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By Martha C. White
July 14, 2021
Life Preserver In The Form Of A Transgender Symbol
Jose Velez / Money

That life insurance is hard to get for transgender people probably shouldn’t be a surprise, given the long-time importance of applicants’ birth sex to insurers’ coverage decisions. But Americans are increasingly able to get coverage regardless of their gender identity, provided they have the patience to navigate the process.

“The industry, as a whole, is evolving with regard to providing life insurance for transgender individuals,” says Trent Landes, director of operations for life insurance, with oversight for underwriting, claims and customer service, at Fidelity Life.

Transgender people don’t pay more for life insurance, everything else being equal, but comparison-shopping for quotes takes a bit more legwork because there is no industry standard when it comes to writing policies for this population. Nor does undergoing gender affirmation surgery preclude buying a policy, although it may complicate the timing for when coverage can begin.

According to a Gallup poll conducted this year, about 1.4 million American adults are transgender — which represents about 0.6% of the U.S. population. Here’s how the life insurance industry is managing coverage for those people, along with shopping tips if you or someone you know is transgender.

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The inconsistency in defining transgender

Whether an insurer considers your sex to be male or female matters a lot to what you’ll pay to insure your life. Indeed, life expectancy based on sex is a key determinant for setting both term and permanent life insurance policy premiums.

“All things being equal, female life insurance rates are lower than male rates,” says Mark Maurer, president and CEO of LLIS, an insurance firm in Tampa, Fla. For instance, LIMRA says that median monthly premiums for a $500,000, 20-year term policy for a healthy 40-year old would be $39.02 for a man and $32.42 for a woman — a price difference that adds up to more than $1,500 over the term of the policy.

Although a growing number of life insurance companies are writing policies for these individuals, the industry is still sorting out some of the more basic questions, such as whether to categorize life policy applicants by their gender identity or the sex they were assigned at birth.

“Each company has their own set of guidelines on how they’re going to treat it. It’s not a completely across-the-board decision,” Maurer says, adding that when he was searching for life insurance quotes on behalf of a transgender customer, the responses he got were all over the map.

The need for evidence of gender identity

As a rule, those who apply for insurance under a gender that does not align with their sex assigned at birth need to show evidence of medical treatment in connection with a gender transition. That evidence may include proof of undergoing gender-affirming surgery, or of plans for such a procedure. Transgender people might be on one or more gender-affirming hormone treatments, too, that further provide a medical indication of their identity.

Psychiatric or psychological treatment may also be relevant. Transgender individuals have higher rates of mental health conditions: A recent comprehensive review of medical literature found that transgender and gender-nonconforming individuals “are exposed to a variety of social stressors, including stigma, discrimination, and bias events that contribute to mental health problems.”

Those problems can include gender dysphoria, a sense of unease caused by a mismatch between biological sex and gender identity that may be so intense as to “lead to depression and anxiety and have a harmful impact on daily life,” according to the UK’s National Health Service.

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Coverage and transgender medical issues

Despite insurers’ relative inexperience in writing policies for transgender applicants, though, the medical treatments for gender identity don’t themselves hinder eligibility for insurance, say our insurance experts.

According to Christopher Cook, senior vice president and head of underwriting at Crump Life Insurance Services, upcoming gender-affirming surgery isn’t considered differently than, say, planning a joint replacement or a heart bypass. “There are levels of mortality with any kind of surgical procedure that involves general anesthesia,” Cook says.

Generally, life insurance companies won’t write a policy for a new customer scheduled to undergo major surgery regardless of the customer’s gender or medical history. Maurer advises considering the anticipated surgical timeline before even beginning to shop for a policy.

Long-duration gender-affirming hormone therapy also isn’t the dealbreaker people might imagine, Maurer says. Yes, insurance companies look at what medications applicants take regularly, but that’s true for anyone whose doctor prescribes those hormones. For example, a transgender man taking testosterone for gender affirmation isn’t viewed any differently than a cisgender man taking testosterone because his body doesn’t make enough.

The same applies to mental-health treatment related to gender identity, which should affect (or not affect) eligibility in the same way as for cisgender applicants, according to Maurer. For example, he says, issues triggered by gender dysphoria aren’t viewed any less favorably than other psychiatric conditions. “Realistically, [insurers] are not underwriting them any differently than for anyone else who has depression,” Maurer says.

Insurance underwriters do consider mental health history in the course of evaluating an applicant’s health, but psychiatric diagnoses generally won’t prevent anyone from obtaining life insurance. People with a documented history of (for example) serious depression might not be able to attain the most favorable rate class, but they won’t be shut out. What’s more, a medical history that reflects adherence to a treatment plan, and stability or improvement, can help mitigate any negative effects conditions like depression or anxiety might have.

Life insurance tips for transgender people

Not every traditional step to buying life insurance makes sense for transgender shoppers. For example, using online quote aggregation tools that simply ask your sex without further elaboration aren’t going to yield accurate responses, says Maurer.

Instead, enlisting at the outset an insurance broker or a financial advisor to help in navigating policy pricing and terms may make particular sense for transgender people who are seeking life insurance, according to Cook. “Financial services professionals will really understand what the specific needs analysis is for the individual,” he says.

A growing number of professionals specialize in financial advice to LGBTQ+ clients, including on life insurance. A recent Money cover story on money and the LGBTQ+ community profiled, as examples, LetsMakeaPlan.org, where about 1,200 professionals have self-selected LGBTQ+ as a client focus, and Be Intentional Financial, which describes itself as “ a remote, fee-only financial planning firm that specializes in working with transgender and queer individuals and families.”

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