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Can people with ALS Qualify for Life Insurance?

People diagnosed with amyotrophic lateral sclerosis (ALS) will often contact us here at InsuranceBrokersUSA to find out if there are any life insurance policies for which they can still qualify for.

And the good news is…

That there are a few options that will be available to those who have been diagnosed with ALS, the bad news is that most of these options will be limited to around $25,000 dollars in coverage and will have some limitations that will need to be fully understood before an individual can make an informed decision about whether or not these types of life insurance policies will be right for him or her.

Before we look into all the “nitty gritty” details about the types of life insurance policies that will potentially be available to those who have been diagnosed with ALS, let’s check if we’re all on the same page regarding what ALS is.

ALS explained

The ALS Association describes amyotrophic lateral sclerosis (ALS) as a progressive neurodegenerative disease affecting nerve cells in the spinal cord and brain.  ALS is also known as Lou Gehrig’s disease and causes a gradual deterioration of voluntary muscle control which affects behaviors such as walking, chewing, talking and breathing.

Unfortunately, there is currently no known cure for ALS or any effective treatment options to stop or reverse the disease’s progression.  Which means that once you have been diagnosed with ALS, you’ will always be considered as someone that has the disease for life insurance purposes.

This also means that…

Once you have been diagnosed with ALS, insurance companies will no longer consider you eligible for a traditional term or whole life insurance policy.  This is why individuals who have been diagnosed with ALS will want to consider some alternative life insurance products such as a guaranteed issue life insurance policy.

Guaranteed issue life insurance policies.

In short, guaranteed issue life insurance policies are life insurance policies that won’t:

  • Ask medical questions
  • Or require applicants to have a medical examination performed.

This means that all US citizens between 40 and 85 years old should be able to qualify for a Guaranteed Issue Life Insurance Policy. Note: This product may not be available in certain states.

Fantastic!  Right?

Well, before you get too excited, we need to highlight 3 major disadvantages that you should be aware of when considering purchasing a guaranteed acceptance life insurance policy.

  1. Guaranteed issue policies aren’t basic issue life insurance policies. This means these policies only offer a maximum of $25,000 in cover.  If you want to protect lost wages, or cover the outstanding portion of your mortgage in the event of you dying early, guaranteed acceptance life insurance policies are not a great option.

If you’re thinking of buying several guaranteed acceptance life insurance policies from different life insurance companies, you’re unfortunately soon going to come face to face with the second disadvantage of guaranteed acceptance life insurance policies, which is their COST!

  1. When purchasing a guaranteed acceptance life insurance policy, you will soon find out that they typically, “dollar for dollar”, are a lot more expensive than whole life insurance or traditional term policies.  This means that if you want to buy several guaranteed acceptance policies from different life insurance companies to get a cover higher than $25,000, that’s okay, but you need to know that it will quickly get massively expensive!
  2. The third major disadvantage of a guaranteed acceptance life insurance         policy is that they contain a clause known as a Graded Death Benefit. In order to understand fully what a graded death benefit clause means, it is handy to explore why it was created by the burial and final expense life insurance companies, and then work backwards from there.

A graded death benefit was designed to protect insurance companies against paying out a guaranteed acceptance life insurance policy during the first few years (normally 2 to 3 years), in the event that the insured dies from natural causes.

In this context, dying from natural causes means a death caused by an illness such as a heart disease, cancer, stroke, or diabetes.

On the other hand, an accidental cause of death would include death caused by a motor vehicle accident, slip and fall, or natural disaster. Unlike death caused by natural causes, accidental causes of death will be covered immediately by a guaranteed acceptance policy, and is not subject to the graded death benefit waiting period.

You may be thinking that this is a rip off!

Remember however, that when you apply for a guaranteed acceptance life insurance policy, the insurance company will not ask any health related questions, nor will it require you to have a medical examination done. This means that the insurance company has literally no idea of the current status of your health.

The insurance company would not know if you’re knocking on death’s door!

The insurance companies had to find a way to protect themselves from those that are really, really sick and take out a guaranteed acceptance life insurance policy, literally at the last minute.

That is why they created the Graded Death Benefit. You could still buy a guaranteed acceptance life insurance policy even when you’re really sick, but be aware that it will not pay out the death benefit if you die from natural cause before the graded death benefit waiting period is over.

It is however not all bad news…

You should be aware that most Graded Death Benefit clauses will, or at least should contain some wording that describes what will happen when someone dies from natural causes during the graded death benefit exclusion period.

Although we recommend that you check the policy you are considering, in most cases you will generally find that if you die from natural causes during the exclusion period specified in the graded death benefit, most, or all of the premiums paid by the insured will be refunded to the beneficiaries. Interest on the premiums will also be included in the payment. The amount of interest to be paid will be calculated based on how long payments have been made on the policy.

This means …

Even with the worst possible scenario when the insured dies from natural causes before the graded death benefit exclusion period is over, the beneficiaries of the policy will still receive all of the premiums payed by the insured, with a small amount of interested added!

That’s all there is to it…

It is unfortunately true that finding a life insurance policy that will cover you will be difficult after you have been diagnosed with ALS, and any policy you find won’t necessarily be perfect.  There are however very few life insurance policies that are perfect, even for heathy individuals.  It is however important to know what kind of cover you will be able to qualify for. You should also be able to determine if any policies you do qualify for will be able to meet your requirements, despite any limitations they might have. Although this is something that only you will be able to determine, should you have any questions whatsoever, please feel free to give us a call. We’ll be happy to answer any of your questions, or discuss in detail all the options that may be available to you!

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