No Life Insurance? Tips for Affordable Options After Becoming Extremely Ill

• Author: Monica Jackson
• Posted: 2023-12-23

A lot of people who experience major disabilities or the sudden onset of a severe illness don't have enough money saved to cover their financial responsibilities in the event of their death, including funeral costs or the financial burdens of grieving loved ones. Yet, they also typically don't have an insurance policy to cover these areas either. They might have incorrectly thought that they didn't qualify for one or allowed an old policy to lapse.

Although insurance companies do deny coverage to many people with disabilities or life-threatening or terminal illnesses, most people can still receive and invest in life insurance coverage. You merely pay a lot more than a young or healthy policyholder because insurers charge higher rates if they consider you at high risk of reaching the end of your life sooner rather than later.

To gain this valuable coverage, follow these simple tips:

Give Up High-Risk Habits

If you have any bad habits that put you at greater risk, then you need to give them up today. An insurer might deny coverage or give you an extremely high premium rate, for example, if you're a smoker or drug user. If you have any hobbies that put you at high risk of experiencing a serious injury in the near future, you need to reconsider those as well.

During the underwriting process, an insurance agent asks you about these and other areas beyond basic details that help determine risk, such as your current job, driving record and geographic location. Risky hobbies include riding a motorcycle, flying an airplane or other flying vehicle, using open all-terrain, ground-based vehicles, participating in snow sports and traveling internationally.

Pick The Right Kind of Coverage

When a person has a disability that's not expected to cause their death, they might benefit the most from a low-cost term life insurance instead of a whole life policy, especially if they're young and without savings. A term life policy covers you for a preset amount of time and the rate never fluctuates. After that time passes, you renew or start over. It's low cost because your insurer deals with less risk that they must pay out during the term. By the time the policy coverage expires on its own, typically within 20 to 30 years, you might also decide to pre-pay your funeral and other end-of-life costs out of pocket from accrued savings or need a different type of policy. The downside is that you don't receive any money back from your premiums if the policy expires.

If your health is likely to decline or end within ten years and you can afford a higher premium, then look into a whole life policy. The premiums for these policies are extremely high, but you benefit in many ways: You don't have to renew the policy since it's for life. It also earns interest over time that you can take out as cash direct or as a loan, which means you have a little extra set aside as a savings component for emergencies or to pay the premiums. The biggest downside is that you might deal with rate fluctuation for several years.

Don't Give Up

Since an insurer might deny coverage or charge a rate you can't afford, you might find yourself struggling to gain coverage. Yet, you still potentially have options. If you're married to a healthy partner, an insurer might agree to cover you under a joint life insurance policy. That said, you might lose coverage if your partner passes first. Some insurers also offer a whole life option known as final expense insurance. Instead of covering lost income for your beneficiaries in addition to funeral expenses, it primarily focuses on covering a preset amount estimated for the latter and some related bills. It's a lot less expensive than the other options and usually doesn't require a medical exam.

If you're employed or a member of a special club or organization, you might also find coverage under what's known as a group life policy. You have zero say about the coverage or costs. Premiums usually come directly out of your paychecks or membership dues. You lose this coverage if you switch jobs, quit the club/organization or can't work any longer at all or your employer fires you. Lastly, if you have a terminal illness, your only option might be a guaranteed life insurance policy in which the insurer pays out a small amount if you successfully pay premiums for two or three years after setting up the policy. If you pass before the agreed term, the insurer pays the amount you put in and interest to your beneficiaries.

Things to Keep in Mind

As you can see, it's difficult but not impossible to receive life insurance coverage if you're disabled or dealing with a sudden severe illness. You merely need to recognize that insurers are businesses designed to make money off their customers. With any consumer-based transaction, you need to research first, learn the pros and cons of your options and go into any appointment with these options in mind.

It's also important to remember that you can negotiate. If you review your options with several insurers, like one more than another and receive the options in writing, always attempt a negotiation. If you have insurance coverage for another area of your life, such as home or auto insurance, you can also attempt to reduce the life insurance rate by requesting a loyalty or bundled discount. You might even successfully argue a denial of coverage if you tell the insurer that you have no choice but to take all of your business elsewhere.