When looking to purchase a burial insurance policy with no waiting period, the main thing you want to be on the lookout for is an insurance policy that will provide you “full” coverage from the moment you begin making payments.
This may seem like an “obvious” thing to EXPECT from a life insurance policy; the truth this is not always the case with many burial life insurance policies!
This is why…
We wanted to take a moment and discuss some of the common mistakes that many folks make when looking to purchase a burial life insurance policy, as well as highlight some key terms and definitions you’ll want to understand before applying for coverage with any particular company.
Questions that will be addressed in this article will include:
- What is a burial life insurance policy?
- What are the most common “types” of burial life insurance policies?
- What is the difference between a Simplified issue life insurance policy and a Guaranteed Issue Life Insurance Policy?
- What is a graded death benefit?
- What are the most important things I should ask when choosing a policy for me?
- How can I improve my chances of finding the “best” burial life insurance policy for me?
So, let’s dive right in.
What is a burial life insurance policy?
Technically speaking, there really isn’t such a thing as a “burial life” insurance policy or a “final expense insurance policy.”
Instead, these are just terms used in the industry to describe smaller life insurance policies, usually between $10,000 to $25,000, with some going as high as $50,000, for the primary purpose of paying for one’s final expense.
These burial policies tend to differ from traditional term or whole life insurance policies because of a “reduced-risk” to an insurance company based on the smaller death benefit. As a result, many insurers won’t require an individual to have to take a medical exam to qualify for coverage.
In some cases, an individual may not even need to answer any medical questions.
Which brings us to our next topic, which is…
What are the most common “types” of burial life insurance policies?
The most common burial life insurance plans for seniors are Simplified Issue Life Insurance Policies and Guaranteed Issue Life Insurance policies.
many individuals may think that these two “types” of final expense insurance policies are alike, the truth is that each of them are actually quite unique and will both have their own unique set of pros and cons.
Therefore, we want to take a moment and briefly describe how each of these two types of life insurance policies work and provide you with a general idea of when each of these types of life insurance policies can be beneficial to an individual.
Simplified issue burial insurance VS Guaranteed issue burial Insurance
There are two main differences between a Simplified Issue Burial Life Insurance Policy and a Guaranteed Issue Burial Life Insurance Policy. The first main difference will be how one can qualify for coverage.
When it comes to applying for a Simplified Issue Burial Life Insurance Policy, applicants will still need to be able to “medically qualify” for coverage.
Which means that…
if someone has been previously diagnosed with some type of pre-existing medical condition, it’s quite possible that they may not be able to qualify for a Simplified Issue Life Insurance Policy.
In this respect, the term “simplified” is only referring to not being required to take a medical exam to qualify for coverage, not due to the “ease” of which one will be approved.
That said, however…
Once approved for coverage, these “types” of policies will offer immediate coverage to the insured for both natural and accidental causes of death.
Which brings us to…
The second way in which a Simplified Issue Burial Life Insurance Policy will differ from a Guaranteed Issue Burial Life Insurance Policy because unlike a Simplified Issue Policy, which will require an applicant to be able to “medically qualify” for coverage, a Guaranteed Issue Life Insurance Policy won’t.
Instead, applicants applying for a Guaranteed Issue Life Insurance Policy will only need to meet three basic requirements.
- First, they will need to meet the minimum age requirement of the policy being applied for (usually 50 years of age and above with some exceptions).
- Second, applicants will need to be US citizens.
- And third, all applicants will need to permanently reside in a state where a Guaranteed Issue Life Insurance Policy is offered.
Which makes qualifying for a guaranteed issue burial insurance policy, much easier than qualifying for many other “types” of burial insurance policies.
The only problem is…
These life insurance policies are going to contain a provision within the policy, which is commonly referred to as a Graded Death Benefit, which will prevent these “types” of policies from covering Natural Causes of death for a set period of time once your policy begins.
Which is generally considered the biggest disadvantage of a Guaranteed Issue Life Insurance Policy!
What is a graded death benefit?
Simply put, Graded Death Benefits are “clauses” written into most (if not all) guaranteed issue life insurance policies which state that a guaranteed issue life insurance policy won’t begin to cover an individual from “natural causes” of death until a certain waiting period has elapsed.
This “waiting period” will usually last 2 to 3 years and is designed to prevent someone who is seriously ill from purchasing these types of policies and then collecting a death benefit just a few days, or months later.
This may seem extremely unfair; it’s important to remember that a guaranteed issue life insurance policy isn’t going to require you to take a medical exam or answer any health-related questions.
At the end of the day, a graded death benefit really is the only thing that allows insurance companies to be able to offer one of these “types” of life insurance policies.
The only problem is…
That a lot of times, individuals will end up purchasing a Guaranteed Issue Life Insurance Policy, thinking that they will be insured right away, only to learn that this isn’t the case.
As a result…
Many folks will often fail to realize that often times, the “length” of one’s Graded Death Benefit waiting period (think two years vs. three years), should be the most important factor in determining “which” Guaranteed Issue Burial Life Insurance Policy is the BEST for you!
This brings us to our next topic, which is…
What are the most important things I should ask when choosing a burial insurance policy for me?
When considering your options, the four most important questions you’re going to want to ask about any burial life insurance policy you’re considering will be:
Will I need to answer any medical questions or take a medical exam in order to qualify for coverage?
The answer to this question will tell you whether or not you are being offered a Traditional Life Insurance Policy, a Simplified Issue Life Insurance Policy, or a Guaranteed Issue Life Insurance Policy.
Does the policy provide immediate coverage for natural causes of death? Or does the policy contain a graded death benefit (if so, how long is the graded death benefit)?
The answer to this question will let you know whether your new life insurance policy will provide you full coverage without a waiting period.
How long will the policy remain in force (term vs whole life)?
Most individuals looking to purchase a burial life insurance policy aren’t interested in policies that they could potentially “out-live,” which is why small whole life insurance policies tend to be more popular choices for those seeking burial insurance.
Will the price of this policy stay the same for as long as I own the policy?
“Be wary of any policy which can increase in cost as one ages because these cost increases could make your policy unaffordable later on in life!”
How can I improve my chances of finding the “best” burial life insurance policy for me?
Probably the “best” thing that an individual can do to help ensure that they find the “best life insurance” for them is to be sure to take their time when initially shopping for insurance and to be sure that right from the beginning that they are completely honest with their life insurance agent!
This means that…
Before you just decide to apply for a life insurance policy you should fully understand what your life insurance needs are.
You should also have a good idea about what options may be available to you, and you should be sure that your agent is, not only experienced with helping folks with a medical condition find coverage, he or she should also have access to a wide variety of different life insurance products so that they aren’t forced to apply a…
“one size fits all approach.”
To your needs.
So, what are you waiting for? Give us a call today and experience the IBUSA difference.