Life Insurance For Myeloma Patients: How to Obtain It and Maximize It

There are many types of life insurance, all with benefits that you may not be aware of. Often people aren’t aware of the many benefits of life insurance that they can capitalize on and often in a tax advantageous way.

Additionally, after being diagnosed with an illness like myeloma, securing life insurance can often be complex and in some cases, impossible. However, there may be options available to you if you think a little outside the box.

Types of Life Insurance

Let’s review the types of insurance and their benefits and limitations.

Term Life (Personal and Group) 

Term Life Insurance is considered the purest type of life insurance. This policy offers you a death benefit that does not increase or decrease, does not earn interest and at the end of the term it will terminate unless you convert it to a permanent policy within the insurers guidelines.

You may find that your insurance needs have changed in which you can convert a portion of the death benefit or all of it to a permanent policy. Generally no underwriting will be required, especially if you keep the policy with the same insurance company.

Policies you have through your employer are considered group life term policies that terminate when your employment terminates. They may have other insurance policies, such as supplemental life, in which you pay more of the premium that is portable after your employment ends.

Become knowledgeable about your employer insurance, its type, and benefits. You may be able to convert some or all of it, which can be beneficial to you if you can convert it to a permanent policy with cash values.

Whole Life and Universal 

Permanent policies, such as whole life and universal policies, offer cash values and other benefits. The cost and growth of these policies vary.

​​​​​Whole Life offers a cash value component that you have the option of taking a loan or withdrawing. It earns interest at a low rate of return. This permanent policy has a fixed premium and a fixed death benefit. 

Universal Life Insurance is a more costly insurance that has a cash value component and also offers more flexibility with premium payments. You also have the option of choosing the death benefit option. 

• Death Benefit Option A: As the cash value grows, you pay less for pure life insurance, which reduces your rate to the company. Instead of paying premiums based on the policy’s death benefit amount, you pay premiums for the lesser pure insurance.
• Death Benefit Option B: The Death Benefit is Increasing in this policy. The benefit of this option is that the beneficiary gets both the death benefit and the cash built-up cash value in the policy (minus any outstanding loans and interest).

The Universal Life policy is also more costly because you’re paying for a larger death benefit which includes the cash value. If the cash value rises, then the premium would also increase to keep up with the larger coverage.

Choosing or obtaining a Univeral Life policy also provides greater flexibility. You can pay higher premiums more frequently than required, build cash value, pay premiums less often, or even skip payments (although this reduces the cash value). You could also pay the premium out-of-pocket or use the cash value to pay the premiums. 

Just be aware of reducing or not paying premiums, as this may cause your policy to lapse.

Also, consider that there are fixed universal and index universal policies that you can choose from. Let's go over the differences: 

The Fixed Universal Life Insurance Policy is the least risky universal policy. It grows at a low rate of interest. The interest earned in the cash accounts in this policy is based on the company’s overall investment accounts. They are usually tied to bonds that are relatively safe. The interest rate from bonds is not tied to changes in the market. Which provides more stable growth. However, because it is relatively safe, your returns will reflect that earning a lower rate of return.

It builds a cash value when the excess premium payments above the current insurance cost is credited to the policy's cash value and is then credited with interest each month. The policy is designed to offer more flexibility than the whole life policy. The cash value grows at a variable interest rate, which has the possibility of yielding higher returns.

However, the premium is not guaranteed to be level. You can choose when and how much premium you want to pay as long as you pay for life insurance, and this policy is not established as an investment. The IRS has guidelines on the structure of these policies.

The Fixed Index Universal Policy builds cash value based on the stock market index that it’s attached to. The policy owner has the ability to choose multiple indexes and choose how much they want in the fixed account.

This policy will have caps on the maximum earnings of the index returns. Your earnings are retained even if the market takes losses. You may not even earn any interest if the market is below. This policy is more risky and complicated than the fixed Universal policy, which does not depend on stock market indexes. 

The Variable Universal Policy gives you a lot of flexibility. You can invest in stocks, bonds, money markets, and mutual funds. This is the most risky of policies because you are at the mercy of the market. If it goes up, you benefit; if it goes down, you lose. There is no cap on your potential earnings. 

As with all the permanent cash value policies, you can take withdrawals or loans against the cash value. You also still have the flexibility in how you pay your premiums. Your death benefit could be significantly higher if the cash value has grown. The beneficiary can benefit from a higher death benefit payout. 

Conclusion 

It’s very important to review your insurance portfolio yearly. Determine your ongoing need for insurance and how it can benefit you now and in the future. Insurance is just as important as your other investments.

You can use your policy as collateral for loans and use the death benefit while you are still living. Additionally, because of your myeloma, your policy may have the Waiver of Premium, allowing you to take advantage of not paying the premiums during your disability. Different insurance companies have varying criteria. Consider converting term policies to permanent ones before expiring to take advantage of no underwriting requirements.

Also, after careful consideration, eliminate unneeded insurance and keep that premium money in your pocket. Be aware of tax liabilities on loans and withdrawals and interest on the loans. Review the accelerated death benefit rider to determine if you can take any of the death benefits to help pay for your care. Remember, this will reduce the death benefit to your beneficiaries.

Don’t just review your own policy; also review your spouse's policy. Ensure they have the necessary insurance policy to give them the most benefits for their current and possible future needs. 

If you cannot access insurance due to illness, see if you can be added to your spouse's insurance through their employer. There’s generally a limited amount you can get without underwriting. Find out if it is also portable when your spouse terminates their employment. Generally, the premium will be more expensive, but you will have coverage.

Do you have credit cards that offer a small policy? Do you belong to a professional association that may offer life insurance via a group policy? 

Guaranteed Issue policies are last resort policies that are considerably more expensive, but they don’t require underwriting. The death benefit is also much less, usually between $5,000 - $25,000. 

Call an insurance broker and ask what may be available. A few insurance companies may cover high-risk people, even those with cancer. There, of course, are criteria that must be met depending on the insurer, such as you being in remission for a certain period of time and not taking any cancer medication.  

If you are interested in other financial resources that can help you along your myeloma journey, click here: Financial and Helpful Resources 

Want to connect to a financial myeloma coach to help you with insurance questions, pharma support, and other financial topics? Register here and look for someone with financial expertise: HealthTree Coach 

You can watch other webinars on important financial topics for the myeloma community here: Past Financial Webinars