What is a Guaranteed Issue Life Insurance Policy?

June 4, 2018

Some people just aren’t good candidates for a life insurance medical exam. If they don’t pass the exam, they don’t get life insurance, it’s that simple. So how do you get past this requirement? Guaranteed issue life insurance could be the answer.

[sc_content_link label=”Get today’s insurance rates.” cat=”life”]

As the name suggests, the policy offers a guarantee of coverage. In other words, your health status doesn’t matter; you can get a policy without a medical exam. The tradeoff with this type of policy, though, is you’ll probably get a much lower coverage amount and you’ll likely pay higher premiums.

How Guaranteed Issue Life Insurance Works

Guaranteed issue life insurance is unique because there isn’t any medical underwriting. In other words, no one evaluates your medical exam results, blood test results, or even looks at the history of your prescription drugs or any other histories that pertain to your health. Again, in exchange for the coverage based on what you say is a higher premium and lower coverage. You’ll likely find policies with a maximum of between $50,000 and $100,000.

Another difference with guaranteed policies is how your beneficiaries receive their benefits. With a standard life insurance policy, your loved ones receive the benefits when you die, no matter how long ago you took out the policy. With guaranteed policies, your beneficiaries may only receive a portion of the benefits if you pass away shortly after taking the policy.

Each insurance company differs in the time they require to pass before full benefits are available, but it’s usually between one and two years, some may make you wait longer though. If you pass away before the specified date, the insurance company will prorate your benefits for your beneficiaries. It is usually equal to the total of the premiums paid.

[sc_content_link label=”Shop and compare insurance quotes.” cat=”life”]

Who Benefits From This Policy?

The policy itself doesn’t seem to have very many benefits. It’s basically long-term coverage in order to get the full amount and the coverage itself is rather low. But, there are certain people that do benefit from it.

Namely, people with chronic illnesses that haven’t secured life insurance prior to falling ill benefit from this policy. They don’t have to deal with the stress of dealing with the medical exam or dealing with an underwriter. Some people just don’t want the hassle or can’t handle being turned down.

Other people that benefit are those that just need money for final arrangements and nothing else. The coverage for this policy is often very low, but enough to cover burial expenses. Without the need for underwriting, you can provide your loved ones with money to make sure your final wishes are met upon your death.

Guaranteed issue life insurance is usually a ‘last resort’ for people age 50 and older. People that have an illness that gives them approximately 10 or fewer years to live usually use this type of policy to cover final expenses. Because it’s a rather costly plan, it makes sense only for those that won’t pay the premiums for long. But, as a word of caution, don’t waste your money if you know you only have a few years left because your loved ones might not even see the full benefit if you die before the date the insurance company will provide full benefits.

Make sure you read the fine print and know exactly what you are getting so that you can ensure that the policy is right for you.

[sc_content_link label=”Get the right insurance coverage.” cat=”life”]