Insurance Guide for the LGBTQ+ Community: Life & Health Explained

It may be tricky navigating health and life insurance if you are gay, transgender or struggling with gender identity The LGBTQ+ community now has guardrails in place to ensure adequate and top-notch health and life insurance options. Here’s more about each type of insurance and why it’s important for you to have these types of coverage. Also, see how you can better handle discrimination for your sexual orientation or gender-identity, if you are met with resistance.

Why Life Insurance for Gay Couples Is Important

Now that marriage equality is legal in all states, buying a joint life insurance policy became even easier^[1] However, you don’t need to be married to buy separate insurance policies and name each other as the beneficiary.

Life insurance is an important part of financial planning for any couple, including same-sex partners. Securing the right life insurance policy can provide financial security for loved ones and take care of funerals and burials after you pass.

There are various types of life insurance policies, and certain considerations for same-sex couples, so choosing the right coverage by considering your specific needs is key. It’s also important to review and update your policy to ensure it continues to meet your needs as your life changes over the years. Here’s everything you need to know about buying life insurance as a gay couple.

Life insurance provides financial protection for your loved ones in the event that you die. For gay couples, the same reasons for buying life insurance are the same. Here are the most common reasons:

• Financial Security: You’ll want your partner to be able to maintain their standard of living and cover mortgage costs, possibly childcare and other expenses.
• Debt Coverage: Life insurance can pay off any outstanding debts or loans.
• Estate Planning: Life insurance allows you to distribute your assets according to your wishes.
• Children: Life insurance provides for the care and education of any children you may have. If a child is under the age of 18, when you pass, you can designate a beneficiary to disperse funds or wait until the child reaches the age of 18 to claim the cash benefit.
• Legacy: A life insurance policy can ensure that the business you built during your lifetime will receive the death benefit, if you name your organization as the beneficiary.
• Charity: Some people like to leave behind their mark by naming a charity as their beneficiary.

There are two main types of life insurance policies to consider: term life insurance and permanent life insurance. Each has its own benefits and considerations.

Term Life Insurance Vs. Permanent Life Insurance for a Same-sex Couple

Term life insurance is the more affordable option of the two. It provides coverage for a specific period, typically 10, 20, or 30 years. If you pass away during the term, your beneficiary receives a death benefit. If you die after your term ends without renewing, your beneficiaries will receive nothing.

A permanent life policy will be more expensive but offers lifelong coverage and includes a cash value component that grows over time. It’s possible to borrow against that cash value but if it is not paid back, the policy will no longer be able to pay its own premiums and you risk cancellation. Also, even if you manage to pay the premiums each month, your beneficiaries may not get the full death benefit if a loan is not repaid.

Special Considerations for Gay Couples

Even though life insurance works the same for same-sex couples as it does for heterosexual couples, same-sex couples may face unique considerations when securing life insurance coverage.

Legal Recognition and Documentation

To make sure your relationship is legally recognized, it’s important to present a marriage certificate or domestic partnership agreement to insurance providers.

Beneficiary Designations

Decide who will be your designated beneficiary or beneficiaries. Clearly stating your partner as the beneficiary on your life insurance policy ensures they receive the death benefit without legal complications.

Joint Policies vs. Individual Policies

Decide whether to purchase a joint policy or two individual policies. Joint policies cover both partners under a single policy, which can be more cost-effective, but will only pay out once, upon the death of the first partner only. The surviving partner is encouraged to then buy another policy for their beneficiary or beneficiaries, but premiums become more costly as you age.

Key Features of a Life Insurance Policy

The following features are what makes a life insurance policy work. Make sure to look at each part before buying:

Death Benefit

The death benefit is the amount your beneficiary will receive upon your death. Ensure it is sufficient to cover your partner’s financial needs, including living expenses, debts, and future goals.

Premiums

Premiums are the monthly payments you make to keep the policy active. Compare premiums for different policies but also take into account the other parts of the policy too.

Riders

Riders add coverages that enhance your policy. Common riders include accidental death and disability insurance. It is much more economical to buy a disability rider than to buy a disability insurance policy.

Waiver of Premium

This waiver excuses you from having to pay premiums if you become disabled.

Living Benefits

With this rider, you can use the death benefit if diagnosed with a terminal illness and need help paying for bills.

Cash Value

Term life policies do not have a cash value but permanent life policies do. The cash value grows over time and can pay the insurance premiums for you. Or the cash value can be borrowed against or withdrawn. If not repaid, it will be deducted from the death benefit that goes to your beneficiary or beneficiaries.

The 8-Step Application Process for Gay Couples

The process of applying for life insurance is generally the same for a gay couple as for a heterosexual couple, but with a few additional considerations:

1. Medical Exam

Many life insurance policies require a physical exam and ask about your habits, such as smoking. Be honest and thorough during this process to ensure accurate underwriting. Otherwise, you risk losing coverage or the benefit after you’ve passed.

2. Disclosure of Lifestyle Factors

Insurance companies may ask you questions about your lifestyle, career, recreational activities, marital status and more. Be honest and transparent to avoid losing coverage.

3. Legal and Financial Documentation

You will be asked for legal and financial documents that support your relationship and financial status. Be prepared to share a marriage certificate, domestic partnership agreement and financial statements.

4. Choose the Right Life Insurance Policy

Only buy a policy after careful consideration and planning. Here are some tips to help you make the best choice:

• Assess your financial needs
• Use this information to determine the appropriate amount of coverage.
• Compare policy types
• Shop around and compare policies from different insurers

Regularly review your life insurance policy to ensure it still meets your needs. Update your policy as your circumstances change, especially if you have (more) children or change careers.

How Does Life Insurance Work for a Transgender Person?

It’s not so much that insurers are biased against transgender people as they are picky about assigning a gender to the prospective policyholder. Gender plays a large part in determining a life insurance rate. For one thing, women usually live longer than men, and they pay less for health insurance because of it.^[2]

Some insurance companies will determine the terms of a policy by the assigned gender at birth while other companies will honor the self-assigned gender the prospective policyholder identifies with, so it’s important to compare rates and ask questions to find the company that will assign you the sexual identity you want to be rated for.

Whether a person has had gender-confirmation surgery, also referred to as sex-confirming surgery or a sex change, and how much time has passed since the sex assigned at birth has changed can also determine which gender category the insurer will use for that person.

Certain health factors differ in terms of standards for men’s vs women’s ideal levels of blood pressure, height and weight, cholesterol and more.

In some cases, a history of transgender history will be viewed as a life-enhancing and mortality-boosting move. However, some insurers feel unsure because surgeries on younger people have yet to be studied.

People who take hormone-therapy prescription drugs may see a higher rate because gender-confirming hormone therapy often comes with side effects, both minor and serious. For instance, transgender men have an increased rate of myocardial infarction compared with heterosexual men and women, “likely due to testosterone therapy and chronic stress resulting from discrimination and minoritized status."^[3]

Another reason transgender people are often rated higher is because they are cited more often for reporting poor or fair health, due to lack of access to health coverage and mental health needs. Transgender people also have the highest rates of suicide and HIV infection. Mild depression or other mild conditions would not affect rates as much as severe and chronic mental health conditions.^[4][5]

Factors Used To Determine Life Insurance

• Age
• Gender
• Job
• Blood pressure
• Height and weight
• Cholesterol
• Overall health history
• Mental health history
• History of surgeries
• Family history of health conditions
• Prescription history
• Chronic health conditions
• Tobacco, marijuana, and opioid use
• Driving record
• Criminal record
• Credit score and bankruptcy
• Adventure travel
• Location
• Income
• High-risk hobbies
• Driving record
• Marital status

Common Myths About Life Insurance for Gay, Lesbian and Transgender Couples

There are several misconceptions about life insurance for gay couples based on common myths. Let’s see why they are inaccurate:

2 Common Myths That Gay Couples Can't Get Life Insurance

Gay couples can buy life insurance just like any other couple. It’s important to work with an insurer that is inclusive and understands your needs.

Myth 1: Life Insurance Policies Are More Expensive for Gay Couples
Premiums are based on individual factors such as age, health, policy type and coverage amount, not sexual orientation. Gay couples can find affordable life insurance policies. They can even buy joint life insurance policies with a marriage or domestic partner certificate.

Myth 2: It's Difficult To Name a Same-Sex Partner as a Beneficiary
Naming your same-sex partner as a beneficiary is not difficult at all if you have all the legal documents in order.

Professional Guidance on Policy Purchases

Working with a knowledgeable insurance agent can help you navigate the complexities of life insurance. Never work with an agent who doesn’t seem to know their information or is not willing to spend time explaining each policy and its terms to you. A good agent can:

• Assess Your Needs: Help you determine the right amount of coverage.
• Compare Policies: Provide comparisons of different policies and insurers.
• Explain Features: Clarify the features and benefits of various policies.
• Assist with the Application: Guide you through the application process.
• Find you the Best Deal: Some agents work with several different insurers.

The Role of LGBTQ+ Advocacy Organizations

Advocacy groups fight for the rights and needs of LGBTQ+ individuals in financial planning and life insurance. These organizations can provide valuable resources and support if you’re faced with insurers who will not provide you coverage options. You can also contact your state’s department of insurance if your insurer will not recognize a same-sex marriage if it is illegal to deny coverage:

• GLAAD Offers resources and advocacy for LGBTQ+ rights.
• Human Rights Campaign (HRC) provides information on financial planning and legal rights for LGBTQ+ individuals.
• Lambda Legal focuses on legal issues and provides guidance on navigating legal challenges.
• Sexuality and Gender Alliance of Actuaries' (SAGAA) may help you find insurers who are advocates of LGBTQ+ rights.
• Your state’s department of insurance is also a place to file complaints if you feel you’ve been discriminated against.

Health Insurance for the LGBTQ+ Community

The Affordable Care Act has greatly improved access to healthcare for the LGBTQ+ community by making it illegal to deny health insurance to people due to their sexual orientation or sexual identity. Despite all this, 1 out of every 8 LGBTQ+ Americans surveyed claim that they’ve faced discrimination by insurers, especially transgender people seeking gender-identity care^[6]

If you’re an LGBTQ+ person, you may be eligible for a state-subsidized health insurance policy, Medicaid or Medicare, depending on your age, income or if you have a disability. You can also buy a private health insurance plan if your employer does not sponsor one or if you just prefer to keep your plan separate from work.

Also keep in mind that when you compare rates, the agent will see whether or not subsidies apply based on personal information, like income and age. Chronic health conditions are no longer a valid reason for insurers to deny coverage or charge you higher rates.

Here’s more information before you begin comparing health insurance quotes:

Health Insurance for Transgender Americans

In 10 states, Medicaid programs for low-income Americans won't cover gender-confirming care, including a transition, for patients, and in 13 states Medicaid won't cover gender-related treatment for minors. Some private health care insurers also deny sex-reassignment type of care^[7]

It’s always a good idea to read the exclusions list for a policy you’re considering buying, to make sure it offers the coverage you seek.

Can Gay People Be on Each Other’s Health Plan?

Gay people in the U.S. can be on each other's health plan under certain conditions, like marital status and the health insurance provider. Here’s a detailed look at how same-sex partners can navigate health insurance coverage in the U.S.

1. Marriage

The U.S. Supreme Court’s ruling in Obergefell v. Hodges in 2015 ensures that married gay couples have the same rights to spousal health insurance benefits as other couples. Married gay couples can add a spouse and children to their health insurance plan. This typically requires a marriage certificate and proof that the children are your dependents.

2. Domestic Partnerships

Some employers offer health insurance plans that cover domestic partners, which may include a domestic partnership agreement. Employers may require a domestic partnership certificate or an affidavit, to verify the relationship.

3. Individual Health Insurance Plans

Same-sex spouses should be able to add their partner to their health plan just like any other married couple. Some insurance providers offer plans that include domestic partners, depending on which state you live in. States that provide domestic partners the same rights as a married couple will usually require that insurers in that state also follow the law.

4. Affordable Care Act (ACA) and the Marketplace

The ACA prohibits discrimination based on sexual orientation and gender identity, ensuring that same-sex couples have equal access to health insurance coverage purchased on the marketplace.

5. Government Programs

Medicaid and Medicare provide spousal coverage, provided that you meet the eligibility requirements. Domestic partners may also be eligible for Medicaid, depending on state-specific laws on domestic partnerships.

Common Myths About Health Insurance for LGBTQ+

Myth 1: Health insurers can charge higher premiums if you have a pre-existing condition like HIV/AIDS or for being an LGBTQ+ American.

It’s against the law to charge higher premiums for any pre-existing condition or for being a member of the LGBTQ+ community.

Myth 2: Health insurers do not have to offer the same coverage to same-sex and opposite-sex spouses.

While employers don’t have to extend health insurance coverage to spouses, they must offer it to a same-sex couple if they do with opposite-sex couples. If you buy a private plan with a family rider, the insurer must offer the same coverage to a same-sex spouse.

Myth 3: Health insurance companies don’t have to offer married same-sex couples premium tax credits and the same low out-of-pocket insurance costs they offer opposite-sex couples.

This is also against the law according to the Affordable Care Act. Any benefits that are offered to “straight” couples under a plan type must be offered to gay or transgender couples.

Factors Used to Determine Health Insurance Rates

• Age: Older individuals typically see higher premiums.
• Income: You may be entitled to a state subsidized plan, which costs much less.
• Gender: Some insurers may vary rates based on gender.
• Location: Rates can vary by region due to differences in healthcare costs and provider networks.
• Health Status: Current health conditions and medical history can impact premiums and coverage options but you cannot be denied coverage and there is a maximum out-of–pocket deductible.
• Tobacco Use: Smokers pay higher premiums due to associated health risks.
• Coverage Level: Gold and platinum plans with more comprehensive coverage generally have higher premiums than silver and bronze plans but they offer more coverage.
• Deductibles and Copays: Higher deductibles and copayments can lower premium costs.
• Occupation: High-risk occupations may result in higher premiums.
• Plan Type: Different types of plans (HMO, PPO, EPO, POS) come with varying costs and provider networks.
• Body Mass Index (BMI): Higher BMI can lead to higher premiums due to potential health risks.
• Insurance Provider: Each insurer has its own underwriting practices and risk assessments, which is why you have to compare rates.
• Prescription Drugs: The need for regular medication can impact premiums and plan choices.
• Lifestyle: Diet, exercise, and alcohol consumption can influence health assessments.
• Dependents: Adding a child(ren) or a spouse to a plan will increase the cost.
• Mental Health History: Past mental health issues can negatively impact premiums.