Your Guide To Buying Life Insurance With A Chronic Illness
Around 133 million Americans (40% of the population) are affected by chronic illnesses according to the National Health Council. If you’re one of these individuals, then chances are you’ve worried about the possibility of getting disqualified for life insurance.
The good news is that buying life insurance with a chronic illness isn’t impossible. It might affect the insurance classification given to you, but most life insurance companies will work with you to find the best insurance plan to suit your needs.
This quick guide will run you through everything you need to know about buying life insurance with a chronic illness.
What Is Considered A Chronic Illness?
The CDC defines a chronic illness as any condition that lasts 1 year or more that requires ongoing medical attention or limits activities of daily living (or both). Most of the time these chronic illnesses have no cure, and the patient will have to keep it under control with constant treatment or medication.
Chronic illnesses encompass a broad range of conditions, and each specific life insurance company will have its own set of guidelines regarding specific diseases. Before you apply for chronic illness insurance, make sure you know everything there is to know about your condition and specific situation.
Some common examples of chronic illnesses include:
Chronic lung disease
When Should You Get Chronic Illness Insurance?
It’s easy to overlook life insurance. At first glance, it just seems like an unnecessary expense that is piled up on your existing costs. The truth is that life insurance is actually one of the most responsible financial decisions you can make, especially if you have a chronic illness. Having a policy will ensure that your loved ones are financially protected with the death benefit that they will receive.
As morbid as it sounds, if you have a chronic illness, then you would understand how important it is to have that protection. A good life insurance policy will protect your family from any financial costs (health care costs, funeral costs, etc.) you may face as a consequence of your condition. Since life insurance rates are affected by factors like your age and health, then getting it earlier will also ensure that you enjoy the lowest rates possible.
Can You Still Buy Life Insurance Coverage With A Chronic Illness?
Many people assume that living with a chronic illness will make you uninsurable due to the innate health risks you carry – but, this isn’t actually the case. While it’s true that having a chronic illness means you won’t enjoy the best premium rates, it doesn’t entirely disqualify you from enjoying cheap rates either.
Having a chronic illness just means that insurers will pay more attention to your health as they evaluate the risk involved in insuring you. You should be fine as long as you have a history of actively taking care of yourself and diligently following treatment plans.
If you don’t have a chronic illness but you feel like you might develop one in the future, then you should know that you can also avail of a chronic illness rider. This turns your standard life insurance benefits into an accelerated death benefit, which we’ll dive deeper into later on.
How Does Having A Chronic Illness Affect Buying Life Insurance?
When it comes to chronic illnesses, your life insurance company will take many of the finer details of your condition into account. This typically includes (but is not limited to):
The severity of your condition
The age of onset
Family history of disease
During the underwriting process, the life insurance agent will look at these factors and weigh the risks involved in insuring you. You will be assigned one of the following insurance classifications, and this will dictate the premiums you will have to pay as well as any benefits you might be qualified for.
Preferred Plus: Clients in this category are generally expected to have the longest life expectancies and, therefore, enjoy the best premium rates. Unfortunately, most people with chronic illnesses might not be qualified for this.
Preferred: This is the second-best category. Those who qualify for it supposedly only have minor health issues that can be treated with medication. It’s possible to qualify for this category even with a pre-existing chronic illness.
Standard Plus: Clients in this category supposedly have better health than average, save for some underlying health issues. People with chronic illnesses who might be taking multiple medications can still qualify for this, as long as they don’t have a family history of disease.
Standard: This is the most common category. Most clients with chronic illnesses can qualify for this category as long as they are actively doing something about their condition.
Substandard: This refers to any classification that is given to possible policyholders who do not fit into the requirements of the previous four. Clients who are classified as substandard might have the most expensive premiums of the bunch, but they can still qualify for a life insurance policy nonetheless. People with particularly complex conditions might find themselves under this classification.
What To Expect When Getting Coverage With A Chronic Illness?
Your experience with getting coverage will vary depending on the specific chronic illness you have. Listed here are a few possible scenarios you might experience if you have one of the more common chronic illnesses.
Depression Or Anxiety
Of all the chronic illnesses, depression and/or anxiety are the ones that have the most varied guidelines per life insurance provider. The underwriter will mainly judge your insurability by looking at when you received your diagnosis, your history with therapy or medication, and whether you’ve been hospitalized because of mental health in the past.
Diabetes is a fairly common chronic disease that affects Americans all over the country. The underwriter will be mostly concerned with the age you were diagnosed with and what kind of diabetes you have. People who have type 1 diabetes or were diagnosed when they were younger should expect higher premiums.
Potential policyholders who have a history of alcoholism might have some difficulty qualifying for the best rates. Underwriters are mainly concerned with the long-term health effects associated with alcoholism, such as liver disease or obesity. Demonstrating that you are putting in the effort to improve your health while staying away from alcohol will increase your chances of qualifying for better rates.
High Blood Pressure
Underwriters who are evaluating people with high blood pressure are mainly concerned with how well they are managing it. Showing a history of constantly exercising, improving your diet, and managing your stress will improve your possible premium rates dramatically.
History Of Cancer
It’s possible for people who are a few years in remission from cancer to qualify as a preferred client. This will mainly depend on the prognosis given to you by your oncologist and how consistent you are in trying to improve your overall health after recovering from your treatments.
Do take note that people who just got diagnosed with cancer or are currently undergoing treatment for cancer will most likely not qualify for coverage. These patients are usually considered terminally ill and not chronically ill. The risk of them passing away is too high, and they should consider looking for other options for financial aid.
Chronic Illness Rider: What Is It?
Chronic illness riders are add-on benefits to life insurance policies that turn your death benefit into a living benefit. Essentially, they function as accelerated death benefit policy riders that are activated if you develop a chronic illness down the road. Many insurance companies already include it as part of their life insurance products by default.
There are usually two main accelerated death benefits for chronic illness. The first one is the general chronic illness rider. This policy rider requires you to be diagnosed with a condition that qualifies as a chronic illness. If you meet the requirements of the chronic illness rider in your policy, then you can claim your death benefit (or a portion of your death benefit) as a lump sum payment.
The benefit amount you receive can be used for whatever you want. Usually, the money received from a chronic illness rider is used to help pay for medical bills or other unforeseen costs lost during your treatment period.
Long-term care insurance riders are the other variation of accelerated benefit riders. These are more specific policy riders that are used to cover the costs of long-term care services. To qualify for this, the policy owner should not be able to accomplish at least two out of the six activities of daily living. Common causes for these are physical disabilities or severe cognitive impairment.
The six activities of daily living are:
Bathing: Being able to clean or groom oneself
Dressing: The ability to get dressed and change clothes
Eating: Being able to feed oneself
Transferring: Being able to physically move oneself
Toileting: Being able to get on and off a toilet
Continence: Being able to control one’s bladder
Long-term care insurance riders (LTC) are different from normal chronic illness insurance riders in a few ways. First, they are paid to the policyholder (or their family) as reimbursements for any payments made related to their LTC costs. This is to ensure that the money received is used only to help cover home care expenses or nursing home expenses.
The next major difference between the two is that long-term care benefits may be taxable as gross income while typical chronic illness insurance benefits are tax-free. This will vary depending on the amount associated with the life insurance plan, your insurance company, and your local tax laws.
Consider adding a chronic illness rider to your policy if you feel like you are at risk of developing a chronic illness and/or will require long-term care later on in your life. However, do remember that opting for an accelerated benefit or long-term care rider will reduce (or completely use up) the death benefit attached to your insurance policy.
Being chronically ill might make it harder for you to qualify for coverage, but it doesn’t mean that you can't buy life insurance products altogether. Consistently trying to improve your health and sticking to your treatment plan will increase your chances to get approved for better life insurance classifications.
Additionally, people who fear they are at risk of developing chronic illnesses later on in life can protect their loved ones by availing of a chronic illness rider. This will allow the policyholder to convert their death benefit into an accelerated benefit in the event that they are diagnosed with a qualifying illness.
We understand that buying life insurance can be scary. At Wesley Insurance, LLC, we are committed to making the process of getting coverage as simple and affordable as possible. Contact us today to see what we can do for you!