How to Choose Life Insurance For People With Disabilities

Life insurance for people with disabilities provides financial security to the chosen beneficiary and can help pay for final expenses. Disabilities may affect life insurance rates depending on the type of disability and the risk it presents to the insurance company. The types of life insurance available to people with disabilities include term and permanent life insurance.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Jul 19, 2021

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Quick Facts

  • People with disabilities have the same life insurance options as anyone else
  • The type of disability will impact your life insurance rates and qualification
  • Life insurance can work together with disability insurance to ensure financial security

If you have or are supporting someone with a disability, the type of life insurance you choose matters. Generally, there are two different types of life insurance you can choose between, depending on which situation suits you most:

  1. A policy that insures you
  2. A policy that insures your guardian, caretaker, or parent and makes you the beneficiary of their coverage. 

The type of insurance you choose depends on a variety of factors, most significantly whether you are a person with disabilities or are a parent, caregiver, or guardian of someone with disabilities. Beyond what type of life insurance policy you choose, you also want to make sure your coverage protects what matters and is important — namely, you or the person you care for. Read on for more tips on choosing the most effective coverage for a person with disabilities.

If you need to find life insurance for a disable person, we can help. Enter your ZIP code above for fast, free, quotes.

What Do Life Insurance Companies Consider a Disability?

The Americans with Disabilities Act defines a person with a disability as: 

“…a person who has a physical or mental impairment that substantially limits one or more major life activity. This includes people who have a record of such an impairment…or are regarded as having such an impairment.” 

A “major life activity” includes anything that affects everyday bodily functions, such as sleeping, eating, walking or running, thinking, talking, or seeing. 

Life insurance companies evaluate how a disability affects your overall health. For example, a person with multiple sclerosis would have different medical or health needs than someone diagnosed with ADHD.

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What Does Life Insurance Cover?

Regardless of disability, life insurance generally offers the same coverage. A basic life insurance policy covers most causes of death with death benefit payout to your named beneficiary, in most cases of natural death, accidental death, suicide, or murder.

A death benefit is a sum paid out to the beneficiary of the life insurance policy, which is often a child, spouse, sibling, or partner of the policyholder. It covers any expenses that the beneficiary may have — such as college tuition, mortgage payments, or funeral expenses for the policyholder. 

The following expenses can be covered by life insurance, under most circumstances:

  • Expenses and bills
  • Co-signed debts
  • Dependent/child care expenses
  • College tuition, fees, or loan payments
  • End-of-life costs

The following costs are not covered by life insurance, usually under any circumstances:

  • Expired policies 
  • Fraud, such as misrepresentation
  • Criminal activity 
  • Exclusions (varies by state)
  • Long-term care, if not covered by specific riders (such as accelerated death benefits, long-term care, or critical illness riders)
  • Disability care 

What Are the Benefits of Life Insurance for Someone With a Disability?

Life insurance is often not for the benefit of the policyholder themselves: it’s for the benefit of their loved ones, including dependents, guardians, caretakers, or anyone else. 

If something unexpected happened and you died, odds are you would want your family and other loved ones to be well taken care of financially. A life insurance policy helps the beneficiary financially, especially when it comes to funeral planning. This ensures that your loved ones aren’t shouldering both the emotional as well as the financial pain of losing you, especially if you’re a caregiver leaving a dependent with disabilities with accumulated medical debt.

Types of Life Insurance Coverage for People With Disabilities

The type of life insurance you opt for depends on whether you’re shopping for yourself as a person with disabilities; or whether you’re a guardian, parent, or caregiver of someone with disabilities and you’re looking to name them as your beneficiary. Read on for more information on how to distinguish between these types of life insurance.

For People with Disabilities: Life Insurance for Your Loved Ones

If you’re an adult with disabilities who has dependents, debts, or loved ones to care for, it’s advisable to invest in a life insurance policy for yourself that will help protect your family and loved ones. 

Having a life insurance policy will help ensure that your loved ones can plan your funeral and pay off their debts, and will generally help them to recover financially from your passing. The death of a loved one is an emotional time, so having life insurance for your beneficiaries can help them execute your final wishes without going into debt.

Generally, you’ll have two types of life insurance to choose from: term vs. permanent.

  1. Term life insurance is a policy that lasts for a set period of time;
  2. Permanent life insurance is a policy that lasts as long as the policyholder makes payments.

While whether you opt for term or whole life insurance will rely on your exact needs, people with disabilities may be better served by permanent life insurance. This is because permanent life insurance secures coverage indefinitely, so you know you’ll be covered (and able to support your loved ones) if your disability worsens as you age.

For Caretakers, Parents, or Guardians: Life Insurance for Your Dependent with a Disability

If you care for or are the parent or guardian of a person with disabilities, your life insurance needs will differ. This group of people will be looking into naming their dependent with a disability as their beneficiary, likely to help them pay for any outstanding medical debt or needs after they pass. 

These policyholders also get to choose between term and permanent life insurance. The exact type chosen will depend on the exact needs of the beneficiary, so speak to your life insurance provider if you have any questions or need insight on which would be best for your situation.

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How to Purchase a Life Insurance Policy

Once you’ve decided what type of life insurance works best for your needs, you’re ready to begin the life insurance purchase process. Generally, this is how that process will work, though the specifics will depend on where you purchase life insurance and what sort of coverage you opt for.

1. Determine your desired coverage and the type of policy you’ll need. If necessary, speak to brokers or life insurance experts to see what they recommend and what works best for your specific scenario.

2. Find or work with a service to find an affordable provider. You can compare life insurance quotes or work with a life insurance broker to compare coverage options that work for your needs but are still affordable. 

3. Begin the underwriting process with your provider. Generally, this includes a phone interview and medical exam (unless you opt for no medical exam life insurance) so your provider can determine your rate and coverage based on your health and other medical needs. 

4. Sign final policy documents and pay the first premium. Until you’ve signed your finalized documents and made your first payment, you are not covered by life insurance; so be sure to finalize your policy as soon as you can. 

This process will differ based on different circumstances, but this is the general format the life insurance purchasing process will follow.

Other Insurance Considerations for People With Disabilities

In addition to life insurance, people with disabilities will likely want to look into additional forms of insurance to help offset some of the costs of medical visits, any assistive technology needed, and anything else their specific disability may require. 

Read on for more information on disability and health insurance, which when coupled with life insurance help protect you, your loved ones, and any other medical expenses you may incur.

Disability Insurance

Disability insurance, also known as disability income insurance or income protection, is a specific type of coverage that replaces a portion of your monthly income if injury or illness keep you from working and earning your income. 

It may seem morbid to count on becoming disabled at some point, but disability can happen to anyone and is extremely unpredictable. It’s best to be prepared for the worst, to ensure that your loved ones are well taken care of no matter what may happen.

What Does Disability Insurance Cover?

Disability insurance covers injuries or illnesses that limit what you’re able and expected to perform at work. To be eligible for disability insurance, a person must meet the definition of disability under the Social Security Act. A person is considered disabled by the SSA if they: 

Cannot work due to a severe medical condition that has lasted, or is expected to last, at least one year or result in death. The person’s medical condition(s) must prevent them from doing work that they did in the past, and it must prevent them from adjusting to other work.

The Council for Disability Awareness identifies some of the most common reasons for short-term (six months or less) disability insurance claims are:

  • Pregnancy
  • Musculoskeletal disorders affecting the back, spine, knees, hips, or shoulders
  • Digestive disorders, such as gastritis 
  • Mental health issues, including depression and anxiety
  • Injuries such as fractures, sprains, or strains

The CDA identified some of the most common reasons behind long-term (longer than six months) disability claims are:

  • Musculoskeletal disorders
  • Cancer
  • Pregnancy 
  • Mental health issues
  • Injuries such as fractures, sprains, or strains

Disability insurance from the SSA also covers disabilities that are present from birth. Visit the SSA’s Listing of Impairments for more information on which conditions are covered. If eligible, SSDI benefits can generally be paid out to the child when they reach 18 or 19, though the parent’s income and work credits are taken into account when determining eligibility.

Disabilities can happen suddenly. This makes it vital for non-disabled people to be prepared and opt for disability insurance just in case. It also makes it important for people with disabilities to see their eligibility status, so that they can help protect themselves and their families if their disability prevents them from working for certain periods of time.

What Are the Benefits of Disability Insurance?

Though many file for it as a precaution, disability insurance helps keep you and your family protected in case of an accident or disability that prevents you from working. Especially in homes with multiple children or dependents, being out of work for several weeks or months due to disability may cause the family to go into debt or be unable to afford some of their everyday needs.

Disability insurance differs from life insurance in that life insurance is often not for the benefit of the policyholder, just the beneficiaries; but disability insurance helps both the policyholder and their dependents. Being out of work for long periods of time, over something you often have no control over, can be scary and lead to uncertainty around your finances.

In fact, the Federal Reserve found that 37 percent of American households would have a hard time covering a $400 emergency expense. Additionally, the Council for Disability Awareness found that only 48 percent of American adults have enough savings to cover three months of living expenses in the event of them not earning any income. 

This is the major benefit of having disability insurance: if you become disabled or your disability precludes you from working, you will not have to worry about money or covering expenses incurred from not working.

How to Purchase Disability Insurance

Much like life insurance, the exact process of purchasing disability insurance will vary based on your exact specifications and needs. Below is the general process of purchasing disability insurance, though it should be noted that some employers offer disability insurance as part of their benefits packages.

1. Know how much coverage you’ll need. This will differ from person to person based on desired benefit amount, policy cost, and other policy-specific criteria.

2. Familiarize yourself with what factors to look for. Disability insurance can often be customized with riders (such as non-cancelable) and other add-ons based on your specific needs and how much you’re looking to spend. Take the time to see what factors are important to you in a disability insurance policy.

3. Compare quotes. Much like when shopping for life insurance, you have a variety of options when it comes to comparing quotes from insurance providers. You can use a quote comparison tool, speak to an expert, or individually request a quote with different insurers — whatever works best for your needs.

4. Complete an application. Once you’ve found the best disability policy for you, you’ll fill out an application, which is generally anywhere from one to five pages long. Usually, the application asks for standard health, financial, and personal information. 

5. Participate in a phone interview with the insurer. This confidential interview with your insurer will ask more in-depth questions than the application itself, especially on your medical conditions and history. This is to determine what will and won’t be covered, such as certain pre-existing conditions.

6. Perform underwriting tasks. The underwriting required for disability insurance is very similar to the underwriting needed for life insurance. Usually, there are three main steps associated with the disability insurance underwriting process:

  • Medical exam to verify health and medical information, usually scheduled by your insurer. Very similar to a yearly physical exam.
  • Income verification via pay stubs or tax returns to certify that the amount of protection you’ve requested makes sense.
  • Attending physician’s statement (APS) to gather your health history from your doctor’s perspective.

7. Sign your policy. The same as other types of insurance, you will not be covered until your policy is signed and your first premium has been paid. This is why it’s important to finalize the paperwork and pay your first premium quickly, to ensure your coverage takes effect as soon as possible.

Like other types of insurance, consult a specialist or your insurer for more information or with specific questions.

Health Insurance Coverage for People With Disabilities

Health insurance covers any medical need you may have that would not be covered through disability or life insurance. Full-time employers offer their employees health insurance under their group plans, and by doing so pay part of their insurance premium.

However, if you work part-time, are self-employed, or are out of work, you will need to shop for your own health insurance through a private insurer. People with disabilities have three coverage options through the federal government, in addition to coverage options through private insurers.

  • The Affordable Care Act Marketplace has options for people with disabilities who don’t qualify for disability benefits and need health coverage. 
  • Medicaid provides low-cost or free medical benefits to people with disabilities.
  • Medicare offers medical health insurance to people under 65 with certain disabilities.

Read on for more information on health insurance, including what it covers and how to purchase it.

What Does Health Insurance Cover?

Health insurance is used to offset the costs of your medical expenses, so you don’t have to pay out-of-pocket for any of your medical needs. Marketplace health insurance plans, as well as many private health insurers, will cover the following 10 essential health benefits, as well as birth control, breastfeeding coverage, and pediatric care. 

Note that exact coverage is not guaranteed, and any questions about coverage should be directed to your insurer.

  • Ambulatory patient services, or outpatient care received without hospital admittance 
  • Chronic disease management
  • Emergency services
  • Hospitalization, such as surgery and overnight admittance 
  • Laboratory services, such as blood work
  • Mental health and substance use services, including behavioral health treatments like counseling and therapy
  • Pregnancy, maternity, and newborn care (both pre- and post-birth)
  • Prescription drugs
  • Preventative and wellness services
  • Rehabilitative and habilitative services/devices

However, there are limitations to what health insurance will cover. The following medical services will generally not be covered by health insurance if not deemed “medically necessary,” though exact coverage will differ:

  • Acupuncture or other alternative therapies 
  • Cosmetic surgeries
  • Dental, vision, and hearing coverage
  • Nursing home care (is covered by long-term health insurance)
  • Preventative tests (coverage varies depending on the exact test)
  • Travel vaccines, such as typhoid for traveling abroad
  • Weight loss surgeries

The exact coverage you have depends on your insurer and what they deem to be medically necessary. For more information, speak to your insurer about coverage.

What Are the Benefits of Health Insurance for Someone With a Disability?

For people with disabilities or their caretakers, health insurance will help offset the costs of some of their medical needs. This includes surgeries, assistive technologies, certain medications, emergency services, and other expenses that may otherwise need to be covered out-of-pocket. 

Having a disability and other medical needs is often expensive, but health insurance helps make it much more affordable. Having health insurance not only helps offset the costs of necessary medical expenses, but helps keep you protected in everyday life — such as a routine doctor’s visit — and in the event of the unexpected, like a car accident that requires surgery.

How to Purchase Health Insurance

Many individuals will be covered under their employer’s health insurance if it’s offered as a benefit, and people under 26 can remain on their parent’s health insurance policy. However, if you do not have employer health insurance or you’re looking to purchase your own, you can sign up during the open enrollment period, which differs from state to state.

However, you can also sign up for an individual health insurance plan if you have a qualifying event that triggers a special enrollment period, which usually lasts for 60 days. Special enrollment qualifying events can include:

  • Becoming a U.S. citizen
  • Having a baby, adopting a child, or placing a child for adoption/foster care
  • Getting married
  • Losing eligibility for Children’s Health Insurance Program (CHIP) or Medicaid 
  • Moving to a different state 
  • Leaving incarceration
  • Losing existing health insurance coverage due to COBRA expiration, job loss, divorce, or aging out of a parent or guardian’s plan

You have a few options to purchase private life insurance if you’re looking for additional options that are not through the federal government. Generally, you can obtain health insurance through the following means, regardless of disability status:

  1. COBRA coverage
  2. Your spouse 
  3. Private individual or family policies
  4. Public exchanges through your state or federal government
  5. Medicaid

Health insurance is not something you want to be without, so no matter how you go about getting coverage, it’s important to try and always have health insurance coverage for yourself and your loved ones.

Additional Resources

If you have a disability or care for someone with disabilities and need more guidance, read on for additional resources that can help. The following 10 resources cover topics relating to disabilities and disability care, so you can have all the information you need.

Deciding how much life insurance you need and buying coverage for yourself or your beneficiary can be difficult, as you’ll want to ensure you’re getting the best possible coverage at an affordable rate. For people with disabilities or their caregivers, this often means seeing what would be the most useful for your beneficiaries. 

While shopping for the best policy, remember that a life insurance policy often isn’t about you — it’s about keeping your loved ones protected in case something happens to you.

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