How to shop for insurance when you're LGBTQ



Myles Ma

Myles Ma

Senior Reporter

Myles Ma is a senior reporter at Policygenius, where he covers personal finance and insurance and writes the Easy Money newsletter. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

Updated  | 7 min read

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This story was updated June 14, 2019.

The LGBTQ community has made significant strides in recent years, winning legal, political and cultural victories, including the right to marry. But the community is still marginalized: 62% of LGBTQ respondents to a recent Experian survey say they faced financial challenges because of their sexual orientation or gender identity.

John Schneider, co-founder of the Debt Free Guys blog and Queer Money podcast, said it's even more important for members of marginalized communities to make sure they're financially secure.

"It's important for us to be more financially responsible than the general population," he said.

There is no federal law prohibiting discrimination based on sexual orientation in the areas of employment, housing or access to services, while only about half of the states offer these protections, according to Human Rights Campaign. LGBTQ victims of hate crimes made up 17% of all bias crimes in 2019, according to FBI data. The impact of these and other risks is only greater without financial protection, Schneider said.

“Skipping insurance puts you in a more risky category than you otherwise would be,” he said.

One way to increase financial wellness involves buying life insurance and disability insurance. Here's what LGBTQ people shopping for insurance should know.

1. Get help

Most LGBTQ people applying for insurance shouldn't face any special challenges, particularly the LGB part of the population, said Ryan Taylor, founder and president of LGBT Financial, a financial services firm in Utah. But those who think they might should get help from an adviser who is experienced with LGBT issues.

You can check with your local LGBTQ chamber of commerce or the National LGBT Chamber of Commerce to find an insurance adviser, Schneider said. Other members of the LGBTQ community may also be able to help.

2. If you take Truvada

Until 2012, Truvada was solely a drug used to treat HIV. That year the Food and Drug Administration approved its use as pre-exposure prophylaxis, or PrEP, to prevent HIV as well. Public health officials consider it a major breakthrough in the fight against HIV.

But some gay men taking the drug reportedly had trouble getting insurance. Regulators in New York in 2018 were investigating reports that people "taking HIV prevention drugs are receiving discriminatory treatment in the purchase of disability insurance," said Maria T. Vullo, New York financial services superintendent. The state later required insurers to cover the drug.

Insurers take time to adjust to new drugs. For example, ratings were more punishing for ADHD drugs in the past, but have become more lenient as they became more widespread. Truvada was once taken exclusively by HIV-positive people, and insurers don’t have as much data on its use as PrEP.

“This is something the carriers are still learning about,” said R. Tyler End, certified financial planner and former head of operations expansion for Policygenius. “If they don’t have enough data, they’re always going to err on the side of caution.”

Taylor said an LGBT-friendly adviser can help in this case as well. He's had success challenging insurance underwriting standards for clients who take PrEP.

"I've been pleasantly surprised that most of the insurers I've talked to and challenged for clients have at least been willing to do a full review of their underwriting policies, and several changed underwriting policies," he said.

Daniel Bruner, senior director of policy for Whitman-Walker Health, a community health center and the largest prescriber of Truvada in the Washington, D.C., area, is concerned insurance denials may lead people to stop taking PrEP. They also make little sense, because Truvada helps prevent health risks, he says.

"Would you rather somebody contract HIV and then the insurers are going to be on the hook to pay for that health care potentially for the rest of that person's life?" Bruner said. "Our hope is if insurers are thinking clearly, they'll realize this is a silly and counterproductive thing to do."

In the event of a denial, Bruner said people should contact LGBT legal organizations like Lambda Legal and GLBTQ Legal Advocates & Defenders as well as their state insurance regulator to challenge the decision.

3. If you're transgender

Transgender people are the most difficult members of the LGBT community to insure, Taylor said. There is little precedent for insurers to base underwriting decisions on, especially for people going through a gender transition that can have unpredictable health effects.

"Insurers, which are typically very conservative in nature, have a very hard time adapting," Taylor said.

Some insurers offer unisex ratings, but they may always not be advantageous for an individual client, who may get a better price applying as a man or woman, Taylor said.

4. Shop around

One other thing you can do if you feel discriminated against: Take your business elsewhere.

"If you are denied by your current provider, find a good broker and see if you can find a different provider," Schneider said.

Whit Cornman, a spokesman for the American Council of Life Insurers, an industry group, said underwriting decisions are based on a number of factors, including height, weight, blood pressure, cholesterol, blood sugar, smoking status and medical history. There are hundreds of different insurance companies who may each weigh these factors differently.

"As a result, insurers might evaluate the same applicant differently and therefore, make different decisions on issuance, pricing, etc.," Cornman said. "Because underwriting decisions vary by company we recommend applicants shop around to find the best policy for them."

5. Don't be afraid to apply

Only six states have laws banning insurers from factoring sexual orientation into underwriting: California, Colorado, Delaware, Utah, Vermont and Washington. There's no federal law prohibiting discrimination in underwriting. But LGBTQ people shouldn't avoid insurance, Taylor said.

Taylor sometimes finds it difficult convincing young clients to apply, not only because they fear they'll be denied, but also because they don't put a priority on their future finances. But the more LGBTQ people apply, even if they're denied, the more visible they become to the insurance industry, he said.

"We have to band together to make change happen," Taylor said. "Hopefully we can get companies to change right now and adapt or at least make exceptions and we can get the insurance in place."

Where to start

Insurance is complicated, it's true. But here’s a primer on the basics to help you shop for life insurance and disability insurance, specifically.

Term vs. whole: Term life insurance lasts for a set period of time, usually up to 30 years, then expires. Whole life insurance lasts your whole life and comes with a cash value component that’s best described as a forced savings vehicle. Whole life insurance is also much more expensive. That’s why term life is the best fit for most families. Whole life is worth considering if you have a complex estate or special needs dependents. Determine how much coverage you need by taking stock of the big financial obligations your family relies on you to cover, along with future expenses, like college tuition. Most people also consider funeral costs when choosing a coverage limit. You can also use this life insurance calculator to help. Determine how long your coverage should last by pinpointing your biggest financial burden (usually a mortgage) and how long you expect your current dependents to rely on your income. Spouses have options when it comes to purchasing life insurance. You can opt for a joint point, two individual policies or a single policy with a rider for a stay-at-home parent. You can learn more about shopping for life insurance with your spouse here. Long-term vs. short-term disability insurance: Short-term disability insurance lasts only a few months, while long-term disability insurance can last until retirement, though it may not kick in as quickly after an illness or injury. Both provide insurance for your income if you’re unable to work. How much long-term disability costs: The average cost is between 1% and 3% of your salary, depending on factors like your age, gender, smoking history, state of residence, occupation and the policy itself.

Want to get a better idea of the cost? You can compare policies right here.

Disclaimer: Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.