I’m disabled, is group life insurance an appropriate choice for me?

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Asked August 13, 2012

1 Answer

Many times, a group life insurance policy may be the only option available. This is true for people with disabilities as well as though who suffer from preexisting conditions. By purchasing a group policy, you typically have access to guaranteed insurance coverage that does not take your disability into consideration. Even if you are eligible for coverage, a privately issued policy may contain exclusions related to your condition which limits your rights if your demise can be shown to be related to it.

Even in situations where you qualify for privately issued life insurance, having a disability could play a factor in the rates you would be charged. For example, if your disability affects your life expectancy, the life insurance underwriter is almost certainly going to charge you more for your premiums in an attempt to recoup more of the cost of the policy value. Group insurance typically averages out the life expectancy of members and sets rates in a way that minimizes the risk of insuring someone with a disability.

Individual life insurance policies have more stringent requirements than group policies. In many cases, a group policy may only be available at a limited value, such as $100,000, where a private policy is available for any amount you can show an insurable interest for. Additionally, group policies are typically offered through employers or organizations, and guarantee coverage for anyone who is eligible through that group.

Group life insurance policies may have other limitations. It is not uncommon for group life insurance, for example, to be limited to accidental death or dismemberment. This means that if you die because of some other cause, such as a debilitating disease, your beneficiaries could find that the claim is denied when they file it.

Other life insurance options include no-medical exam life insurance policies and final expense coverage. Most people are able to qualify for these types of policies, but the upper limit for the face value of the policy is typically low. In the case of final expense insurance, the entire settlement may be paid to a funeral home or other agency, which means that you will not be able to leave anything to your descendants.

Answered August 13, 2012 by Anonymous

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