insurance
Permanent life insurance typically guarantees lifelong protection and a death payout to your beneficiaries, no matter when you die. It also usually provides the opportunity to build cash value, which accumulates on a tax-deferred basis. The coverage length and cash value are why permanent life is much more expensive than term life.
There are multiple types of permanent life insurance, which vary in terms of how much flexibility you have and how cash value builds. Here are some common options:
Whole life insurance. This type of permanent life insurance has fixed and guaranteed premiums, rate of return on cash value and death benefit. The cash value component of a whole life insurance policy increases over time based on your interest rate. You can take out a loan against the cash value or withdraw funds.
Universal life insurance. This type of policy has more flexibility than whole life, and you may be able to adjust your death benefit and premium payments within certain parameters. The cash value gains in a universal life insurance policy depend on what type you buy, such as guaranteed universal life, indexed universal life or variable universal life.
Variable universal life insurance. This type of policy offers a cash value component that you can allocate across a variety of investments such as bonds, stocks and money market funds. Variable universal life insurance is designed for those willing to assume more risk when it comes to investment gains and losses.
Related: Term Vs. Whole Life Insurance: What’s The Difference?
Life Insurance Options If You’re Denied Coverage
If you can’t qualify for traditional life insurance coverage, there are other options available. Depending on your needs and unique situation, here are several options worth considering.
Guaranteed Issue Life Insurance
With guaranteed acceptance or guaranteed issue life insurance, you can’t be turned down, and there are no medical questions or life insurance medical exam. The trade-off is that coverage limits are minimal and often range from $5,000 to $25,000 of coverage.
These policies also have graded death benefits. Your beneficiaries won’t receive the full death benefit if you pass away within two or three years of buying the policy, unless you died from an accident. It’s a way the insurance companies protect themselves from applicants who are severely ill and know they don’t have long to live.
Service-Disabled Veterans Life Insurance (S-DVI)
Some disabled veterans may qualify for life insurance through the U.S. Department of Veteran Affairs. Service-Disabled Veterans life insurance provides low-cost coverage to eligible service members that have a service-related disability. With S-DVI, service members can receive up to $10,000 of coverage. If a service member becomes totally disabled and is unable to work, they can receive supplemental coverage of up to $30,000.
For S-DVI, service members must be in good health, didn’t receive a dishonorable discharge and apply within two years from the date that they were granted service-connect disability, or by Dec. 31, 2022, whichever comes first.
Enrollment for S-DVI coverage ended after 2022 because a new life insurance program called Veterans Affairs Life Insurance (VALife) was created.
Veterans Affairs Life Insurance (VALife)
Veterans Affairs life insurance starts on Jan. 1, 2023, replacing Sevice-Disabled Veterans life insurance offerings.
Veterans with service-related disabilities can receive guaranteed acceptance whole life coverage in $10,000 increments up to $40,000 with VALife. Your coverage with VALife goes into effect two years after you enroll, as long as you’ve kept up with your payments. If you die during the two-year waiting period, your beneficiary will only receive premiums paid plus interest.
All veterans age 80 and younger with a VA disability rating are eligible, and there is no time limit to apply. Veterans 81 or older who have previously applied for a disability rating before age 81 but received a rating after turning 81 are eligible to apply within two years of their rating.
If you have S-DVI, you can remain in that program. Or, you can apply for VALife, and if you do so before Dec. 31, 2025, you can keep S-DVI during the initial two-year waiting period for VALife.
Group or Supplemental Life Insurance
Many employers have a group life insurance plan that provides affordable life insurance to workers. You typically don’t have to go through any underwriting process in order to receive the base coverage, such as coverage equal to one year of your salary.
Some group life policies may also have add-ons such as a waiver of premium, which allows coverage to continue but eliminates premium payments for employees who have become totally disabled. Typically, to qualify, you must be disabled for at least 180 days and under 60 years old.
Funeral and Burial Insurance
Funeral and burial insurance policies are designed to help beneficiaries pay for final expenses such as funeral costs. These policies typically do not require a medical exam, and the application may have minimal health questions or none at all.
Joint Survivorship Life Insurance
Also known as second to die insurance, joint survivorship life insurance insures two lives under one policy. Instead of paying out the death benefit when one person dies, this policy only pays out the death benefit when both policyholders die, such as two spouses.
These policies are often used to pay estate taxes, fund a trust for a child with special needs, or leave a legacy behind to other heirs.
Can I Get Life Insurance For My Child With a Disability?
If you have a child with special needs, you may be considering life insurance on yourself so you can ensure they are financially supported when you die. But you may also be considering life insurance on the child that could help cover funeral and burial or even medical bills if they pass away.
Life Insurance for Parents of a Child With a Disability
Buying life insurance often means something different when you have a child with a disability. With the right coverage and setup, it means your special needs child can be financially taken care of for the rest of their life.
If your child is a minor, the insurer will not pay out a death benefit to them. It will be held up until a guardian is appointed. If your child is not a minor, a regular life insurance payout could negatively impact the assistance they receive, such as Medicaid and Supplemental Security Income.
The most straightforward option to make sure your child is taken care of—without disqualifying them from government assistance or holding up life insurance funds if they’re a minor—is to set up a special needs trust. The trust will be listed as the beneficiary on your life insurance policy and will not impact government benefits eligibility for your child.
Life Insurance for a Child With a Disability
One way to buy life insurance for a child with a disability is to add a child rider to your own life insurance policy. If the child dies before a certain age, the rider will pay a death benefit.
A child term life rider typically adds $5 to $7 per $1,000 of coverage to your premium. The drawback is that coverage is usually limited to $25,000 or less per child, which may not be sufficient if there are outstanding medical bills or income replacement for time off from your job.
You could also purchase a separate life insurance policy for a child. Some insurers, such as Gerber Life, offer life insurance for children with smaller coverage limits than adult policies. These are usually whole life policies, but some insurers, such as Aflac, offer term life for children.
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Life Insurance for People With Disabilities Frequently Asked Questions
What do disability insurance and life insurance have in common?
Both life insurance and disability insurance are designed to provide a financial cushion to people in times of need. But they are entirely different types of insurance.
The primary purpose of life insurance is to pay a death benefit to beneficiaries if the insured person dies while the policy is active. Disability insurance pays out benefits if the insured person becomes disabled and cannot work due to the disability. Some life insurance policies include or have the option to add on a disability income rider.
What happens to life insurance if you become disabled?
If you have a life insurance policy in force before you become disabled, your life insurance coverage is not affected.
If your life insurance policy has disability-related riders, such as a waiver of premium rider or a disability rider, you may get some financial help. A waiver of premium rider allows you to stop paying life insurance premiums if you become disabled. A disability rider uses part of your death benefit to replace some of your monthly income.
Can individuals who are disabled get life insurance without a medical examination?
Guaranteed-issue life insurance does not require a medical exam. But costs are typically high for low coverage amounts and graded death benefits.
Can you get life insurance while on SSDI?
Yes. The severity of the disability could impact what life insurance you qualify for, so it is important to shop around and speak with an experienced life insurance agent or financial advisor to find the best life insurance fit for your needs.