The idea of having a life insurance policy is fascinating as it eases the burden on your loved ones after your death.
However, applying for a traditional life insurance policy has a lot of unknowns because you never know if your chosen insurer will approve your applications. That’s when guaranteed issue life insurance becomes handy.
Guaranteed issue life insurance is a type of life insurance policy that promises to give your loved ones ultimate peace of mind for end-of-life costs after losing you.
It is an excellent choice for seniors concerned about not qualifying for traditional life insurance due to health and age limits. The most exciting thing about applying for a guaranteed issue life insurance is that you are certain that your application will be approved.
The providers of these policies do precisely what the policy implies: they accept and approve applications for all applicants. Definitely, this means that everyone can get this type of insurance policy regardless of their health and financial situation.
If you have been procrastinating getting burial insurance due to the anxiety associated with applying for a traditional life insurance policy, guaranteed issue life insurance has you covered.
Read on to learn everything you need to know about guaranteed issue life insurance and why you should even consider applying for the policy.
Table of Contents
What is Guaranteed Issue Life Insurance?
At its core, guaranteed issue life insurance is a type of whole life insurance that does not require any health screenings or medical exams to get approved.
It is also called guaranteed acceptance life insurance. It is usually suited for seniors between 50 to 80 years or those who cannot qualify for a traditional life insurance policy due to serious medical conditions or terminal illnesses.
That said, the main selling point of guaranteed issue life insurance is that you can’t be turned down because the application doesn’t involve health questions or medical underwriting.
As such, it provides a guaranteed way for your family to pay funeral costs, medical bills, and other final expenses. However, not without catches.
Guaranteed issue life insurance generally offers low death benefits with higher than normal premiums. Besides, it has a waiting period, usually two years, but varying from one insurer to another.
As you would expect, this means that your chosen beneficiary won’t receive the policy’s death benefits if you die during the waiting period. But this doesn’t qualify a guaranteed issue life insurance policy as some sort of scam.
In many cases, when you die during the waiting period, your insurer repays (to your beneficiaries) all your premiums plus interest, usually at a rate of 10%.
The guaranteed issue life insurance providers put the waiting period in place because, if they didn’t, nearly everyone could apply for insurance on their deathbed and pay a few hundred dollars to secure a $25,000 benefit for the family.
How does Guaranteed Issue Life Insurance Work?
While most life insurance policies require some type of medical underwriting, guaranteed issue life insurance stands out in that it doesn’t require any sort of medical underwriting.
In fact, this type of whole life insurance gets its name because the insurers guarantee they will issue a policy to you as long as you meet the age criteria at the time of application.
During application, you will be required to choose a coverage amount, but the beneficiaries will only qualify for a graded death benefit until after the grading period of your policy. It is only after the grading period that your beneficiaries qualify for a full payout amount.
Due to the lack of medical underwriting, the cost for a guaranteed issue life insurance policy will be relatively higher than a policy that involves medical exams and tests.
Like other burial policies, the coverage amount payable to the beneficiaries at the end of your life is usually capped at around $25,000.
Of significance, unlike a traditional life insurance policy, guaranteed issue life insurance doesn’t have a savings component. You pay premiums in exchange for a fixed amount to be paid out upon your death.
The difference between Guaranteed Issue Life Insurance and Simplified Life Insurance.
There are two main types of burial insurance: guaranteed issue life insurance and simplified issue life insurance. While the two provide coverage for end-of-life expenses, they differ in how applicants are approved for a policy.
Also referred to as no questions final expense insurance, guaranteed issue life insurance is a type of whole life insurance policy that doesn’t require a medical exam.
In comparison, simplified life insurance is a type of whole life insurance that allows you to skip a medical exam but requires you to fill a medical questionnaire.
With simplified issue life insurance, your answers will determine whether you will be approved or not and the cost of the policy. While answering “yes” to some questions can disqualify you, a “yes” to other questions will only make the policy expensive.
In many cases, insurers will charge higher rates for guaranteed issue life insurance policy to cover the additional unknown risk.
Relative to simplified issue life insurance, guaranteed issue life insurance offers small coverage amounts, typically capped at $25,000, whereas simplified life insurance coverage amounts can be up to $40,000.
Overall, both guaranteed and simplified life insurance are ideal options for individuals who don’t qualify for traditional policies, with guaranteed issue policies being favorable for individuals with serious health concerns.
How much does Guaranteed Issue Life Insurance cost?
In most cases, guaranteed issue life insurance covers high-risk people simply because there is no medical information. As a result, premiums are usually more expensive compared to other forms of final expense life insurance.
As with other forms of final expense life insurance, guaranteed issue life insurance premiums depend on your age, gender, where you live, and the coverage amount.
Premiums can run substantially higher, and because of the waiting period, you are not truly covered until the third or fourth year. Also, the cost will increase in proportion to the coverage you buy.
Regardless of the coverage amount, the average cost of guaranteed issue life insurance is 2-3 times the cost of traditional life insurance.
As such, an 80-year old individual can end up paying upwards of $300 monthly for a $20,000 guaranteed issue life insurance policy from a top-rated provider.
How are Guaranteed Issue premiums calculated?
The price of whole life insurance policies depends on a number of variables, including age, gender, medical conditions, hobbies, and place of residence. Guaranteed issue life insurance is no different.
Although some guaranteed issue life insurance providers offer fixed prices based on age, most insurers calculate guaranteed issue premiums based on where you live, coverage amount, age, and gender. As such, there is no one-size-fits-all formula for calculating guaranteed issue policy premiums.
To ensure you are getting the best offer, do your due diligence and request final expense quotes from different providers, then compare. The best offer for you will also depend on your budget, long-term priorities, and expected costs.
Pros and Cons of guaranteed issue life insurance.
Guaranteed issue life insurance can provide life insurance to certain people who need a whole life insurance policy but don’t qualify for other forms of final expenses insurance. With few exceptions, you are guaranteed acceptance and some financial support for your family when you pass.
In their entirety, guaranteed issue policies are promising and sound enticing. But are they any good?
Here are the pros and cons of guaranteed issue life insurance policies:
Pros of guaranteed issue life insurance.
- Easy to apply – no medical exams or health questionnaires are required to qualify
- Instant, near-guaranteed approval
- Is it the best option for people who do not qualify for traditional and simplified issue life insurance
- Depending on your policy, your premiums may be stopped at a set age
- Death benefits can be used for any purpose.
- Death benefits will be provided to beneficiaries if death is due to an accident. This statement holds even during the waiting period.
- Though at a slower rate, policies accrue cash value that can be withdrawn or borrowed against.
Cons of guaranteed issue life insurance.
- Relative to other forms of final expense life insurance, guaranteed issue policies are more expensive.
- Payouts are lower than traditional policies.
- Graded death benefits mean that your beneficiaries will not get a full payout if you die within the waiting period.
- There is usually an age cap, so individuals older than 80 years will likely not be eligible.
- Does not pay out a death benefit in cases of suicide, no matter when it happens
Comparing the pros and cons of guaranteed issue life insurance, it is safe to say that the price is high for the coverage amount you get. For this reason, it makes perfect sense to consider other types of life insurance policies that you can qualify for.
Guaranteed issue life insurance is on the higher end, it is almost certain that you will find other forms of whole life insurance favorable.
How to buy a guaranteed life insurance policy.
Like any other insurance policy, guaranteed issue life insurance plays a key role in ensuring your family is financially stable when grieving.
Although the policies might be expensive, purchasing a guaranteed life insurance policy relieves your loved ones of the stress and confusion they may experience when you die.
If you are considering purchasing a guaranteed issue life insurance policy, here are tips and steps to guide you:
- Decide how much coverage you need.
With a lot of factors to consider when deciding how much burial insurance you need, it should be no surprise that many people usually underestimate the coverage they need.
To arrive at a reasonable figure, figure out how much your family may need to pay for your end-of-time expenses and other general expenses.
The obvious cap of $25,000 means that your guaranteed issue policy will likely pay for your final expenses only. That said, if there are people you want to leave care for, you may want to consider alternatives that allow for a higher coverage amount.
- Research different guaranteed issue life insurance carriers.
Instead of requesting quotes randomly, do your due diligence to identify some of the top-rated insurers. This involves searching websites of different carriers and reading reviews by previous clients to gauge the company’s reputation.
Most top-rated providers of guaranteed issue life insurance will have plenty of positive reviews and a good blend of competitive rates with many coverage options to fit diverse insurance needs.
- Request final expense quotes from different providers.
The simplest and best way to ensure that you are getting the best offer is by comparing offers from different life insurance carriers. Once you have narrowed your options, get quotes from each company and start comparing.
Most guaranteed issue life insurance providers have an online quote generator that allows you to get instant rate quotes right from their websites.
To get quotes, you will be required to input some basic information that will be used to calculate personalized rates. Avoid providers who request sensitive medical information to avail a quote.
- Fill out the application.
After identifying a suitable carrier, you can now fill out an application. For guaranteed issue life insurance, you should be able to complete the application online. The process doesn’t have to be painful; just be truthful in your application.
- Wait for the approval.
One of the most interesting things about guaranteed issue policies is the near-guaranteed, instant approval. Because the application doesn’t involve exams, you may not wait for long before you are approved.
Purchasing a guaranteed issue life insurance policy doesn’t have to be overwhelming. While an agent can help you complete the process and ensure you get the best offer tailored to your specific requirements, you don’t necessarily need one.
Once you are approved for a guaranteed life policy, the next critical thing you need to do is to tell your beneficiaries about your policy.
Make sure to detail the beneficiaries as much as possible about your policy so that they can claim the death benefits with minimal hassles after you die.
Who should get Guaranteed Issue Life Insurance?
Guaranteed issue life insurance is best suited for individuals who cannot qualify for traditional insurance policies and other forms of whole life insurance due to health problems perceived as too risky.
Every provider will have their own age restrictions, but many companies avail their products for seniors aged 50 to 80 years.
If you fall outside this age bracket, you may still be able to purchase a guaranteed issue life insurance policy, but you will have very limited options.
Considering that guaranteed issue loan insurance coverage amount is usually capped at around $25,000, it is safe to say that this type of insurance is ideal for individuals who are OK with having only a small amount of life insurance.
Does guaranteed issue insurance have cash value?
Guaranteed issue life insurance is a whole life policy that not only offers coverage for your entire life but also builds cash value over time, which you can access through a policy loan before passing away.
Cash value is considered an additional benefit on top of the ultimate death benefit. Even so, it is worth noting that the payout to your beneficiaries is the coverage amount of the policy, not the coverage amount plus the cash value.
As long as your policy stays active, your insurer allocates some amount of every premium you pay into your cash-value account. It may be worth noting that, relative to other permanent life insurance policies, guaranteed issue policies accumulate less cash value.
Most important is the fact that guaranteed issue life insurance builds cash value.
Factors affecting guaranteed issue life insurance price.
We all want to protect our loved ones and offer them peace of mind, and we want to do it at a cost we can afford. Part of the reason why many people underestimate the cost of final expenses life insurance is that they don’t understand the factors that affect the prices.
Here are factors that play a big role in the determination of guaranteed issue life insurance premiums:
Age is one of the biggest factors that influence the calculation of guaranteed issue life insurance premiums. A general rule of thumb is the older you are, the more you will pay for your guaranteed life insurance. Statistically, older folks are more likely to die, which is the reason for hiked prices.
Females have a relatively higher life expectancy compared to males. As such, males are more likely to have a death benefit payout sooner than females. This is why the males guaranteed issue life insurance is pricier.
- Policy amount:
Policy amount or coverage amount refers to the size of the death benefit payable to your beneficiaries in the event of your death. It is common knowledge that the more coverage you buy, the pricier it will be.
Unlike traditional life insurance, guaranteed issue life insurance policies are approved almost instantly with no health questions. This eliminates other factors known to affect the prices of life insurance policies.
All other risks, including undisclosed medical history, current medical conditions, and risky lifestyle, are the reasons why guaranteed issue life insurance is generally pricier than other kinds of whole life insurance.
Is guaranteed issue life insurance right for you?
Honestly, guaranteed issue life insurance makes sense only if you have exhausted all other life insurance options.
As such, if you have serious medical conditions or circumstances that limit you from qualifying for traditional life insurance and other forms of permanent life insurance policies, this type of life insurance is right for you.
If you are so caring and want to save your loved ones financial stress when you die, purchasing a guaranteed life insurance policy is worth the price. Although you will pay higher, you will have relieved your family and friends of a great deal of stress.
Best guaranteed issue companies.
Guaranteed issue life insurance policies are considered riskier because applicants do not supply their medical and lifestyle information. For this reason, some life insurance providers do not offer products related to this type of whole life insurance.
If you are in the market for a guaranteed life insurance policy, here are some of the top-rated guaranteed issue life insurance providers you may consider.
American International Group (AIG) Direct is one the biggest life insurance companies in the world and has an excellent reputation offering reliable whole life insurance products.
They guarantee that premiums will not increase during the lifetime of the policy. To qualify for their guaranteed issue life insurance products, you should be 50 – 85 years old. Their coverage amount is capped at $25,000.
- Gerber life insurance
Gerber offers guaranteed issue life insurance policies for individuals aged between 50 and 80 years. You can obtain a policy with coverage amounts ranging from $5,000 to $25,000. With this provider, you are sure that your policy will accumulate a cash value, which grows over your policy’s lifetime.
- Mutual of Omaha
Mutual of Omaha offers whole life insurance policies and guarantees acceptance for ages 45 – 85. They also guarantee that premiums will never increase. For guaranteed issue coverage, you can apply for a policy amount between $2,000 and $25,000.
- AAA life insurance
This is another top-rated provider of guaranteed issue life insurance policies. They sell guaranteed issue policies to individuals aged between 45 and 85 years.
You can obtain coverage amounts ranging from $5,000 to $25,000, but your beneficiaries can receive graded death benefits if you pass away within the first two years of your policy.
With these insurers, you are sure of competitive prices and a reasonably good range of coverage options. Even better, they allow policyholders to accelerate death benefits if they are ill.
Guaranteed issue life insurance companies to Avoid.
While we cannot rule out that there are entirely lousy insurance companies, some companies just have a bad rap.
In many cases, poorly-rated guaranteed issue life insurance providers have higher premiums, longer waiting periods, and a smaller range of death benefits.
Guaranteed issue life insurance companies you need to avoid.
Although Americo is not necessarily a bad life insurance company, it is not the best to start with. With Americo, you can obtain a coverage amount of up to $10,000, which, though not small, limits individuals who may want to obtain higher policies.
On the other end, you can obtain a policy amount of as low as $2,000.
As for age, Americo avails its guaranteed issue policies to individuals aged between 50 and 75 years. Your beneficiaries get premiums plus 5% interest if you die in the first year, premiums plus 10% interest if you die in the second year, and 75% of the death benefit if you die in the third year.
- Colonial Penn
Colonial Penn advertises guaranteed issue life insurance beginning with low monthly rates. They allow policyholders to obtain coverage amounts as low as $400, but coverage varies by age.
Individuals who choose them can obtain maximum coverage of about $17,000, which also varies by age.
With Colonial Penn, the waiting period is usually two years, and graded death benefit includes all premiums plus 7% interest.
- Columbian Financial
Columbian Financial claims to offer guaranteed issue life insurance policies for ages 25-80. With this insurer, you can obtain coverage amounts ranging from $2,500 to $25,000 if you’re above 45 years and $5,000 to $10,000 if you are below 45.
The waiting period is three years, with payout during the waiting period being 106% of premiums.
While these are not the worst providers in the life insurance industry, it is advisable to consider other guaranteed issue life insurance elsewhere before you can think of purchasing from them.
Does guaranteed issue life insurance require a medical exam?
Also known as no exam life insurance, guaranteed issue life insurance doesn’t require a medical exam or health screenings. Even so, some providers may require you to answer a few basic questions about your health.
As the name suggests, providers of guaranteed issue life insurance policies accept virtually everyone who applies.
When to buy a guaranteed issue insurance policy?
While many people should, in reality, qualify for traditional life insurance and other whole life insurance policies, some people will be disqualified from purchasing these policies with favorable terms by their age or medical conditions.
If you belong to this camp limited by age, medical conditions, and circumstances, you are definitely a better candidate for guaranteed issue life insurance.
Purchasing a guaranteed life insurance policy provides an excellent way to defray your final expenses even when you can’t qualify for other life insurance policies.
Another situation when it makes perfect sense to buy a guaranteed life insurance policy is when you have taken on considerable debt. While the death benefit for this type of policy is not high, it can help your family accomplish some financial goals after your death.
From a good heart, you can also buy a guaranteed issue life insurance mainly to leave behind funds for a certain charity.
How can guaranteed issue life insurance benefits be used?
The payout for a guaranteed issue life insurance policy comes with no strings attached, so your beneficiary is responsible for deciding how to use the funds. While your chosen beneficiary can use your policy payout for just about anything, people often use the funds to accomplish the following:
- Funeral expenses:
Guaranteed issue life insurance benefits can help your survivors cover the costs of funeral arrangements. The money can cater to expenses like purchasing a casket, cremation, an urn, preparing the lifeless body for viewing, and other expenses related to your final arrangement.
- Medical bills:
If you were hospitalized before passing away, death benefits from your policy can be used to settle the medical bills, including prescription medications, specialist care, medical procedures, and hospital stays.
It is not uncommon for a person to die with debt. If you had a sizable debt before dying, your family can use the lump sum they get from your insurer to consolidate your debts.
When used to settle your debts, guaranteed issue life insurance can go a long way towards protecting the value of your estate.
While death benefits are intended to cover final expenses, the truth is that beneficiaries can use guaranteed issue life insurance benefits to fund just about anything.
Your survivors can use the money to cater to daily family expenses during and after the grieving period.
Beneficiaries of death benefits can also use the money to make a down payment on a home, buy a new car, pay for college, or even travel.
In a nutshell, guaranteed issue life insurance benefits can be used to fund anything the beneficiary wishes.
Is guaranteed issue life insurance worth it?
Guaranteed issue life insurance is an appropriate choice when you don’t qualify for all other options. As such, individuals who want to defray their final expenses but do not qualify for other whole life insurance options will find the purchase worth it.
Guaranteed Life Insurance with no waiting period.
To many people, time is very limited, and they need to be served with urgency. So can you get life insurance that starts immediately or that has no waiting period?
Guaranteed life insurance with no waiting period can be accessed from different life insurance companies. As long as your age falls between the specified range, you are likely to be allowed to take an insurance cover that starts to operate immediately.
Interestingly, you will still not require a medical exam to get approved.
Importantly, the costs will remain constant, but you will be required to prepay the premiums for more months than when taking an insurance plan with a waiting period.
Guaranteed issue life insurance quotes.
Guaranteed issue life insurance policies are usually on the higher end when it comes to price. If you are considering purchasing this type of whole life insurance, the good news is that getting quotes is very easy.
Many providers of guaranteed issue life insurance allow you to get instant quotes right from their websites. To get a quote, all you need is to populate the spaces with the required details.
In many cases, depending on your age, expect upwards of $200 per month.
Guaranteed issue life insurance is one of the common types of whole life insurance among individuals who don’t qualify for traditional life insurances.
If you have a health condition that disqualifies you from other life insurance policies, hopefully, this post educates you about everything you need to know about guaranteed issue life insurance and when you are just a better candidate for the policy.