Life insurance is an important financial tool that provides financial security for your loved ones in the event of your unexpected death. While it can be used to cover a wide variety of expenses ranging from mortgages, lost wages, and even future college expenses, most of the time, when someone is considering purchasing a $50,000 life insurance policy, their primary focus is usually centered more around taking care of any final expenses that may arise at the time of the insured death.

Rising costs, Changing Needs

And while in the past, a $25,000 life insurance policy was often considered sufficient for most families. As the cost of living continues to rise and the financial responsibilities of families increase, many families are now turning to larger whole life insurance policies, such as a $50,000 whole life insurance policy, as a way to ensure their family will be adequately protected.

One thing that many people aren’t aware of, or at least aren’t immediately aware of is that as one chooses to apply for a $50,000 life insurance policy vs a $25,000 or $10,000 policy, qualifying for coverage will become more difficult. In some situations, the applicant may not be able to qualify for $50,000 in coverage from a single carrier.

In this article, we’ll discuss the process of applying for a $50,000 life insurance policy, the obstacles you may encounter, and what an individual can do if they aren’t able to qualify for coverage.

Types of Insurance offering $50,000 in coverage.

Several types of insurance offer coverage of $50,000 or more:

1. Term Life Insurance: This type of insurance provides coverage for a specific term, usually 10, 20, or 30 years. It is usually the most affordable option and can provide coverage of $50,000 or more.
2. Whole Life Insurance: This type of insurance provides coverage for the policyholder’s entire lifetime and also includes a savings component. It is typically more expensive than term life insurance, but it can also provide coverage of $50,000 or more.
3. Universal Life Insurance: This type of insurance combines the features of term and whole life insurance and provides flexible coverage options. It can also provide coverage of $50,000 or more.
4. Simplified Issue Final Expense Life Insurance: These policies are designed for people who may have some health issues and are not able to qualify for traditional life insurance policies. They are typically more expensive than other types of policies, but they can also provide coverage up to $50,000. These policies can be offered as both a term and whole life option, so it is important to understand which product you are applying for.

General Assumptions:

Most applicants who are looking to purchase a $50,000 life insurance policy to cover their final expenses will typically want a policy that will provide coverage for the remainder of their lives.  As such, most $50,000 final expense insurance policies you will find will be small, simplified issue whole life insurance policies.

$50,000 Simplified Issue Whole Life Insurance Policy

A $50,000 Simplified Issue Whole Life Insurance policy is a type of permanent life insurance that does not require a medical exam as part of the application process. Instead, the insurer will typically ask the applicant to answer some health questions on the application form.

The coverage amount is fixed and does not decrease over time as long as the policy is in force, and the premium is paid. The policy also includes a savings component, known as cash value, which grows over time and can be accessed by the policyholder in the form of loans or withdrawals.

We should also note that the premium for a Simplified Issue Whole Life Insurance policy is typically higher than that of a term life insurance policy. Still, it is usually lower than that of a traditional whole life insurance policy that requires a medical exam.

The Simplified Issue Whole Life insurance policy is a great option for people who may not qualify for traditional life insurance due to health concerns or other factors but still want to provide coverage and financial security for their loved ones.

Types of questions asked during the application process:

During a Simplified Issue Life Insurance application process, the insurance company will typically ask a series of health-related questions to assess the applicant’s risk. These questions may include the following:

1. Personal information such as age, gender, and occupation
2. Medical history, including any pre-existing conditions and current medications
3. Family medical history
4. Tobacco and alcohol use
5. Any previous insurance policy you have had
6. Information about dangerous hobbies or activities
7. Information about any criminal record
8. Information about any DUI conviction or accidents

It’s important to note that the specific questions may vary depending on the insurance company and the type of policy being applied for.

Additionally, some companies may require additional information, such as a medical records review or phone interview. It’s also important to be honest and accurate in answering these questions, as providing false or misleading information can result in a denied claim or the policy being canceled.

Options for those unable to qualify for coverage.

Because simplified issue life insurance policies don’t require an applicant to take a medical exam to qualify, some individuals with pre-existing medical conditions may find it more difficult to qualify for coverage simply because the insurance underwriters won’t have enough information about them in order to make an informed decision.

In situations like these, being denied coverage may simply mean that they will need to pursue a fully underwritten whole-life insurance policy (which will require a medical exam) in order to qualify for the coverage they desire.

Others, with more serious pre-existing medical conditions or a lifestyle factor, may not be able to qualify for either a simplified or fully underwritten $50,000 life insurance policy.  In cases like these, applicants will need to seek out alternative products in order to obtain the coverage that they are looking for.

Alternative options may include:

1. Accidental Death and Dismemberment (AD&D) Insurance: This type of insurance provides coverage in the event of accidental death or dismemberment. It can be a good option for people who are unable to qualify for traditional life insurance policies due to health concerns. Unfortunately, accidental death policies won’t provide any coverage for natural causes of death. They will pay a death benefit to your beneficiaries in the event that your death is caused by an accident.
2. Guaranteed Issue Life Insurance: This type of insurance is designed for people who have health issues and are not able to qualify for traditional life insurance policies. These policies typically have a waiting period before the coverage starts and may have a higher premium than other types of policies.

While both of these options have merit, we understand that most individuals aren’t looking to purchase a life insurance policy that isn’t going to provide coverage should they die from an illness, disease, or natural causes.  So, let’s now take a closer look at guaranteed issue life insurance policies.

Guaranteed Issue Life Insurance

Guaranteed Issue Life Insurance policies are specifically designed for people who have health issues and are unable to qualify for traditional life insurance policies. These policies typically have a few key characteristics:

1. No Medical Exam: There is no medical exam required as part of the application process, so these policies are accessible to people with health issues.
2. Guaranteed Approval: Guaranteed Issue Life Insurance policies are guaranteed to be approved, regardless of the applicant’s health status.
3. Limited Coverage: The coverage amounts for these policies are typically lower than traditional life insurance policies, usually ranging from $5,000 to $25,000
4. Higher Premiums: These policies typically have higher premiums than traditional life insurance policies because the insurer is taking on more risk by not requiring a medical exam.
5. Waiting Period: Guaranteed issue life insurance policies have a waiting period before the coverage starts, which means that death benefits will not be paid out for a certain period of time after the policy is issued. This waiting period will typically be referred to as a graded death benefit and will usually last between 2-3 years, depending on the insurance carrier.
6. No cash Value: These policies usually do not have any cash value component.

Guaranteed Issue Life Insurance policies can be a good option for people who are unable to qualify for traditional life insurance policies due to health concerns but still want to provide coverage and financial security for their loved ones. That said, however, we here at IBUSA like to exhaust all other options before considering them because they will only provide up to $25,000 in coverage and because they will contain a graded death benefit.

Purchasing multiple guaranteed issue life insurance policies

Purchasing multiple guaranteed-issue life insurance policies is a strategy that some individuals use to increase their overall coverage amount.  And while it may be successful, there are a few things to consider when purchasing multiple guaranteed issue life insurance policies to achieve $50,000 in coverage:

1. Policy limits: Each guaranteed issue life insurance policy typically has a coverage limit, so it may be necessary to purchase multiple policies from different insurance carriers in order to achieve the desired coverage amount of $50,000. In doing so, you will now need to fully understand the pros and cons of each insurance policy being purchased.
2. Premiums: Purchasing multiple policies will increase the overall cost of premiums, so it is important to consider the affordability of these additional policies.
3. Underwriting: Each insurance company will have its own underwriting guidelines, so it’s important to check with different companies to see if they will accept multiple policies from the same individual. This usually won’t be an issue when only applying for $50,000 in coverage. However, you will want to inform each carrier of the other policy.

In summary, purchasing multiple guaranteed issue life insurance policies is a strategy that can be used to increase coverage, but it’s important to consider the cost and underwriting guidelines of each before accepting coverage.

The good news is that we here at IBUSA work with a wide variety of different insurance carriers, so when it comes time to apply for coverage, be that with one or multiple insurance carriers, we should be able to meet your needs.

So, give us a call, and let us show you what we can do for you!