If you have lived a decent life, few are those who want to see you die. Your friends, your colleagues and your family would all likely be saddened to hear of your demise. Insurance providers would also prefer that you live a long, healthy life, as they only profit as long as you are alive.
For the provider, an insurance policy is essentially a gamble that you will live long enough to pay for your death benefit one month at a time. This means that they also prefer to insure customers who will continue paying premiums for quite some time. Unfortunately, for the terminally ill, this is not typical.
It can be extremely difficult if not impossible to find an insurer who will take a virtually assured losing bet by offering a traditional life insurance policy to a terminally ill person. However, there are some options available for those who wish to do a good thing for their family at a really bad time.
Some providers offer a type of policy known as graded premium life insurance. They most often have face values up to $50,000, and the premiums depend on the age of the patient as well as the type and stage of illness. Learn more about these topics at AAMIs existing life insurance page.
Like a casino, the insurance provider will nearly always hold the odds in its favor, and so graded premium life insurance policies follow a special set of rules. This type of policy hinges on a two year period after it is established. If you manage to hang on for at least two years before dying, you win and the company will pay the full benefit value to your family when the time comes.
If you do not, your family gets the amount they’ve paid in premiums back as a consolation prize. You may also be able to get a type of insurance known as Accidental Death and Disability that will pay your family a benefit in case of a surprise twist ending, but likely will not cover your illness’ termination.
It is advisable to speak with an independent broker about your options in this scenario, but the options are simply limited for a terminal illness patient. The game of life insurance is predicated on provider profit, and insurance companies will seldom take on a policy they will have to pay out in the foreseeable future. For this and many other reasons, establishing a life insurance policy before you know for a fact you need it is the safest play.