Nowadays, we know how important life insurance can be for you if you have someone who depends upon your income. However, what is often overlooked is someone who is not dependent on your income but who will be inconvenienced or downright put out if you die.
Rather than dying with no life insurance, finding a small simplified issue whole life insurance policy to cover your final expenses and burial costs will help your loved ones greatly.
There is a common question that often comes up with this topic; “what if I am on Social Security disability?” If you are receiving a disability or Social Security allowance of any kind, the process of getting covered does become a little more difficult but we are going to discuss your options today. In addition to this, we will show the barriers to entry as well as how to find the best prices. Without further ado, let’s take a look!
Finding Life Insurance while receiving Disability Benefits
If you have a disability or aren’t working currently, you may be concerned about finding life insurance but it all comes down to the extent of your disability.
Considering a mental disability can be very different than a physical disability, they will be treated differently by life insurance companies.
Which means that being ‘disabled’ isn’t a barrier to life insurance in itself otherwise this would be extremely unfair.
What it does mean, however, I life insurance companies do have to protect their interests which is why it will be harder to get insurance if you suffer with bi-polar disorder or perhaps something physical condition such as Crohn’s disease.
Factors to Consider
When you first apply for life insurance with a disability, the company will consider numerous factors starting with your general lifestyle and habits.
First and foremost, you need to be current and up-to-date with treatment for your condition. If you have a history of not turning up to appointments with doctors or you have rejected treatment in the past, you are less likely to be accepted because you aren’t showing a proactive approach and being preventative. If a life insurance company is to offer you coverage, they need you to stay alive or charge high premiums.
After this, there are some bad habits that the companies look for including drug/alcohol abuse, smoking, and other similar problems. Once again, this shows that you aren’t worried about your health problem or that you aren’t doing all you can to stay in shape. Typically, life insurance providers will immediately decline your application if you receive disability allowance and smoke at the same time.
Finally, drug and alcohol abuse is also a big talking point with life insurance on disability but providers will reject you if this is paired with mental health problems such as depression, OCD, or even schizophrenia. Since drugs and alcohol make these problems even worse, there is the same lack of care on your part and it suggests that the problem is uncontrolled.
Disability Life Insurance Underwriting
With those negatives out of the way, what about acceptance and coverage?
In truth, you will find it hard to get a policy as large as you would like.
Normally, you will choose a coverage that suits your needs and pay as much as you can afford for this because typically life insurance is seen as income replacement.
However, Social Security does not factor into this ‘income’. If you aren’t currently holding down a job, you will have very little income to consider which means that you will struggle to find large policies. This being said, there are some exceptions but these will be discussed a little later.
SSDI and SSI
During the application process, you will be asked a few questions regarding your Social Security benefits. Firstly, they need to know whether you currently receive Social Security Disability Income (SSDI) or Social Security Income (SSI).
Why? Because this will tell the providers whether age forced you to retire or a disability. As we said before, the companies need to know how much of a risk you are and the two types of Social Security will contribute to this.
Since we are focusing on Social Security Disability Income today, it all comes back down to the underlying “cause”.
Before we provide some tips to getting life insurance while receiving social security disability benefits, we should take a look at some of the most common ailments and how they are treated by providers.
Mental Health Conditions
Nowadays, more people suffer from mental health problems than ever before and this could include depression, anxiety, schizophrenia, bi-polar disorder, or post traumatic stress disorder PTSD.
According to many studies and pieces of research, most companies will not accept these conditions on policies worth over $50,000. For anything up to $50,000, some companies may accept you for coverage depending on a few key questions.
If you have been declined for ordinary life insurance and simplified issue life insurance, you may need to consider a guaranteed issue life insurance policy.
You see, this type of guaranteed acceptance policy requires no medical examination nor any medical-related questions. Although this will be more expensive than other policies, it will still allow you to receive coverage. One drawback is typically only $25,000 or less will be available per company, so you may need to stack your final expense and burial insurance policies.
Next up, you might receive Social Security Disability payments because of long-term pain, whether it stems from the knee, back, or it could even be arthritis.
In this instance, you have more opportunities to receive a larger ordinary whole life or term life insurance policy. In terms of rates, this will depend on what type of medication you are taking because many will have severe side-effects that need to be considered.
For example, the highest premiums will come from medication like percocet, tramadol, vicodin, darvocet, and hydrocodone. Since long-term use of these medications can bring serious side-effects, the rates for these will be higher than most.
For anti-inflammatory and non-narcotic medications, these are less severe and will yield lower premiums; the same can be said for any medication bought over the counter such as ibuprofen. With all narcotic medications, you will need to prove that you attend regular check-ups with the doctor and ensure that you have never abused any substances.
Serious Health Issues
Of course, this phrase could cover a broad array of topics but we are looking towards the most serious pre-existing health conditions including cancer, heart problems, strokes, uncontrolled diabetes, kidney problems, etc.
Not only do these require serious intervention, they have the ability to shorten life expectancy and affect everyday life.
With life insurance, your options will be limited if health conditions affect your major organs.
Therefore, policies with medical exams or questions will reject the application immediately. Once again, you have the option of choosing a guaranteed issue policy, but the premiums will be higher and the death benefit maximum lower, so keep this in mind.
Life Insurance on Disability Tips
Before we finish, we just want to mention a couple of tips and notes to discuss that will impact your decision as well as the decision of the life insurance company.
In theory, combining two or three final expense or burial insurance policies sounds like a great idea because you can reach the desired coverage. Although it might be a bit messy dealing with multiple companies, you can leave a good amount behind for beneficiaries.
Contact an Agency
If you are currently scouring the market contacting life insurance companies one by one, we highly recommend getting in touch with a life insurance agency.
As long as you research, you will find agencies that have experience dealing with high-risk cases.
With this in mind, they will know about life insurance on disability and exactly which companies are the best ones to contact moving forward.
When choosing an agency, you will need to ensure that they work with various final expense and burial insurance companies.
Choosing the Right Company
During this process, you also need to contact the right companies and this is something with which an agent can help. With some companies, you will have a chance to attach a cover letter to your application where you can explain the various positive, healthy habits you have in life. Suddenly, they will see why you are a good candidate and that you are doing all you can to stay healthy.
Accidental Death Coverage
When talking to companies directly, they may talk fast in hopes of confusing you. Within minutes, you are being offered a type of policy called “Accidental Death Insurance” and it sounds great after being rejected for life insurance.
However, don’t be fooled because this policy will only pay the death benefit if you were to die from an accident. If you pass away due to your health condition, they will not pay out with this type of coverage. To prevent this from happening, stay alert when talking to salespeople and look for the clues.
For example, a low price for high coverage should set the alarm bells ringing considering they either know you are ill or aren’t asking any questions.
When looking for life insurance on disability, we understand that you would rather answer a few questions and receive the lowest premium possible.
But what happens sometimes is this just isn’t possible and you need to go for guaranteed issue instead. Although you will pay higher premiums, the company will not push a medical examination on you nor will they ask any health questions.
Furthermore, we should also note that guaranteed issue policies include a graded benefit. A graded death benefit means that the full death benefit isn’t available until a couple of years into the policy.
For example, a company like Gerber Life Insurance will offer a two year graded death benefit where your premiums will be returned plus 10%. This being said, at least you can have the peace of mind knowing a policy is in place.
When receiving SSDI, life insurance can be difficult to obtain. But ‘difficult’ is still a long way from ‘impossible’.
When applying, the various companies will ask for the severity of your issue and about your lifestyle/habits.
If you can answer the health questions with a “No”, ordinary life insurance might not be outside the realms of possibility.
If you answer “Yes” to a few questions, you still might qualify for simplified issue no exam life insurance.
Finally, if you are not eligible for either of these, guaranteed acceptance life insurance may still be an option.
As we said before, always contact a professional if you don’t know where to start because they will have knowledge of every company and every situation!
JustBuryMe is an agency that represents many different companies, offering ordinary, no exam and guaranteed issue life insurance. Give us a call today to see just what is available for you.