Best Life Insurance for SSI Recipients (2023)

If you’re receiving Supplementary Security Income benefits, you might be wondering if you can still get life insurance. Luckily, in many cases, life insurance and SSI benefits are mutually exclusive. Life Insurance for SSI Recipients is not hard to get. Certain types of policies can affect how much SSI you can collect, though.

Keep reading to learn how much life insurance can cost, the different life insurance policies, and how your SSI benefits could change.

What types of life insurance for SSI recipients are available?

SSI life insurance comes in many shapes and sizes, so one type might be better for you than another.

Term Life Insurance for SSI Recipients

Term life insurance is the most popular type because it’s simple and affordable. When you get term life insurance quotes, you choose how many years you want the policy to last. If you die during your term, your beneficiaries will receive a payout from your insurer. Terms range from 10 years to 30 years.

The risk with term life insurance is that your insurance could expire before you die. Make sure you give it some thought before purchasing a new policy.

Permanent Life Insurance for SSI Recipients

Permanent life insurance policies last your entire life. Additionally, they typically have a cash value that is separate from the death benefit. The cash value is essentially a savings account that can build as you make your monthly payments. If you decide to cancel your permanent life insurance policy, you can cash out.

Whole life insurance is the most common type of permanent life insurance. You pay a standard monthly rate for a guaranteed minimum return. Although they’re relatively simple, whole life insurance policies can cost at least five times more than a term life policy, so it may not be worth it unless you can comfortably afford the higher rates. Whole life insurance is best suited for younger policyholders who can build up their death benefits over time.

If you don’t want an entire policy, or if you don’t qualify because of your age or health, you can just pay for burial insurance. Burial insurance is a subset of whole life insurance. You can purchase it as either simplified issue life insurance or guaranteed issue life insurance.

Simplified issue life insurance covers medical care, funeral services, cremation, or anything else related to your death. No medical exam is necessary, but there is a health questionnaire. To be eligible, you can’t have any major health issues. There could be an age cap on this policy, too.

Guaranteed issue life insurance functions like simplified issue life insurance but has higher monthly rates because the eligibility requirements are less strict. There’s no medical exam, and a questionnaire isn’t required. The only people who don’t qualify are those who can’t fill out their applications, such as those with Alzheimer’s or dementia.

Universal Life Insurance for SSI Recipients

Universal life insurance technically falls under permanent life insurance, but it’s more complicated. The big takeaway is that you can adjust your death benefit and monthly payments so long as you have enough money in the account. This increases your flexibility.

Universal life insurance includes investment options. There are three types:

• Guaranteed universal life insurance. Out of the three types, this has the lowest risk. As long as you pay your monthly rates, you’re guaranteed coverage.
• Variable universal life insurance. Any investment losses will negatively affect your death benefit.
• Indexed universal life insurance. Indexed insurance functions like variable universal life insurance, except that there’s no fixed interest rate. It could mean higher gains and greater losses.

The investment policies are suitable for those who like a hands-on approach, but if you prefer the simple route, try a term or a whole policy.

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How much does life insurance cost for SSI recipients?

Life insurance will cost the same whether or not you’re collecting SSI, but the cost of these policies can vary widely. For a standard policy, you could pay as low as $71 a month or over $1,000 per month. 

The average SSI recipient might fall within the $100 to $445 range, but your rates depend on a few crucial factors:

• Your age. As you age, the risk of death is higher. If you’re buying a new plan after retirement age, expect your quotes to be higher than the average. Is there any sort of age limit when buying life insurance? Make sure you talk to an agent about this.
• Your gender. Women pay less than men do because men have a shorter life expectancy. On average, women spend at least $20 less per month. Women in their 70s or 80s may even pay hundreds less.
• Your medical history. An insurer usually looks at your medical history to see if you have any preexisting conditions, such as being overweight. Many insurers will also have a doctor examine you before giving you life insurance. Life insurance for overweight people is possible to get.
• Your tobacco use. Because smoking is highly linked to cancer, smokers are subject to higher rates.
• Your criminal history. Insurers look for specific red flags in your criminal record, like DUIs or felonies. Life insurance for felons is more expensive and requires a few extra steps in the application.
• Your hobbies. If you have any high-risk hobbies, such as race car driving or skiing, your rates may go up.

Of course, the amount of coverage you get will also affect your rates. For example, a $500,000 policy for a 50-year-old female collecting SSI could be $71 per month, but a $1 million policy would cost $129 per month.

Luckily, having SSI and life insurance shouldn’t affect your rates.

How will getting life insurance affect my SSI benefits?

Receiving SSI won’t affect your life insurance, but having life insurance could affect your SSI.

On average, people can receive up to $794 in Supplemental Security Income payments, and couples can get $1,191. However, the Social Security Administration limits how much you can receive based on your financial resources.

Resources refer to assets that can easily supplement your income. For example, property, bonds, stocks, bank accounts, and specific life insurance policies can count as resources. You are allowed $1,500 in life insurance. Anything over that limit counts as a resource and will affect your SSI benefits.

You only have to worry about this if you have a permanent life insurance policy. Canceling your insurance and cashing out is a source of income, so your SSI benefits would decrease.

Additionally, receiving a death benefit could affect your SSI. If you are a beneficiary on someone’s life insurance policy and you rely on SSI, consider having the payout put into a trust. This way, your SSI benefits won’t change.

How much life insurance should I purchase?

When figuring out how much life insurance you should purchase, look at your debts and dependents. Your policy should cover any outstanding debts, such as mortgages, car loans, credit card debts, cosigned loans, and more. Covering your own funeral expenses can take the stress off your family as well.

If you have dependents who rely on your income, you should ensure they’re covered after you’re gone. Income could include SSI, pensions, trust funds, or retirement benefits. Most people buy a $500,000 policy for income replacement, but any assets you own can help offset how much you need to purchase.

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When is it too late to get life insurance?

For the most part, you can get some degree of life insurance no matter your age. Most companies will insure people up to 65 years old, but some companies work with those as old as 80.

Plus, it depends on what type of policy you want. If you’re collecting SSI because of a life-threatening disability, you might have difficulty finding a full life insurance policy that you’re eligible for. However, you can still set up burial insurance as long as you’re physically and mentally able to fill out the application yourself.

Just remember that rates are higher for those who apply later in life than for those who take out a life insurance policy in their 20s or 30s.

Life Insurance for SSI Recipients: The Bottom Line

You can still get an affordable life insurance plan while collecting SSI. Remember that a permanent life insurance policy beyond the $1,500 cutoff will lower your SSI payments. A term life insurance policy won’t affect your SSI benefits, so make sure you choose terms that work for you and your family. There are lots of ways you can save money with SSI. You may be able to get benefits such as lower-cost car insurance for SSI recipients.

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