How to Buy Life Insurance for Ill People

by Neal Frankle, CFP ®

Just because you have poor health doesn’t mean you can’t get the life insurance you need. I usually get an e-mail once a week asking if there is such a thing as life insurance for ill people. While there is no magic bullet or secret insurance company that sells cheap life insurance to people who are ill, you do have options.

Before we get too far, it’s important to be clear about the nature of the issue that makes it tough to buy coverage. Is your condition only temporary? If so, you’ll ultimately be able to get life insurance and save a huge chunk of change in the process. Cheer up. Even if you have cancer you can usually get life insurance one to three years after you complete your treatment, unless it’s bone cancer (five years) or leukemia (10 years).

But even if your condition is not temporary you have options. If you have an existing policy, they may expand the coverage without further underwriting. This is more often the case with a whole life policy than term. But some term policies have a feature that allows you to convert it into whole life without underwriting. Find out if your policy has such a feature.

Understand that different insurance companies view health maladies differently. Just because one insurance company turns you down or rates you doesn’t mean that every insurance company will. Having said this, be careful about applying too often. Every time you get turned down it means other insurance companies will be less likely to write your policy.

Before you fill out an application, you should get some indication that the company will accept you. Do that by speaking with the underwriters before you submit your application. Even if an insurance agent tells you that the company will write the policy, check with the underwriters first. You may have to push the broker, but she’ll get your call through if you push hard enough.

How do you find insurance companies that write policies on people with bad health?

First, please realize that if you have a health condition and need new coverage, it doesn’t matter if you are applying for term life or whole life. Don’t let a broker push you in one direction or the other.

Do a Google search for “cancer survivor life insurance” but replace “cancer” with your condition. If nothing comes up, call the companies that come up during your “cancer” search. Those are companies willing to write life insurance on people who are in less than perfect health.

Call the insurance commissioner in your state. Ask if they have a list of companies for you to contact. Depending on the state in which you live, the insurance commissioner might just have a list of companies for you to call.

Consider “guaranteed issue” if you have no choice. This is insurance, as the name implies, that the company will issue regardless of your health situation. But don’t get your hopes up too high. Usually these polices only provide very low limits. And if you pass away within two years of purchasing the policy, all your family will get will be a return of premium. If your situation is that serious, you might just be giving them an interest-free loan.

But be wary of accidental death and mortgage unemployment insurance. They usually won’t cover you if you’re sick and pass away.

Finally, join an organization that offers group term. Many of these policies have the same restrictions as “guarantee issue,” but some don’t. If you are well enough, get a job for a company that offers group term life insurance. These policies usually don’t have the same limitations as guaranteed issue.

If you are recovering from a serious malady that would otherwise make you uninsurable, you have many options. Even if you aren’t recovering, you still have a few inventive ways to get life insurance.

One last tip. If at the end of the day, you can’t get life insurance, there are other options. This is terrible to say, but your family can still prepare for the death of a spouse without life insurance if you can’t get it any other way.



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