Can you buy life insurance if you have a terminal illness?

You can buy life insurance if you're terminally ill, but your options will be limited to guaranteed issue life insurance or any group coverage option offered through your employer.

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Tory CrowleyTory CrowleyAssociate Editor & Licensed Life Insurance ExpertTory Crowley is an associate editor and a licensed insurance expert at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Edited by

Antonio Ruiz-CamachoAntonio Ruiz-CamachoAssociate Content DirectorAntonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

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If you have a terminal illness, it’s still possible for you to get life insurance, but your options will be limited. Factors like your diagnosis, any complications, your life expectancy, and what medications or treatment you have will affect your eligibility.

For most people who have a terminal illness, guaranteed issue life insurance — a type of whole life insurance that offers near-certain approval and doesn't require a medical exam or medical questionnaire to apply — will be their best option.

People with a terminal illness can generally expect to pay more for life insurance. This is because their life expectancy is shorter, posing an increased risk to the insurer.

Be sure to speak with your insurance agent about the expected cost for life insurance coverage. It’s important that you get the insurance coverage you need, but it’s also important to find a monthly premium payment that will make sense for you and fit your budget.

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Do I have to disclose a terminal illness to a life insurance company?

You need to disclose all of your health information, including any diagnosis of terminal illness to the life insurance company. When you apply for life insurance, the agent will ask about your medical history, including any diagnoses or medicine that you take. 

After you apply, the insurance company will request your medical records to ensure that the information you provided is correct and thorough.

Failing to provide the relevant information related to your health history can be considered insurance fraud and is illegal. No matter what your situation is, it’s best to be honest and forthcoming on your application. 

What is insurability in life insurance?

Insurability is the degree to which an insurance company deems a person “insurable” based on their assessed risk. People with a terminal illness will generally be deemed less insurable than someone with a treatable health condition. 

However, every insurance company evaluates risk a little differently, which is why some companies will be able to offer you better rates than others. 

A licensed agent will ask you questions related to your health and lifestyle to determine your insurability.

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Life insurance options for people with a terminal illness

For most people with a terminal illness, guaranteed issue life insurance will be their best option. Term life insurance is usually impossible to be approved for once you have a terminal diagnosis, but other products may be able to provide coverage for you. 

Deciding which type of life insurance to get and how much coverage you need is important, and speaking with a licensed insurance agent is the best way to determine which option is best for you, especially if you have a terminal diagnosis.

Guaranteed issue life insurance

Guaranteed issue life insurance is a type of final expense policy. These policies are sometimes called “burial insurance” because they’re often used to help cover funeral costs. If you apply, you are guaranteed approval. 

However, this type of insurance is often quite expensive compared to other types. Additionally, if you pass away due to a medical issue during the first two years that the policy is active, your beneficiary will not receive the full death benefit. Instead, they will receive an amount equal to 110% of the premiums you paid. 

Pros

  • Approval is guaranteed

  • No medical exam is required

  • Policies last your whole life

Cons

  • Monthly premiums are expensive 

  • Two-year waiting period required for death due to medical issue

Best guaranteed issue life insurance

Mutual of Omaha

Policygenius rating 

Our proprietary rating methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the "methodology" section for more details.

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4.5

AM Best rating 

A.M. Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).

A+

Cost 

Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).

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$

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No-med-exam option

Why we chose it

Mutual of Omaha is a reputable company that offers a variety of life insurance products — including a no-medical-exam option — so that you can select the type of life insurance that best suits your needs.

Pros and cons

Pros

  • No-medical-exam options for older applicants

  • Strong financial and customer ratings

Cons

  • Policies are more expensive than average

  • Slow turnaround time

Mutual of Omaha offers a guaranteed issue policy and is almost always able to offer better rates than its competitors. 

Group life insurance

Group life insurance is one contract that covers multiple people. Most people get group life insurance through their employer for free or for a heavily subsidized rate.

Group insurance usually provides coverage equal to about one to two times your salary and may also give you the option to purchase supplemental coverage. You can’t be denied coverage with group insurance, so if you have a terminal illness, this is a great way to get covered.

Pros

  • You can’t be declined 

  • If you have significant health issues, you may get a better rate than if you apply as an individual

  • Your employer usually pays all or most of the premium

Cons

  • You have to take whatever insurance is offered by the provider 

  • The amount of coverage you get is often less than you need 

  • You usually don’t get to keep the coverage when you change jobs

Accelerated death benefit rider

Riders are add-ons to insurance policies, and an accelerated death benefit rider could be a huge help to someone diagnosed with a terminal illness. This rider allows you to withdraw part of the money from the death benefit of your policy. 

You’re eligible to exercise this rider if you have received a terminal diagnosis and a doctor has projected that you’ll pass away in the near future (usually six to 24 months, depending on the insurer). This rider is typically included in your policy automatically at no extra cost to you.

Pros

  • Provided at no additional cost 

  • You can use the money you withdraw for anything you need, including medical bills

Cons

  • You have to already be approved for a either a term or permanent life insurance policy to add the rider

  • You can’t increase or add the rider after you have already been diagnosed with a terminal illness  

  • Some providers charge a $150 withdraw fee

How much does life insurance for someone with a terminal illness cost?

For most people getting life insurance with a terminal illness, a guaranteed issue policy will be the best option. These policies can, however, be expensive. For instance, a 65-year old man can expect to pay $169.68 per month for $25,000 in coverage, while a 65-year old woman can expect to pay $123.45 per month for the same amount, according to Policygenius data. 

Average guaranteed issue life insurance rates

Age

Sex

$10,000 coverage amount

$25,000 coverage amount

$40,000 coverage amount

50

Female

$30.39

$74.47

$87.61

Male

$40.18

$98.96

$113.10

65

Female

$49.98

$123.45

$154.43

Male

$68.47

$169.68

$216.31

85

Female

$157.64

$392.59

$534.00

Male

$192.62

$477.04

$761.34

Collapse table

Methodology: Average monthly estimated rates are calculated for male and female individuals obtaining a Guaranteed issue whole life insurance policy. Life insurance rates are based on policies offered by Policygenius from Mutual of Omaha, and may vary by insurer, policy type, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 1/04/2023.

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How to buy insurance when you have a terminal illness

Even if you have a terminal illness, the buying process for life insurance will be similar to what it is for everyone else. Follow these steps to get the coverage you need. 

  1. Calculate how much coverage you need You can get life insurance to cover the cost of any debt you have, your funeral expenses, or your share of any expenses your family or partner are relying on.

  2. Decide what type of policy you need Most people who receive a terminal diagnosis will be best suited to a guaranteed issue policy, but speaking with a licensed advisor is the best way to determine your best option. 

  3. Shop around for a policy Connect with an advisor to compare rates and decide which product will be best for you.

  4. Apply Submit the required application information to the insurance company with your sales agent, including your personal information and medical questions. 

  5. Go through underwriting The insurance company will review the information you submitted and verify your overall risk before they make you a formal offer.

  6. Sign the policy and make your first payment If you accept the offer of coverage from the insurance company, you’ll sign the policy documents and make your first payment. Your policy will then be active.

Are you allowed to buy life insurance for a dying relative?

Technically, you can buy life insurance for someone who’s dying, as long as they consent and participate in the application process. If you chose to pay for someone else’s life insurance policy, you have to prove that you have insurable interest and will be impacted financially if they pass away. 

If you want to get life insurance coverage for your spouse, you can speak with an insurance agent and answer health and personal questions on their behalf. Your spouse will still need to consent to the application and ultimately sign the policy documents to get insurance coverage. 

If you do want to help another family member get life insurance, like a terminally ill parent or sibling, you can assist them with their application, but they’ll need to connect with an insurance agent and be the main driver in getting the policy — and you won’t be able to discuss personal or health information with an agent for them in the same way that you could for your spouse.

Other health concerns that can affect your life insurance

Certain pre-existing conditions and other health-related concerns can affect your life insurance options or costs. A Policygenius expert can help you find the right policy for your needs.

FAQ

Can I buy a life insurance policy for someone without their knowledge?

You cannot get a life insurance policy for someone else without their consent and participation.

Can you cash out a life insurance policy if you’re terminally ill?

Insurance policies that have a cash value — like many permanent life insurance policies — typically allow you to surrender the policy and claim the cash value at any time. The cash value will be less than the death benefit and there may be fees associated with the claim. In most cases, it's not advisable to surrender an insurance policy to claim the cash value associated with the policy.

Can I get life insurance for someone who is in the hospital?

You can't get life insurance for someone else. If you have a loved one in the hospital who wants life insurance, depending on their situation, they may be able to get coverage, but they would have to apply for and purchase the insurance themselves.

Corrections

No corrections since publication.

Author

Tory Crowley is an associate editor and a licensed insurance expert at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Editor

Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

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