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Can you purchase life insurance if you are terminally ill?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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UPDATED: Mar 19, 2020

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There are some possibilities for purchasing life insurance if you are terminally ill. The amount will be limited, but options are available.

The following article will provide additional information on purchasing life insurance for the terminally ill, as well as how to access some money from an existing life insurance plan before death.

After reading through the below information on life insurance for those with terminal illnesses be sure and enter your zip code into the free quote finding tool above for a free insurance comparison.

What type of life insurance is available for the terminally ill?

To find a life insurance policy if you are terminally ill, requires going through a specialized life insurance company. One way to do this is to contact an insurance broker.

A broker works with several different companies and has no stake in one particular company so they can find the best policy for you. Life insurance policies for the terminally ill are called graded life policies. Typically, the maximum amount available is $50,000.

The only problem with graded life insurance policies is that you must stay alive for two years after the date the policy is purchased to get the full amount. If you die before the two year period, you will only get the monthly premium amount you have paid returned to your beneficiary.

In some cases, two years may be too long for a terminally ill patient to wait, but in some cases it may not be. The positive aspect of a graded life insurance policy is that the premiums are returned if you die before the waiting period, so you will have lost nothing financially.

Another type of life insurance policy for the terminally ill is a final expense policy. This is a small amount that is meant to cover funeral expenses only. There is no physical exam required with this type of policy so anyone, including the terminally ill, can purchase one. If you are worried about your loved ones being left with the expense of a funeral, this is a good option.

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Can options be added to a traditional life insurance policy?

If you already have a life insurance policy and become terminally ill, there are some options available to you. You can just go with the amount you already purchased or you can add a rider called a living benefit or accelerated death benefit to your policy. This type of rider allows people who are terminally ill to receive a portion of life insurance money before death.

You may be wondering why someone would want to do this. Well, there are many reasons. The money can help pay for current medical expenses or experimental treatments that medical insurance does not cover. The money can be used to take that one special vacation that you may not have time for. Also, the money can be distributed as the policy owner wishes. Sometimes it can be gratifying for a terminally ill person to present the money to the recipients and know that loved ones will be taken care of.

If a terminally ill patient decides to go this route, there are certain requirements that must be met. These are federally mandated guidelines set by the U.S. Department of Health and Human Services. You must have a terminal illness that will result in death within a specific amount of time, be permanently living in a nursing home due to your illness or be unable to perform daily activities necessary for living such as bathing or using the bathroom.

The living benefit is not subject to the same tax laws as other life insurance policies so it generally is tax free. The amount of the policy that you can get as a living benefit differs from state to state with withdrawal amounts ranging from 50% to 80%. In order for the remainder of the benefit to go to your beneficiary, you must continue making your monthly premium payments until death. It is important to note, that the insurance company will charge you interest for using the living benefit.

Where can I find terminally ill life insurance quotes?

If you or someone you love has a terminal illness, there may still be life insurance options. You will need to speak to an agent as these types of policies are very specialized. However, they may provide the peace of mind you need. To begin comparing terminally ill life insurance plan options just enter your zip code in now.

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