Life insurance and disability
[social_share]There are two aspects where life insurance and disability cross. The first is a buyer with a pre-existing disability, and the second is that disability insurance is often a part of a life insurance package.
Pre-existing disabilities can add to a life insurance premium. There are two exceptions to this. If anti-discrimination laws are in place, having a disability shouldn’t affect the buyer’s premium, but these laws can include some conditions and specifically exclude others. They differ between the various states and territories as to what they cover. Also, anti-discrimination laws in general apply less to life insurance than to other situations, such as getting a job.
The other exception is a disability that doesn’t usually shorten a person’s life expectancy. With the advance of medical technology, a number of disabilities and medical conditions that used to drastically shorten the effected person’s life expectancy now have little effect, and so their life insurance premiums should be the same as anyone else’s. This can particularly be the case if the disabled applicant is at a younger age (although conversely some conditions have a particularly drastic effect on a younger person’s life insurance premium, which is otherwise at a very low level).
The other point where disability and life insurance cross is when one is a part of the other. Life insurance may cover more than the life of the policy holder; it may cover disabilities, as well.
Disability insurance does not cover all types or costs of disabilities, and separate insurance should be purchased if the applicant wishes to cover the additional expenses that generally come with a disability, such as outfitting the house with specialised equipment. However, the life insurance package can cover the policy holder’s ability to work. This differs from policy to policy. For example, one person may have a life insurance policy that doesn’t cover any aspect of disability, and so will only pay out when the policy holder dies. Alternatively, another life insurance policy may pay out if a disability stops the policy holder from working.
Finally, there are three tiers of disability cover with life insurance. The first covers the policy holder if they can no longer work in a certain profession. This tends to be very expensive, although the payouts are quite easy to obtain. The second tier pays out if the policy holder is unable to work at a certain level and after that there is the cheapest tier, for when the policy holder is unable to work in any capacity. However, a payout here can be difficult.
