Individuals purchase life insurance coverage for a myriad of different reasons. This can include the payoff of a large debt, the payment or reduction of estate taxes, the replacement of lost income, or the pre-payment of large future expenses such as a child or grandchild’s college education.
One of the most basic needs for life insurance, though, is the payment of final expenses. Unfortunately, many people who are older and in poor health, are unable to qualify for even small amounts of coverage to pay for the cost of a funeral.
In this case, however, there may be a solution with guaranteed issue life insurance. With this type of life insurance protection, also known as guaranteed acceptance life insurance, many people who have been turned down for other types of coverage can obtain the protection that they need to give loved ones the financial peace of mind that they deserve.
What is Guaranteed Issue Life Insurance?
Guaranteed acceptance policies are a type of policy that will be issued to an applicant regardless of his or her health condition. Oftentimes, this type of coverage is considered to be a “last resort,” as those who apply for such policies will not typically qualify for other types of more traditional life insurance due to their health conditions. These individuals may also not have the option of participating in a group life insurance plan through their employer.
When purchasing one of these policies, applicants may choose to purchase a term policy option. This means that they will be purchasing only the pure death benefit protection with no cash value or investment component.
Alternatively, a guaranteed issue policy can also be issued as a whole life policy, as versus term coverage. This means that in addition to offering a death benefit, the policy will also build up a cash value or savings component. Over time, this cash can grow substantially, and can essentially be borrowed or withdrawn by the policy owner if so desired.
It is important to note, however, that any un-repaid balance of the cash at the time of the insured’s death will be deducted from the amount of the policy’s death benefit that is paid out to the insured’s beneficiary.
How is This Type of Coverage Different?
Because guaranteed acceptance policies typically covers individuals who have adverse health conditions, insurers are aware that the risk of claims on such policies is substantially higher than on more traditional, medically underwritten policies.
Because of this, the insurance companies that offer guaranteed issue life insurance protect their financial position in two primary ways. First, the insurers will typically offer somewhat low death benefits on such insurance plans. If you are looking for something with a slightly larger death benefit but are looking for only little scrutiny in the underwriting process you may want to consider a no exam life insurance policy.
In addition, the death benefit on a guaranteed policy may not be paid out to the beneficiary if the insured dies during the first two years that the policy is in force. Should the insured pass away during that period of time, the beneficiary will instead receive a return of the policy premiums that were paid in. In some cases, the beneficiary may also receive an amount of interest.
In structuring the death benefit in this manner, the insurance companies can protect themselves from the potentially substantial risk of insureds purchasing life insurance just prior to death in order for loved ones to receive a large amount of death benefit.
How to Apply for Coverage?
In order to apply for a policy, an individual will be required to submit an application for coverage. Here, the insurance underwriters will want to know information regarding your:
- Height and weight
- Marital status
- Smoking status / tobacco usage
- Health condition
Once the underwriters have had a chance to review your application, they will be able to issue your life insurance policy.
How Much Will You Pay in Premium?
Because there is no medical exam required in order to qualify for a guaranteed issue life insurance policy, the premiums for this type of coverage are usually quite a bit higher than for comparable traditional life insurance coverage that requires medical underwriting. With this in mind, it may be cost effective for an applicant to shop around and compare premium prices prior to applying for their coverage.
Taking the Next Step
If you or a loved one is in need of life insurance and is unable to qualify for traditional term or permanent coverage, then a guaranteed issue life insurance policy may be the right choice for you.
When shopping for a guaranteed issue policy, it is oftentimes best to compare several different coverages from various carriers. This way, you can ensure that you are getting the best option for your specific needs and budget.
We can help you to find the guaranteed issue life insurance coverage that you need. We work with many of the top life insurers in the industry, and we can help you with comparing life insurance premium quotes. To get started, just use the form on this page.
If you have any additional questions regarding guaranteed issue life insurance, or about life insurance coverage in general, our team at Life Insurance for Seniors 360 is here to help. Just dial 888-229-7522 and we will be happy to answer any of the questions or concerns that you may have so that you are better prepared to purchase the financial coverage and protection that you and your loved ones need.