Guaranteed issue life insurance means just that. If you meet a couple requirements, you are guaranteed to be accepted, which is why guaranteed issue is also known as guaranteed acceptance life insurance, i.e. life insurance with no health questions.
The requirements are pretty simple. In most situations, you must be within the age limits, typically ages 50-80, and you must reside in a state where the guaranteed issue policy is available.
If you meet these two requirements, you will qualify for a guaranteed acceptance coverage, which is no health questions life insurance.
So, that brings us to the question,
What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance is a type of life insurance policy that is available to individuals who may not be able to qualify for traditional life insurance coverage due to health conditions or other risk factors.
Guaranteed issue policies do not require a medical exam or health questionnaire and are typically available to individuals who are aged 50 or older.
Typically, a guaranteed issue policy is going to be a small whole life insurance policy. That means the coverage will typically last until you die and premiums will stay the same. However, this is not always the case so be sure to ask your agent what type of insurance your policy is.
Under (most) guaranteed issue policy, the death benefit and premiums are fixed and guaranteed, and the policyholder is not required to answer any health questions or undergo a medical exam. However, guaranteed issue policies typically have higher premiums than traditional policies, as the insurance company is taking on a higher level of risk.
Guaranteed issue life insurance policies may be a good option for individuals who have a pre-existing medical condition that would make it difficult or impossible to qualify for traditional life insurance coverage.
They may also be a good option for individuals who are looking for a simple, straightforward life insurance policy with a guaranteed death benefit.
However, it is important to carefully review the terms and conditions of a guaranteed issue policy to ensure that it meets your needs and financial goals.
Guaranteed issue policies may have lower death benefits and higher premiums than traditional policies, and the premiums may increase over time.
Guaranteed issue life insurance policies will also typically contain a graded death benefit.
What is a Graded Death Benefit?
A graded death benefit is a “clause” or “provision” written into most (if not all) guaranteed issue life insurance policies that states that the true death benefit for natural causes of death will only be in affect after the policy has been inforce for a set period of time (typically 2-3 years depending on the carrier).
During this “waiting period” the guaranteed issue life insurance policy will provide full coverage in the event that the insured dies from an accidental cause, but will not provide any death benefit coverage should the insured die of natural causes.
Each life insurance company that offers a guaranteed issue policy, will have their own graded death benefit clause which is why it’s important to carefully review the terms and conditions of a graded death benefit policy to ensure that it meets your needs and financial goals.
Term Life Insurance vs. Whole Life Insurance
It is important to understand the difference between term life vs whole life when discussing guaranteed issue policies.
The most important difference you need to know is that term life coverage is temporary and whole life coverage lasts your entire lifetime.
This is an important distinction because there are companies out there that offer final expense burial insurance as a term life policy. These term policies have increasing premiums every five years, so that after a decade or two, the premiums have increased dramatically.
And not only do the term life premiums increase, but the term policy comes to an end upon a certain age specified in the contract.
The good news is these policies are typically not guaranteed acceptance, so if you are looking for a guaranteed issue no health questions asked life insurance policy you can usually be confident that it is whole life insurance and not term.
Guaranteed Issue Life Insurance Rates
Please check out our different articles that show whole life insurance rates by age for:
It is worth pointing out some of the key benefits of whole life insurance. These three benefits are guarantees, exclusive to a whole life policy.
Three benefits of whole life insurance include:
- Guaranteed Premiums
- Guaranteed Cash Value
- Guaranteed Death Benefit
Guaranteed premiums means that your premiums are locked in. With fixed premiums you will know what your payment for life insurance will be.
The advantage here is with budgeting, since you don’t want to be surprised with a price hike in retirement.
Guaranteed cash value means that your cash value will grow as you make more premium payments. And over enough time, you can use your cash value to buy a paid-up policy, where no more premium payments are due.
Guaranteed death benefit simply means that your death benefit is guaranteed to be paid out to your beneficiary when you die, as long as you met your obligation of paying your policy premiums.
Pros and Cons of Guaranteed Issue Life Insurance
Let’s start with the obvious benefit of guaranteed acceptance life insurance, virtually anyone can qualify as long as they meet the 2 main requirements of age and domicile.
So, you can get life insurance without health questions or an exam simply by being in the age range and residing in a state where the product is sold.
The benefit is, if you have a pre-existing condition, such as cancer, heart disease or stroke, you can still qualify for life insurance, because these are no health questions life insurance policies.
Which is great, because those health conditions will usually be an automatic decline from most life insurance companies that require you answer health questions or take an exam.
Another advantage of guaranteed issue life insurance is that it is whole life, which build cash value. The cash value can be accessed via withdrawals or loans, so if you are in a financial bind, you have easy access to money.
Cash value can also be used to pay your premiums for a period of time. You can alert the insurance company to your need and they can help you allocate cash value to pay your premium.
A negative of guaranteed issue products is the price. Because there are zero health questions and no medical exam, the insurance company has no idea your current health status.
As a result, the company will charge a higher cost per dollar of coverage than other types of life insurance.
Graded Death Benefit
Another disadvantage of guaranteed issue is the graded death benefit, which the company puts into the policy since you are getting life insurance with no health questions.
A graded death benefit means the full death benefit is not paid in full until after a 2 or 3 year period has passed.
As mentioned above, this is because the insurer has no idea your health status and they use the graded death benefit to protect themselves.
After the 2 or 3 year graded death benefit period has passed, the full death benefit coverage is in effect.
And note, the full death benefit will be paid from day one if death occurs due to an accidental death.
Best Guaranteed Issue Life Insurance Companies
The top 5 best companies offering guaranteed issue life insurance policies are:
These companies offer no health questions life insurance for ages 50-80.
You can get coverage starting from $5,000 to $25,000.
Cash Value Whole Life Insurance that can be borrowed against or used to pay premiums for a period of time.
A 2 year graded death benefit if death occurs in the first 2 years due to natural causes.
How Do I Get NO Health Questions Life Insurance?
The application process is very straightforward. You can simply click on our quoter to see final expense quotes and click apply and one of our agents will reach out to you shortly. Additionally, you can reach out to us by phone or email.
The typical information required on your application includes:
- Full Legal Name
- Date of Birth
- Social Security Number
- How Much Coverage You Are Applying For
- Your Beneficiary Name
- How You Plan to Pay for Coverage
- Who Will Pay for Coverage
So, does that mean I can take out a guaranteed issue policy on someone else?
The short answer is yes, there are times when you can get life insurance on someone else.
The longer answer, is it depends. You must have the consent of the person who you are taking out the life insurance coverage on. If a parent or sibling agrees to get the life insurance on their self, you can be the payor of the policy on their behalf.
Guaranteed issue life insurance is a great option if you have run out of alternatives. However, it is always better to try and find coverage that goes in force immediately, rather than after two years.
So, our advice would be to give the team at IBUSA a call and see what we can do for you. We work with dozens of top life insurance companies and it may be we can find a better alternative for you.
So what are you waiting for? Give us a call today and experience the IBUSA difference!
I provide support for my 2 elder sisters- Pam is 73 and in a care facility in NJ, Deb is 71 in senior housing in MA and our family burial plot is in NY. I want to take out a small immediate full payout policy on each so I can have the resources to pay for cremation and transit of items to me for a later trip home with them to the family plot if things happen during COVID times and I cannot travel now. I would appreciate information on this option
It sounds like you are looking to purchase a life insurance policy that each of your sisters would need to be able to “medically qualify” for. For this reason, it would be best for you to give us a call so that we can learn a little bit more about each one of your sister’s medical “status” before we make any assumptions about what they may or may not be able to qualify for.