If you Google “individual impairments,” typically, the first results are about life insurance for people with disabilities. But, it’s important to note that an individual impairment does not equal a disability. It simply refers to a health condition or medical issue affecting an individual's insurability. The underwriting process for those living with disabilities that require long-term care can differ from the underwriting process for those with individual impairments. In this article, we’ll focus on how advisors can help clients with impairments secure the coverage they need.

What is an individual impairment?

Individual impairments can vary in severity, ranging from minor health issues that have little impact on insurance rates to serious medical conditions that may lead to a decline in coverage. Common life insurance impairments include chronic illnesses, heart conditions, diabetes, and mental health conditions. Individual impairments can also include risky occupations, like pilots or law enforcement officers. 

Underwriting and individual impairments

Each insurance carrier has its own underwriting guidelines, which means their approach to individual impairments can vary. However, some general points to consider are:

• Risk assessment: Life insurance carriers evaluate the impact of individual impairments on an applicant's life expectancy and overall mortality risk. They use data and statistical models to determine how specific health conditions may affect an individual's life expectancy.
• Medical underwriting: During the underwriting process, carriers review the applicant's medical history, including their family’s medical history and current health status. They may also require a medical exam, blood tests, or other diagnostic tests to gather additional health information.
• The severity of impairment: The severity of an individual impairment can significantly impact the applicant's insurability. Minor health issues may have a minimal effect on insurance rates or eligibility, while more severe conditions could lead to higher premiums or even a decline in coverage. In addition, comorbidities can make a life insurance policy more difficult to obtain or result in higher premium rates. 
• Risk tolerance: Some carriers may be more willing to take on applicants with certain impairments, while others may have stricter underwriting guidelines and be more selective in their policy approvals.

What life insurance options are available for those with individual impairments?

Finding the best life insurance options for individuals with impairments can be challenging, but it is not impossible. Here are some types of life insurance to consider:

1. Guaranteed or simplified issue: This policy ensures acceptance regardless of health conditions and may not require a medical exam or health questions. However, it tends to have lower coverage amounts and/or higher premiums than other policies.
2. Graded or modified benefit: This policy is designed for individuals with more severe health conditions. It provides a limited death benefit during the initial years of the policy. The total death benefit is available after a waiting period (usually 2-3 years). The premiums for this type of policy may also be higher.
3. Group life: Some employers offer group life insurance coverage, which might not require medical underwriting. However, it may be limited in coverage amount and typically ends if the individual leaves the job.
4. Survivorship policies: Also known as a second-to-die or joint and survivor policy, it insures two individuals, usually a married couple, under a single policy. Unlike traditional life insurance policies that pay out a death benefit when the first insured individual passes away, a survivorship policy pays the death benefit only after both insured individuals have died.
5. Accidental death: It pays the beneficiary a lump sum death benefit if the insured's death is due to an accident. These policies are generally more affordable than standard life insurance, require little to no medical underwriting, but have exclusions and limitations on coverage. Accidental death policies can be a good option for those considered uninsurable.

Remember, these are not the only options available, and the best life insurance product will vary depending on the specific impairment, its severity, the individual's overall health, and financial needs. It's essential to carefully review policy terms, coverage amounts, waiting periods, and premium costs to make an informed decision.

Advisor checklist: How to help clients with individual impairments

For clients that want products with more specific coverage terms or benefits than the ones mentioned above, like term or whole life, there are certain strategies that advisors can utilize.

• Obtain as much information as possible: Help your client gather all the relevant information carriers need. This includes not just the clients’ medical records but also records for the family’s medical history, work information, and financial records. 
• Write a cover letter: A cover letter from a life insurance advisor to the carrier is a valuable tool for advocating on behalf of their client and providing crucial information that might not be evident from the application alone. The cover letter allows the advisor to explain any complexities or nuances related to the client's health, lifestyle, or financial situation, providing context that can positively impact the underwriting decision. The cover letter enhances the carrier's understanding of the applicant's profile by emphasizing the client's strengths, addressing potential concerns upfront, and demonstrating their commitment to comprehensive risk assessment. It increases the likelihood of securing their client's most suitable and competitive life insurance coverage.
• Utilize a digital brokerage: Using a brokerage like Modern Life can make the entire application, quoting, and underwriting process much more manageable. Our platform has features like digital document management and shareable document links. Advisors can also submit quotes for multiple products to the nation's top carriers and share a curated list of options to share with clients. Our brokerage and medical team can review all documents to ensure your clients get the best coverage and rates to meet their needs. 

Case study

Client profile

John, a 42-year-old married man with two children, had been struggling to find life insurance due to his impairments. He had a history of heart disease and diabetes, which made him a higher-risk applicant for many insurance companies. John's priority was to financially protect his family if something happened to him, but he had been turned down for coverage by multiple carriers.

Engaging a life insurance advisor

Frustrated by the rejections, John sought help from a life insurance advisor who could offer him the best chance of finding suitable insurance.

Assessment and tailored solution

The life insurance advisor thoroughly assessed John's health history, current condition, and financial situation. Understanding the complexities of John's impairments, the advisor gathered all relevant medical records to present a comprehensive picture of his health status to potential carriers. 

The life insurance advisor recommended a guaranteed universal life (GUL) policy based on John's needs and circumstances. GUL offered a lifetime death benefit with fixed premium payments, ensuring that John's family would be financially protected no matter when he passed away. Additionally, GUL provided more affordable premium rates than other permanent policies, making it a suitable option for John's budget.

Advocacy and negotiation

The advisor utilizes Modern Life’s brokerage and medical team to develop the best strategy and cover letter to submit to carriers. The letter highlighted John's regular medical check-ups and commitment to managing his heart disease and diabetes. It also addressed any potential concerns the underwriter might have regarding his impairments.

The advisor submits John’s application to multiple carriers through Modern Life's platform.

Policy approval

John received multiple carriers quotes thanks to the life insurance advisor's advocacy and negotiation skills. He was granted a GUL policy with a death benefit that would provide his family with the financial security they needed. Although the premium was slightly higher than standard rates due to John's impairments, it was still within his budget, and he felt relieved knowing that his loved ones would be taken care of in the event of his passing.

Conclusion

The tailored solution addressed his specific health concerns and gave him peace of mind, knowing that his family's financial future was protected. John continued to work closely with his advisor to periodically review his policy and adjust as needed to accommodate changes in his health and life circumstances.