The term Guaranteed Issue life insurance often comes up when researching insurance options but it is rarely explained. What it means is that a person is GUARANTEED to qualify for this type of life insurance policy no matter what health issues they may currently have. Many people think “guaranteed” refers to the death benefit, but it actually refers to the application and issue process.
Usually there are no health questions and no medical exams with these types of policies. This is a great product for people who have health issues. The insuring company needs to know your personal information such as name, address, date of birth and social security number. They also need to know who you want to be your beneficiary. That’s about it. They aren’t concerned if you smoke, if you're overweight or if you have any health conditions like diabetes, circulatory issues, COPD, etc.
Two things to remember when considering guaranteed issue policies:
- These policies are typically "graded". That means if the insured passes away within the first 2 or 3 years of the policy, the beneficiary will not receive the full death benefit. The beneficiary will usually receive the premiums paid up to that point plus some interest OR a much smaller portion of the full death benefit. Read the fine print carefully when purchasing this type of policy. You want to know when the full death benefit will start and what amount will be paid to the beneficiaries prior to that time. These amounts will vary between insurance companies.
- Guaranteed issue whole life policies are usually more expensive than standard whole life policies.This is the right option for someone ONLY if they have serious health issues. Many people choose to buy a guaranteed policy because it’s quick and easy and they think it’s all they will qualify for. However, if someone is willing to answer a few health questions, there are often less expensive options available that offer better coverage.
Not sure if you need a guaranteed issue life insurance policy? Call us or schedule a quick online video consultation. We can talk about the health issues you have and determine the best option.