People come to us daily wanting to apply for life Insurance while receiving Social Security income.

This can be a difficult process.

This article will explain the barriers and opportunities, help you determine the types of life insurance available to you, and how to find your best price from a safe and secure company.

Quick Article Guide

1. Policy Amounts  and Requirements
2. Options while receiving “Regular” Social Security (SSI)
3. Options while receiving  Social Security Disability Income (SSDI)
4. Common Disabilities and Recommended Life Insurance Options

How Much Life Insurance Can I Qualify For If I’m On Social Security Income?

Every day we receive inquiries from clients looking to purchase life insurance for themselves, their spouse or parent who aren’t working.   How does this figure into how much life insurance you can qualify for?

There are “Guaranteed Issue” policies, normally sold for policies between $5,000 and $25,000 which don’t ask income or health questions. If you’re hoping to qualify for a higher amount of coverage, be prepared to answer health and income questions.

What does income have to do with anything? Can’t I buy as much life insurance as I can afford?

Simple answer…..NO.

Insurance company underwriters (the persons making the decisions or whether your policy can be issued or application “declined”) look at life insurance as “income replacement” insurance, and generally don’t factor in Social Security income into the equation.

If you aren’t working, either due to a disability or natural retirement, this factors in to your financial qualification and justification. There are a few exceptions, which we’ll cover.

What’s the difference between SSI and SSDI?

Insurance companies will ask if you’re receiving SSI (Social Security Income) or SSDI (Social Security Disability Income).  The type of Social Security that you collect depends on whether or not you retired due to age or due to disability. If you collect Social Security Retirement and you are not disabled, skip to the next section.

To an Actuary (someone who determines the insurable risk) we are all better risks if we’re healthy enough to work and remaining active.  Make sense?

Social Security received by reaching Retirement Age

If you collect Social Security Income (SSI) due to strictly reaching retirement age, (not as a result of disability),  the maximum insurance death benefit offered will be based on your current income, exclusive of SSI.    Therefore, if you’re near retirement, it’s generally better to apply while still working.  You’ll have more companies to choose from and larger policy limits.  These 8 money saving tips for affordable life insurance may also help.

If you’re already retired, you’ll generally be limited to $50,000 in life insurance, with a few exceptions.

1. If you’re receiving pension income, which your spouse would lose upon you death, underwriters will generally approve at least 10 years of this income replacement.  For example, if the pre-tax pension is $4,000 per month, you may qualify for $480,000 of more in life insurance.
2. Let’s say you’re caring for an elderly parent or disabled adult child…underwriters will consider the cost of this care by hiring an outside caregiver if you were to die.
3. Underwriters won’t consider investment income, but if you’re at a high net worth and would be leaving an estate with a tax burden your heirs would be responsible for, insurers will generally allow you buy enough life insurance to cover this burden so your assets wouldn’t need to be liquidated.
4. We’ve also had success in insuring retirees with large property holdings, including farms.   Underwriters can justify insuring your life for the amount of the remaining property debt so your heirs wouldn’t be forced to sell.

MAXIMUM LIFE INSURANCE BENEFIT:   $50,000.  (could be higher with exceptions noted above).

MEDICAL EXAM:   No. You can purchase up to $50,000 of whole life insurance without a medical exam or income justification.   If you receive pension income which your spouse would lose upon your death, you may be able to qualify for a higher amount. 

Applying for this larger amount could require a medical exam.  Check with your JRC insurance agent…we’ll determine which company may be able to offer the amount you’re looking for, with highest probability of your application also being medically approved.

Social Security Due to A Disability

When someone is collecting social security income due to a disability, the insurance company will consider the cause of the disability claim.

If you’re collecting V.A. Disability only, call us and explain the cause.   If it’s a physical disability, it will be looked upon more favorably than psychological disability such as PTSD  (see below).

Following are  common disabilities we come up against, common application results, and recommended options.

Disability Due To Anxiety, Depression, PTSD, Bi-Polar Disorder, or Schizophrenia

If your disability is due to a mental health issue, insurance companies selling term insurance (policies at $50,000 and up with health questions and/or medical exam) will not accept the risk, so it’s not worth applying….you will be “declined”.   Your JRC insurance agent will help you secure a “Guaranteed Issue” life insurance policy….no health questions and guaranteed approval.

MAXIMUM LIFE INSURANCE BENEFIT:   $25,000

MEDICAL EXAM REQUIRED?:   NO

AGE MINIMUM/MAXIMUM:   45/85

Disability Due To Chronic Pain

If you’re disabled due to a chronic (long term) back pain, knee pain, etc. and/or arthritis, you may be able to qualify for larger life insurance death benefit.

Insurance company will base your rates for the type of medication you are using to control your pain, as they look at the risk of potential side effects over time, as well as the likely inability to exercise.

If you are taking a medication like Vicodin, Hydrocodone, Percocet, Darvocet, or Tramadol, the insurers will usually charge a slightly higher premiums due to the risk of side effects taking these medications long term.

Life insurance companies are more lenient with non-narcotic medications or anti-inflammatory medications Over the Counter (OCT) pain medications such as ibuprofen are treated more favorably.

If you are taking a narcotic medication, the insurance companies will want to see periodic follow-up with your doctor and no history of substance abuse or treatments.

MAXIMUM LIFE INSURANCE BENEFIT:   $50,000.  (could be higher if you’re receiving pension income).

MEDICAL EXAM:   No.  You can typically purchase up to $50,000 with no exam or income justification.   If you receive pension income which your spouse would lose upon your death, you may be able to qualify for a higher amount.  This could require a medical exam depending on your age.  

Check with your JRC insurance agent…we’ll determine which company may be able to offer the amount you’re looking for, with highest probability of your application also being medically approved.

Disability Due To Serious Health Issues: Heart Problems, Stroke, COPD, Uncontrolled Diabetes, Cancer, or Kidney Problems

Life insurance options are limited if your disability is due to a physical health issue affecting major organs.   Life insurance companies selling term insurance (policies at $50,000 and up with health questions and/or medical exam) will not accept the risk, so it’s not worth applying….you will be “declined”.   Your JRC insurance agent will help you secure a “Guaranteed Issue” life insurance policy….no health questions and guaranteed approval.

MAXIMUM LIFE INSURANCE BENEFIT:   $25,000

MEDICAL EXAM REQUIRED?:   NO

AGE MINIMUM/MAXIMUM:   45/85

Combining policies…Can’t I just buy multiple policies?

With limits on life insurance coverage, we’re sometimes asked for maximum policy amounts for 2 or 3 companies on different policies. This is not permitted. All insurance applications will ask you how much cumulative coverage you currently have, and if you’re replacing a policy. You must answer honestly, otherwise you could be committing insurance fraud and endangering payment of a claim.

Beware of fast talking salesmen

Many insurance agents determines will offer “Accidental Death Coverage” once they determine you’re disabled. They policies won’t pay a death claim if you die due to medical condition….they only pay if you die due to an accident. Your first clue is if the policy is $100,000 and up, under $20 a month, and not requiring a medical exam.

To be blunt, would you insure a neighbor’s life for a large amount of money if you didn’t know anything about their health? Insurance companies are businesses, making mortality assessments, not government subsidized charities.

Give us a call…we’re here to help

Every situation is unique, so we encourage you to call JRC Insurance Group toll-free at 855-247-9555. A licensed professional can get an understanding of your situation and provide our free, non-biased advice.

We work with 50 of the top insurance companies in the industry, and will determine your best fit based on our years of experience helping clients navigate the life insurance experience. Without a doubt, we will save you time and aggravation. We may not tell you what you want to hear, but will be truthful and respectful, saving you time and disappointment.