7 Things You Should Know About Life Insurance and The Terminally Ill

Those who are terminally ill and have never purchased life insurance find themselves in a terrible position. On one hand, they are worried about the emotional loss to their family; on the other hand, they feel they may not be able to insure themselves and get the money they need for their family to function after they are gone.

Can a terminally ill person get life insurance? Yes, but there are some facts of which you should be aware if you are trying to buy life insurance for someone who has a terminal illness.

1) You will pay more. It stands to reason that companies which offer policies to terminally ill people know that they will have to pay out a claim in the relatively near future, and will charge far more for their policies than “regular” life insurers.

The cost of such a policy may be so prohibitive that it is wiser to take the amount in question and put it into some other vehicle which can allow it to grow more rapidly.

2) You may have to settle for a “graded” premium policy. Graded premium policies are offered by several companies for those who have terminal illnesses with uncertain outcomes. For example, if a person is diagnosed with cancer, but the doctors believe there is at least a 50 percent chance the person may recover with chemotherapy, a company might agree to issue a graded policy.

For the first two years, the person pays the premiums; if he or she dies during that time, the company will simply refund the premiums paid to the family. After two years, the face amount of the policy will be paid.

3) Some policies do not pay anything during given time periods. Often, policies which do not require health exams refuse to pay if you die within a certain amount of time, even if you have paid your premiums regularly. This prevents people with terminal illnesses from buying insurance just before they die and expecting a large payout. Check carefully to be sure your policy will pay.

4) Suicide clauses can stop payments. If a person is determined to have ended his or her own life, many insurance policies will not pay the survivors. Examine your policy carefully for this type of language.

5) Pre-existing conditions can cause non-payment. Be very careful when buying an insurance policy which lists “pre-existing conditions” as an exclusion. This means that death from anything which was wrong with you at the time of the policy purchase is not covered. Graded policies make exceptions for this, but some policies have very strict limitations on pre-existing conditions.

6) Only qualified people can buy insurance on you. The person who buys an insurance policy must have an interest in your life; people cannot just buy policies on anyone and wait for them to die. If you want your family to have insurance, buy the policy yourself or designate a close family member to help you in this matter.

7) Work with an agent experienced in terminally ill life insurance policies. Not every life insurance agent understands the challenges and problems facing you in this situation.

Be sure to find one who deals with these types of policies, so that you can get sound advice and help from the agent, and feel confident that you are making the right insurance decisions for your loved ones.