What is Guaranteed Life Insurance?
A Guaranteed Life Insurance or Guaranteed Acceptance Life Insurance is a type of insurance policy where your coverage is guaranteed, and you can’t be turned down because of health issues. This insurance is often used by people who might not otherwise qualify for regular life insurance because of age or health-related conditions. It’s often called Burial or Final Expense Insurance and it is a popular form of insurance today for people in the senior market.
These policies have certain Characteristics to them that make them differ from other traditional life insurance policies. For example, there are no health exams. You can’t be turned down because of medical issues, your acceptance, like the name of the insurance, is guaranteed. These are whole Life Insurance policies that will last the life of the insured person as long as they continue to still pay the premium. The premiums on the policy will not increase, the payment will stay the same for the entire time the person keeps the policy in force. You can’t be cancelled for any reason.
The policy will build cash value that can be borrowed against, but that will decrease the amount of the face value and interest is charged because it is a loan against the policy.
These policies typically will have a two year waiting period, meaning if the insured should pass away during the first two years the policy will not pay the face value, but instead will pay all the premiums paid up to that point, plus a set amount of interest.
Who is Guaranteed Life Insurance For?
The title of this article is “Guaranteed Life Insurance for Seniors” but this life insurance can be for others as well. If you have been turned down for life insurance for some health condition, (and yes it’s legal to deny people life insurance because of a health condition) that makes it difficult to find a company that will insure you. This denial is reported to the MIB or Medical Insurance Bureau and that is a red flag for a carrier to not insure you because you’ve been denied before, therefore you must be a risk for coverage and the carrier just simply denies you. This happens quite a bit, people will believe that they can just apply to another company and get coverage, when they do they find out that the insurance company already knows about your previous denial and refuses you coverage. So even if you’re not a senior citizen this coverage still might work for you. Some coverage might be better than no coverage. Also if you become ill, this might work for you as well because there are no medical questions, so you might find a policy there where you can’t find one anywhere else.
What are some of the downsides to Guaranteed Issue Whole Life?
There are a few drawbacks to these types of policies. One is that they have higher premiums than traditional life insurance policies. This is because they are a much heavier risk for the insurance companies and this will offset some of the cost. Unlike traditional insurance policies there are often no medical exams or qualifying questions before the policy is issued.
Also, unless the policy has been in force for a specific amount of time the beneficiaries won’t receive the death benefit should the insured person pass away, typically there is a two year period for these policies to pay the full face amount . This is known in insurance terms as a graded insurance policy. An example would be If the insured were to die in the first two years of issuance the life insurance company would issue a refund of the premiums, plus interest in lieu of the actual full benefit of the policy. This of course, protects the insurance company from an individual who is terminally ill from taking advantage of the insurance carrier and get a benefit for his family without paying premiums into the policy to cover the losses that the insurance company will have with these types of life insurance policies.
Who should apply for this type of insurance policy?
Again, this is a policy for people who have health issues where the applicant typically can’t get traditional Term or Whole Life Insurance and it will be more expensive. It is used when people who want to get covered but find that they can’t get covered by regular Term or Whole Life Insurance policies. Also, the face amounts on these types of policies are smaller than the other types of policies, but it will provide coverage for those who need it.
Is Guaranteed Issue Life Insurance a good option?
Guaranteed Issue Life insurance is a type of insurance that should only be considered if other life insurance policies aren’t an option. If you’re somewhat healthy and you’re looking for a policy that will help your family pay for your final expenses, you might be better off looking at what’s called simplified insurance, where there is no medical exams, but the policy will be issued upon verification from your doctors on your state of your health. They will ask you medical questions, they will won't even check your prescriptions that you’re taking or check with the MIB or Medical Insurance Board.
Which Companies Cover Guaranteed Issue Life
AIG, Gerber Life, Colonial Life Among Others
So, there are a few companies that will provide you with a Guaranteed Issue Policy, they are similar in a lot of ways, there might be some price differences and face amounts. They will all usually have the two-year waiting period and they will typically have the same regulations.
Now you might want to speak with a Life Insurance Agent that has access to multiple carriers, as they will have insights into whether or not you will qualify for a more traditional type of insurance policy and they can search through many carriers that could possibly provide you an option. If you have been denied before, getting in touch with one of them might save you time and energy as this is what they do and will have access to the information to get you insured as quickly as possible so that you can move on to living your life.
I hope this article has been helpful to you. I am available to help with any questions or concerns that you might have. I am a licensed life insurance specialist and I deal with these types of conditions on a regular basis and I would love to be of help in any way that I possibly can.
Aware Insurance Services