It’s not uncommon for us here at IBUSA to receive a call or two each week from someone who is looking to purchase a life insurance policy on someone (including themselves) that has been diagnosed with a terminal illness.
This is why…
We wanted to take a moment and answer some of the most common questions we get from folks who find themselves in this situation and hopefully provide one with a better idea about what “kind” of options may be available to them.
Questions that we will address in this article will include:
- What does it mean to be diagnosed with a terminal illness?
- Can individuals who have been diagnosed with a terminal illness be able to qualify for a traditional life insurance policy?
- If a “traditional” type of life insurance policy isn’t possible, what “kind” of life insurance policy can I qualify for?
- What can I do to help myself qualify for the “best” life insurance policy for me?
So, without further ado, let’s dive right in!
What does it mean to be diagnosed with a terminal illness?
Technically speaking, if you or a loved one have been diagnosed with a terminal illness, what this generally means is that you have been diagnosed with a disease that can’t be cured. Or adequately treated to the point where the disease isn’t expected to cause one’s ultimate death.
Conditions which may fall under such a definition may include:
- Certain types of advanced cancers,
- Dementia or Alzheimer’s disease,
- Advance heart disease or heart failure,
- Amyotrophic lateral sclerosis (ALS) or Lou Gehrig’s disease,
- Advanced chronic obstructive pulmonary disease (COPD),
- Liver failure,
- Multiple sclerosis,
- Kidney failure,
Interestingly enough, though, one thing that this definition fails to take into account is how long one might be expected to live after being diagnosed with a “terminal illness”.
Which means that…
Even though someone may have been diagnosed with a “terminal illness” like COPD or Multiple Sclerosis, it doesn’t necessarily mean that that same person wouldn’t be able to qualify for a traditional life insurance policy. It just means that they are going to be asked a lot of questions about their condition before they will be approved of coverage.
Can individuals who have been diagnosed with a terminal illness be able to qualify for a traditional life insurance policy?
Yes, some people who have been diagnosed with an illness that could be classified as a “terminal illness” can sometimes qualify for a traditional life insurance policy.
However, we don’t want to give anyone…
Because if your doctor is referring to your disease as being terminal or your disease is causing you to suffer from significant complications, chances are you’re not going to be able to qualify for traditional coverage.
If you have been diagnosed with Multiple Sclerosis, chances are you will die probably from complications of this disease. The same way someone might die from complications of their diet, or genetic pre-disposition towards heart disease.
Likewise, life insurance for terminally ill cancer patients may be available, but it depends on your specific diagnosis, your age and the state you live in.
What we don’t know for sure is…
Whether your illness may cause you to die four months from now or 40 years from now!
It’s not all that uncommon for some “terminal illnesses” to affect someone for years and years.
In cases like these while they still may be “classified” as terminal, a better description would be to call them a “chronic” condition.
This is why…
When it comes to insuring folks who have been diagnosed with Multiple Sclerosis, most life insurance companies are going to want to know how “progressive” your disease is before they’re going to be willing to make any kind of definitive decisions about your life insurance application.
The same could be said about folks who have been diagnosed with:
For this reason…
It’s pretty much impossible to know for sure whether an individual will be able to qualify for a traditional life insurance policy after they’ve been diagnosed with a particular disease until we know:
- Exactly what disease they have been diagnosed with.
- How severe is their condition?
- And how is it affecting their ability to live a normal life?
What can say for sure though is that the vast majority of folks who have been diagnosed with a pre-existing medical condition in which has been referred to as being “terminal” won’t be able to qualify for a traditional term life insurance policy.
If a “traditional” type of life insurance policy isn’t possible, what “kind” of life insurance policy can I qualify for?
Once it’s been determined that an individual won’t be able to qualify for a traditional life insurance policy, your next step will be to consider two different options that may be available to you depending on one where you live.
The first potential option…
Is called an Accidental Death Policy, which would provide individual coverage if they died from an accident. And while these “types” of policies are useful, most folks who are suffering from a terminal illness aren’t concerned about dying from an accident, which is why most individuals aren’t going to be interested in pursuing this option.
The second option…
That a person who has been diagnosed with a terminal illness might want to pursue is called a Guaranteed Issue Life Insurance Policy or Final Expense Life Insurance Policy.
These types of life insurance policies can often be quite useful to those who have been diagnosed with a terminal illness provided that they understand all of the pros and cons before applying for coverage.
For this reason…
We now want to take a moment and briefly review what a Guaranteed Issue Life Insurance Policy is so that you can have a better idea about whether or not one of these “types” of life insurance policies might be a good option for you.
Guaranteed Issue Life Insurance Policies Defined:
Guaranteed Issue Life Insurance Policies are life insurance policies that aren’t going to consider one’s health when determining who they will and won’t insure.
These policies work well as burial insurance for terminally ill or burial insurance for cancer patients.
There are only three requirements one must meet to qualify for this type of whole life coverage.
- First, you must meet the minimum and maximum age requirements when applying for coverage.
- Second, you must be a US citizen.
- And lastly, you must live in a state where these “types” of life insurance policies are offered.
And that’s pretty much it! Which is a good thing, especially if you have been diagnosed with a terminal illness.
The only problem is…
That these “types” of life insurance policies tend to have three serious disadvantages to them that may make those who have been diagnosed with a terminal illness think twice about buying one. So, let’s now turn our attention to “why” a guaranteed issue life insurance policy might not be right for you.
Guaranteed issue life insurance policies will usually only provide up to $25,000 in coverage. So, if you need or want more coverage than that, what you’re going to find is that you will need to purchase several different guaranteed issue life insurance policies FROM DIFFERENT COMPANIES to obtain a larger amount of coverage. Which segues nicely into our next problem which is…
Guaranteed issue life insurance policies tend to cost more than other “types” of life insurance when you compare how much you are paying for the amount of “coverage” you are receiving.
This is why it may not be possible for someone to afford to purchase several of these types of life insurance policies if they want more than $25,000 in coverage.
Lastly and most importantly, guaranteed issue life insurance polices contain a “clause” within them known or referred to as a Graded Death Benefit.
Graded Death Benefit Defined.
A graded death benefit clause is a rule written within all guaranteed issue life insurance policies which simply states that a new insured must wait some period of time after their policy starts (usually 2 to 3 years) before the policy will pay out in the event that you die from a natural cause of death.
“Natural cause of Death”
You should assume that this would include any cause of death directly relating to the terminal illness that you have been diagnosed with.
Now the main reason why…
Insurance companies include graded death benefits within all of their guaranteed issue life insurance policies is because without them, they would have no way of protecting themselves from people buying these “types” of life insurance policies from their death bed!
We should note however…
That guaranteed issue life insurance policies will pay out right away if you die from some type of Accidental Cause of death like a slip or fall, motor vehicle accident or a natural disaster because these types of deaths can’t be predicted and certainly aren’t expected.
If an insured dies from a “natural cause” before the graded death benefit expires, most guaranteed life insurance insurance companies will have some type of program in place where the insured will either receive all of the premiums they paid into the policy before their death (plus interest in some cases) or at some portion of their payments.
For this reason…
We will usually recommend that anyone with the finacial means to pay for one of these “types” of life insurance policies so that they can take advantage of these programs (especially those that return 100% of ones premium plus interest of some kind).
Because even if an individual doesn’t live past the graded death benefit period, paying premiums to the insurance company can act as a way of setting aside cash into a high interest savings account (assuming that the client continues to make payments until he or she dies).
We’ll if so, don’t fret because, at the end of the day, all you need to take from this article is the knowledge that even though you or a loved one has been diagnosed with a terminal illness, there is still a chance that you may be able to qualify for a life insurance policy.
What can I do to help myself qualify for the “best” life insurance policy for me?
In our experience here at IBUSA, what we have found that usually, the folks who seem to find the “best” life insurance policy for them are those that:
- Take their time reviewing their options.
- Ask a lot of questions.
Seek out those life insurance agents who not only have experience working with individuals who have been diagnosed with a wide variety of pre-existing medical conditions, but also have access to dozens of different life insurance companies so that when it comes time to helping a more “challenging” case, they don’t have to rely on a…
“One size fits all approach!”
The good news is that this is exactly what you’re going to find here at IBUSA!
Now will we be able to help out everyone who has been previously diagnosed with an terminal illness?
No, probably not. But what we can tell you is that in addition to offering a wide variety of different term and whole life insurance policies, IBUSA has also worked very hard to establish relationships with many of the Best Final Expense Insurance Companies as well so that in the event that someone isn’t able to qualify for a traditional life insurance policy, chances are you may have some other “type” of product that they can qualify for.
So, if you’re ready to see what options might be available to you, just give us a call!