Did you know that there are different types of life insurance policies available? If you’re in the market for life insurance, it’s important to understand the differences between these policies so you can choose the one that’s right for you. One type of policy you may have heard of is Guaranteed Issue Life Insurance. Let PowerPACplus take a closer look at what this policy offers and what policyholders need to know about it.
What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance, also known as guaranteed acceptance life insurance, is a type of whole life insurance policy that doesn’t need you to answer health questions, take a medical exam, or give an insurance company access to your medical and prescription data. It’s also known as “no-questions-asked life insurance” or “no-questions-asked final expense insurance.”
Isn’t that fantastic? But there’s a catch. There is usually a waiting time with guaranteed issue life insurance. Your beneficiaries will not get the policy’s death benefit if you die within the waiting period. The majority of policies have a two-year waiting period. It’s three for some. This isn’t a ruse of any type. In reality, if you die during the waiting period, the insurance company will reimburse all of your insurance premiums, plus interest, normally at a rate of 10%, to your beneficiaries.
Your beneficiaries will still receive something, but it will be less than you had hoped for. Insurance firms imposed the waiting period because otherwise, anyone may apply for insurance on their deathbed and pay a few hundred dollars to get a $25,000 reward for their family. This would be impossible for any insurance firm to survive. Guaranteed issue life insurance is for sick persons who might otherwise be unable to obtain coverage.
How does it work?
Medical underwriting is required for most life insurance plans. Exam findings, blood tests, medication history, and other factors are used by medical underwriting to assess an applicant’s health. An underwriter with experience in health issues and analyzing results will decide whether to approve or deny the insurance application.
The underwriter also assigns a rating class, which influences the amount of insurance premium the applicant will pay. Consumers can pay premiums that are appropriate for their health status thanks to medical underwriting. People who are in good health usually pay less than those who are not.
Guaranteed issue life insurance does not necessitate the same level of underwriting data as traditional policies. As a result, the price of a guaranteed life insurance policy will be higher than the cost of a medically underwritten policy. That is the deal for getting rid of the medical exams and testing. Many life insurance policies can cover one million dollars or more in coverage. Guaranteed issue policies, on the other hand, may cap the amount of coverage at $50,000 or $100,000.
How much does it cost?
Other forms of life insurance policies vary in price depending on factors such as age, hobbies, and medical issues. Guaranteed issue life insurance policies, on the other hand, have set costs based on your age at the time of application. Take a look at the pricing in the table below. Methodology: Rates are based on males and females purchasing a guaranteed issue life insurance policy from AIG in March 2022, and may vary by insurer, term, coverage amount, health class, and state. All insurance is not available in every state.
Guaranteed issue life insurance is the most expensive sort of burial insurance since it covers high-risk persons – up to $150 per month for a 60-year-old. Meanwhile, death benefits are modest, topping out at $25,000 in some cases. For the same 60-year-old, a 10-year term life insurance policy with 10 times the coverage would cost around $60.
Who is Guaranteed Issue Life Good For?
This is a guaranteed issue. Certain persons who require life insurance but do not have any other options may be able to obtain it through life insurance. Perhaps they wish to leave money to their heirs to cover funeral costs or other final expenses. Alternatively, they may choose to leave a tiny legacy for their children or grandkids. This sort of life insurance is beneficial to those who:
- Have medical conditions that would make purchasing other types of life insurance, such as whole life insurance, impractical or unaffordable.
- Have a limited life insurance budget
- Are OK with having only a small amount of life insurance coverage, such as $25,00
There are better possibilities if that isn’t you. Universal life insurance policies, for example, can provide higher coverage amounts (much higher, into the millions).
These other options may necessitate a life insurance medical exam, but they may offer the most competitive rates. There are also an increasing number of no-exam life insurance solutions available, particularly for term life insurance consumers.
We hope that this article has provided you with a basic understanding of Guaranteed Issue Life Insurance. As always, if you have any questions or need more information, please don’t hesitate to reach out to us. We are here to help you make the best decisions for your family and your future.