Guaranteed issue life insurance is not like term or whole-life insurance. It doesn't require a medical exam or health questions. A small death benefit is included to help your family pay for funeral costs and medical bills.
There are pros and cons to guaranteed issue life insurance. Paying funeral costs can appeal to seniors with limited income, severe health conditions or family needs for around $10 per month may be attractive.
Working with an agent who can shop the market on your behalf for life insurance is crucial for those with medical conditions. Experienced agents can help you find the best life insurance companies based on your health history.
Let's suppose your policy has a Graded Benefit. In such a case, your beneficiaries get a refund of 110% on the premiums that you have paid. If you are killed by suicide or in an accident, your heirs get a full refund. Your beneficiaries would receive $100 to $110 if you paid $100 for premiums. The cause of death will vary.
Life insurance policies may offer insurance coverage for as high as one million dollars.
As with other types life insurance, the price you pay for your policy may change depending upon factors like your age, hobbies or medical conditions. Guaranteed issue policies are set prices based on the age of the applicant.
The beneficiary would not be entitled to the death benefit if the insured dies before the waiting period has expired.
Most life insurance companies will give a refund of your premiums instead of the death benefit if you die in the first few year of your policy. Investopedia reports that this practice is not intended to prevent the immediate payment of large amounts to critically ill people who sign up for a policy to ensure their loved ones receive a death benefit.
Guaranteed life insurance companies frequently use graded deaths benefits to protect them from severe-ill customers.
Guaranteed-issue life insurance covers people who have specific health issues. This makes it the most expensive type. A 60-year-old can pay upwards $150 per month. In contrast, death benefit amounts are very low at $25,000 and $25,000.
Seniors and those at moderate to high risk are best served by simplified issue life insurance. An extensive medical questionnaire is required. A slightly higher coverage amount is available.
Eligibility typically depends on your age, with policies often available to individuals between the ages of 50 and 85. The requirements may vary by insurer, but medical underwriting is not part of the application process.
While you can't be denied coverage for health reasons, most policies include a waiting period, often 2-3 years, before the full death benefit is paid out. If you die during this period, the beneficiaries may only receive a refund of premiums paid, plus interest.
Guaranteed issue life insurance can be a good option for individuals who have difficulty qualifying for traditional life insurance due to age or health issues. However, because of the higher premiums and limited coverage, it is important to consider whether it meets your financial goals and needs.