Life Insurance for the Terminally Ill
You’re at the doctor’s office - it doesn’t sound good. He sits down with you, and explains to you that you have a terminal illness.
This upsetting news changes everything. One of your main questions is most likely, “How will my loved ones survive financially after I’m gone? Is it too late to get life insurance?”
The short answer is no, it’s not too late - you can still purchase life insurance after your diagnosis. Here’s how:
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What are my Options?
We’re not going to lie to you, if you have recently been diagnosed with a terminal illness and are looking to buy life insurance, your options are going to be pretty limited. But nonetheless, there are still options!
Guaranteed Issue Life Insurance
The main choice here is going to be Guaranteed Issue (GI) life insurance. This type of life insurance is available to anyone between the ages of 50 and 85. No medical questions are asked, and policies are issued quickly after submitting the application. With GI policies, you can apply for up to $25,000 of coverage.
It is important to note that with guaranteed issue policies, there is a two-year waiting period that comes along with them. This means that if you pass away within the first two years after obtaining the policy, your beneficiaries will just receive back the premiums you paid each month (plus interest).
After the two years has passed, your beneficiaries will receive the full death benefit amount after you pass away, assuming it was non-accidental. The main purpose of GI policies is to provide money for final expenses and burial costs.
Burial Insurance and Final Expense Insurance
If you don’t want to purchase a guaranteed issue policy, you have a couple other choices. You can opt for a burial insurance policy, which is also known as funeral insurance. It’s pretty much how it sounds - this type of insurance pays solely for the funeral, nothing else.
Final expense insurance is similar; it covers the cost of the funeral expenses as well as the burial expenses. If you’re in good health otherwise, you can receive up to $50,000 coverage. If not, the most you’ll likely receive would be up to $25,000.
These applications get approved very quickly - as little as a few days. You have the option to choose a level or graded death benefit for your policy.
A graded death benefit is what we described earlier: if you pass away within the first two years, your beneficiaries will get the money back that you paid towards your premiums, plus interest (usually 8-10%). For example, if you pay $100/month for 6 months before passing away, your beneficiaries would receive the original $600 back, + $60 to account for the 10% interest - a total of $660. There are no health questions asked with a graded death benefit.
A level death benefit provides coverage from day one for the full death benefit amount. However, level death benefit plans do ask health questions, so if you’ve just been diagnosed with a terminal illness, we recommend choosing the graded death benefit option.
Riders for those Already Insured
Say you’re already insured when you get this news - great job, you’ve already got an advantage. In this case, you may want to see if your policy has an accelerated death benefit rider.
This rider allows you to receive some of your death benefit early in monthly payments from your insurance provider. Whatever amount is left over after your death will be given to your beneficiaries in the final insurance settlement. This could help if you have ongoing health-related costs such as in-home nursing care, or if you’d just like to have a little extra money to cross off some bucket list items.
Some insurance plans also offer riders that cover your monthly premiums in the event that you become injured or suffer from a debilitating illness that prevents you from being able to earn an income - this may be another one you want to look into seeing if your provider offers.
We Can Help!
With the new diagnosis, there’s no doubt you’ve got a lot on your mind - and we’re here to help.
AtJRC Insurance Group, we have helped thousands of families and businesses with their life insurance needs, and we can help you too! Our agency is licensed in all 50 states and we’re independently owned and operated.
As a non-partial, no-fee brokerage, our goal is match our clients with the best life insurance options available by shopping and comparing rates from 63 highly-rated insurers. By having access to dozens of companies and their guidelines, we’re able to save our client’s time and money.
Most importantly, our services as completely free, and there is no cost to apply for coverage. Give us a call toll-free today at 855-247-9555, or you can request a free quote online to compare rates and options from dozens of insurance companies in less than a minute.
Personal Finance Writer
Ashley, both a published author and content creator, explores topics related to financial planning, wealth management, and insurance. Her articles have been featured in a range of publications, including Forbes and Yahoo! Finance.