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Life Insurance for LGBTQ Persons

Key takeaways

    • Life insurance provides critical financial protections for the LGBTQ community.
    • A lesbian, gay, bisexual, transgender, or queer individual can apply for the same type of life insurance as anyone else, with the same application. Keep in mind that there might be some additional considerations for transgender people.
    • By naming their beneficiaries, LGBTQ individuals can ensure their wishes are carried out.

How does buying life insurance benefit LGBTQ persons?

The LGBTQ community is one of the most uninsured and underinsured markets. According to industry group LIMRA, only 38% of LGBTQ households have individual life insurance, compared with 44% of the general population.

Life insurance is a key part of financial planning for many adults, but especially for LGBTQ people who may have more financial concerns. About 62% of LGBTQ persons say they’ve faced financial challenges because of their gender identity or sexual orientation.

Life insurance is there to protect the people who matter most to you by helping them replace your income, cover the mortgage, or plan for the future. That holds true, no matter who you love or what your pronouns are. Your gender or sexual orientation should never hold you back from applying for life insurance. Your future financial security is crucial, so you should make sure to protect it. Insurers want to help you do just that.

Life insurance products can hold many benefits for LGBTQ persons, including ensuring a safety net for your loved ones that they can count on. Looking into coverage while you’re still young and healthy can also protect your family if health issues crop up later. Those issues are particularly important for LGBTQ populations, who often face challenges in access to healthcare and are at greater risk of mental health issues, suicide, victimization and STDs than the rest of the population.

If you’re thinking about the financial future for yourself and your family, life insurance can help you:

  • Protect loved ones. If people are depending on you financially, then life insurance is a must. According to a recent study by the UCLA School of Law Williams Institute, 29% of the LGBTQ population in the U.S. is raising kids. Life insurance can help make sure that your partner, or spouse, and kids can cover their daily expenses like food, bills, housing, and childcare.
  • Cover debts. If you have a mortgage, car payment, or credit card debt, life insurance can help make sure that your debt won’t burden your family later on if you’re not there to help cover it.
  • Secure the future. Life insurance provides financial security to help loved ones save for college, plan for retirement, or achieve other financial goals. You can also use life insurance to support a cause that matters to you, like leaving money to a favorite charity or organization.

Naming life insurance beneficiaries

Changing laws in recent years, including the 2015 Supreme Court ruling in support of same-sex marriage, trend toward expanding rights for LGBTQ individuals and their families.

Yet many LGBTQ people are still rightfully concerned about how to protect their partners, loved ones, and children in case they die. Wills can be contested, wishes ignored. Life insurance policies can secure protections for your chosen beneficiaries and peace of mind for you.

One significant benefit of a life insurance policy for an LGBTQ person can be making sure your wishes are carried out after death. If your next of kin doesn’t respect your sexual orientation, your gender identity, who you love, or the family you’ve made, they might try to contest your will regarding any estate you could leave behind. There are well-documented examples of families of same-sex couples fighting with surviving partners over inheritance. A life insurance policy can provide an inheritance for your loved ones that family members can’t take away from them.

Naming a beneficiary is particularly important for LGBTQ buyers to sidestep emotional or financial struggles down the road. Beneficiary designations take priority over wills, because they’re legally binding documents. Naming your partner, kids, friends, or even a nonprofit, a school endowment, or another cultural organization as your beneficiary can help make sure your payout goes where you want it to go.

There are many financial benefits to naming a life insurance beneficiary as well. For example, your spouse or partner won’t have to pay taxes on the death benefit money, since life insurance proceeds are generally tax-free. If you don’t name a beneficiary, though, the money may go through your will and be subject to taxes or used to pay down any outstanding debts and take months to reach your loved ones.

If you are not legally married and you don’t name your partner as a life insurance beneficiary, your estate will typically go to your next of kin, which means that your partner may not receive the financial protection you intended to provide them. In cases like these, you might want to set up a trust to receive the money, so that your partner can access the trust after your death to receive the funds.

How should an LGBTQ person go about purchasing life insurance?

A lesbian, gay, bisexual, transgender, or queer individual can apply for the same type of life insurance as anyone else, with the same application.

When reviewing your application, the insurance company will examine the answers you provide to questions, any required medical exam information, and other data sources, such as driving and prescription records. They do this to get an understanding of your health and family health history, as well as your lifestyle choices like smoking and hobbies. That helps them determine whether to issue an insurance policy and at what premium.

In general, lesbian, gay, bisexual, and queer people shouldn’t encounter any unique challenges when applying for life insurance. The process can be a little more complicated for transgender individuals, though.

If you are transgender, non-binary, or genderqueer, the wide range of products available today makes finding the right policy to provide for your loved ones easier. When you apply, many life insurance companies will ask for medical and other records. While this applies to cisgender individuals as well, this can be a source of stress for the transgender, non-binary, and genderqueer communities. Knowing what you may be asked about empowers you as a consumer. You could be asked to include:

  • A modified birth certificate
  • A note from your therapist
  • A surgery record

With most carriers, you’ll have the opportunity to offer explanations and context about your gender identity during the process.

Usually, life insurance carriers ask for individuals to apply with the sex assigned at birth. This would include individuals whose gender identity differs from their assigned sex at birth, but who have not undergone any medical or physical transition.

Medical or physical transitions, like hormone therapy treatment or gender-affirming surgeries, can affect your premiums and the underwriting process. Some carriers will also consider your psychological adjustment and the completion of any surgeries in determining your rate classification.

If you are transgender, non-binary, or genderqueer, speaking directly to an agent may help you best understand your options. Fidelity Life is proud to support the LGBTQ community, and one of our licensed agents would be happy to discuss your needs.

For many insurance approvals, a medical exam will need to be completed and a health assessment is taken into consideration. If you are interested in life insurance without a medical exam, Fidelity Life offers the following no-exam products.

If you’re living with HIV

Wondering if you’re able to purchase life insurance if you are living with HIV? There are more options out there than there were in the past for people living with HIV. While living with the disease used to mean an automatic denial for coverage, some life insurance companies are starting to consider it to be an ongoing illness and provide coverage for people who are HIV-positive.

Depending on your overall health, your life insurance options if you’re living with HIV may include, among others:

  • Guaranteed issue life insurance. Guaranteed issue life insurance is another type of coverage that doesn’t require you to take a medical exam or answer any health or medical questions. Guaranteed issue life insurance policies are meant for people with serious health conditions like HIV that keep them from buying other kinds of policies. The policy will pay anywhere from $5,000 to $25,000 to your beneficiaries, which they can use to pay for funeral costs and end-of-life expenses. Guaranteed issue life insurance also typically includes a waiting period, with full coverage beginning after a few years.
  • Accidental death benefit insurance. Accidental death benefit (ADB) insurance is another option for those living with HIV. You can purchase ADB as either a standalone policy or a rider added to another policy. Accidental death benefits are paid to beneficiaries following deaths due to accidents, including car crashes, drowning, choking, slips, machinery, and other accidental situations. If life insurance isn’t an option because of HIV, ADB can offer protection to your family.
Family running on a beach
Family running on a beach

Find a policy that works for you

There’s a range of affordable Fidelity Life products to choose from based on your situation and financial responsibilities.

The best types of life insurance for LGBTQ persons

Depending on your income level, age, financial goals, and dependents, you may want term life insurance or permanent life insurance. You can add to your coverage through riders. With all policies, you will be able to name your beneficiaries. Partners, spouses, children, extended family, and friends can all be named.

It’s important to note that every state has different rules and regulations around gender identity. These may change over time or be impacted by federal laws. Additionally, every carrier’s products and applications may differ on this matter. We recommend speaking to your life insurance company about your situation, as some insurance carriers have unisex standards for the application. They can help you determine how to best move forward and get affordable coverage.

Some products, like Fidelity Life’s Accidental Death Benefit are unisex products, with height/weight measurements from a unisex build chart used to determine Standard rates. As with cisgender individuals, notable impacts on your premium will be your age, medical profile and any lifestyle risks, like smoking.

Ready to shop for coverage? Here’s a closer look at your main options.

Term Life Policies

Term life insurance has a level premium and a guaranteed death benefit. This means that you pay your set premiums every month or year for the term of the policy. If you die before your term life insurance expires, your beneficiary or beneficiaries will receive the death benefit, according to your policy terms. If you are still alive at the end of the term, the policy terminates, and you will have to buy life insurance again.

See the range of term life products available from Fidelity Life.

Permanent Life Policies

The most common type of permanent life insurance is the whole life policy, which is a cash value policy. Rather than a set term, it lasts your lifetime as long as you continue to pay the insurance premiums. Part of your premium goes to your coverage and a portion goes into a tax-deferred savings vehicle, usually starting a few years after you’ve purchased the policy. Eventually, the policy will have a cash value that you can borrow against or withdraw. The insurance premiums are significantly higher, but the returns can be well worth it.

Explore permanent life products from Fidelity Life.

Life Insurance Riders

If you are able, customize your life insurance policy with riders to increase your death benefit and enhance the protections your policy provides for yourself and/or your family. You can add an accidental death benefit (ADB) rider to increase the death benefit payout in case you die in a covered accident, and there is a family accidental death benefit (ADB) as well to offer added coverage for spouses and dependents.

You may also want to consider a terminal illness rider, also called an accelerated death benefit to allow you to access cash from your policy’s death benefit early if you receive a terminal diagnosis.

A family accidental death benefit can be added to a Fidelity Life standalone Accidental Death Benefit policy.

Learn more about the terminal illness rider from Fidelity Life which can be added to several of our products.

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