In a landscape where traditional life insurance policies often hinge on rigorous medical evaluations, guaranteed life insurance offers an alternative for people dealing with significant health risks or previous denials from insurers. Unlike other options, guaranteed life insurance, a form of whole life insurance, bypasses the need for a medical exam for approval. Guaranteed life insurance offers a number of unique characteristics. While traditional policies may tout cash value as a benefit, the cash value isn’t a significant factor for guaranteed issue life insurance due to its low coverage amounts. Bankrate can help you understand the nuances of guaranteed life insurance, along with its advantages and drawbacks, to help you make an informed decision regarding your insurance needs.

What is guaranteed issue life insurance?

Guaranteed issue life insurance, also known as guaranteed life insurance or guaranteed acceptance life insurance, is a type of policy that does not require any health questionnaires or medical exams to get approved.

Without a required medical exam as a potential blocker, most eligible applicants can get coverage. Guaranteed issue life insurance may be a great option for seniors with a history of health problems or individuals who don’t qualify for traditional life insurance.

Guaranteed life insurance is a whole life policy, meaning it offers coverage for your entire lifetime. When you do pass away, your beneficiaries can begin the death benefit claim process to help pay for things like your funeral or unpaid debts.

In most cases, you have to be a policyholder for a minimum of two years, depending on the policy terms, before your beneficiaries can claim the full death benefit. If you die within the first few years of policy activation, your beneficiaries may only receive partial benefits. This attribute in guaranteed issue life insurance is called a graded death benefit.

Who is eligible for guaranteed issue life insurance?

Guaranteed issue life insurance is designed for individuals who may have difficulty obtaining traditional life insurance due to health issues or other factors. Requirements will vary depending on the insurance provider, but guaranteed issue life insurance is typically intended for people between 50 and 80 years old with serious health issues.

How does a guaranteed life insurance policy work?

Guaranteed life insurance functions by offering coverage without the need for a medical exam, relying instead on a health questionnaire. Quotes can be obtained online with minimal information, and you may be able to purchase a policy instantly. As long as you continue to pay the premium, the policy will be valid. A portion of each payment contributes to a cash value account, which grows over time. It’s important to note that the cash value accumulation in guaranteed issue policies is typically lower compared to other permanent life insurance options. Upon the policyholder’s passing, beneficiaries are entitled to the death benefit, provided the graded period has passed. The benefit can also be assigned by the policyholder to cover funeral expenses directly.

How much is guaranteed issue life insurance?

Guaranteed issue life insurance coverage tends to be much more expensive than term life insurance because it covers high-risk parties. For instance, an older individual who seeks a guaranteed issue policy may pay around upwards of $200 per month for a $25,000 policy. In contrast, a slightly younger individual with an average medical history may pay less than $100 per month for a $250,000 term life insurance policy. However, paying a high premium for guaranteed life insurance may be worth it if you have been rejected by traditional life insurance companies.

Guaranteed life insurance premiums are generally issued based on your state, age, gender and the amount of coverage you want. The older you are, the more money you will likely pay. The only way to determine how much you’ll pay is to get a personalized quote.

If your health is average or better, guaranteed life insurance might not be the best option for you. Instead, you may want to consider first applying for traditional life insurance, such as term or whole life, because you can get much more coverage for your dollar.

Is guaranteed life insurance worth it?

Now that you know what guaranteed life insurance is, you may be wondering if it’s a good fit for you. Guaranteed life insurance may be a great option for people who have high-risk health issues and would like coverage for end-of-life expenses. When deciding whether guaranteed life insurance is the right fit for you, it may be helpful to review the following pros and cons.

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  • Does not require submitting medical questions or completing a medical examination to qualify.
  • Simple application process.
  • It can cover final expenses.
  • Applicants could receive approval instantly.
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  • The average premiums are high relative to the low coverage amount.
  • Most insurance providers cap the death benefit at $25,000, which is typically enough to cover funeral expenses but not take care of loved ones. Additionally, death benefits are often subject to waiting periods.
  • If you live in a nursing home or have been diagnosed with a terminal illness, you might not qualify for coverage.
  • You generally have to be between the ages of 50 and 80 to purchase a new policy.

Who is guaranteed life insurance best for?

Here are the people who might benefit from a guaranteed issue policy:

  • People with significant health risks
  • People who have been denied coverage
  • People who only want coverage for end-of-life expenses

Here are the people who may want to consider looking into a different life insurance policy:

  • People under age 50
  • People with no or few health risks
  • People who want a lower monthly premium
  • People who want a higher death benefit

Guaranteed life insurance alternatives

Of course, guaranteed life insurance is not the only option for policy seekers with health complications that make them high-risk for term life insurance providers. The following policy types may also be worthwhile options to consider.

Insurance policy type Meaning
Universal life A universal life insurance policy is a flexible type of permanent life policy — you can adjust your death benefit. It also comes with a cash value portion that grows depending on market interest rates.
Final expense life Final expense insurance pays for end-of-life costs, such as medical care and burial or funeral costs.
Whole life Whole life insurance covers you for the rest of your life and also includes a cash value account that you could use prior to death.
Term life Term life insurance covers you for a set period, usually for 10, 20 or 30 years.

What is the process of applying for guaranteed issue life insurance?

Typically, the process of applying for guaranteed issue life insurance is simple. Applicants will usually be asked several basic biographical questions like age, gender and state of residence. You will not be asked to go through a medical exam or answer health questions. Approval is often granted quickly.

Frequently asked questions

    • The best life insurance company varies for everyone. First, you may want to speak to a licensed insurance agent about your specific needs. For instance, if you have health issues and have been turned down by traditional insurance, your agent may point you towards guaranteed issue life insurance.When you find out what type of coverage you are looking for, you may want to request quotes from the top insurance providers in your area. Finally, you may want to look into factors such as customer service and mobile app experience. Together, these steps may help you find the best life insurance company for you.
    • The answer to how much life insurance you need depends on various factors, like your age, income, amount of debt and future burial expenses. To estimate how much you need, you may want to start with an online calculator like Bankrate’s life insurance calculator. If you need help figuring out how much coverage you need, consider reaching out to a licensed life insurance agent or certified financial planner.
    • Most insurance companies only sell guaranteed issue coverage to individuals between ages 50-80, although the exact age range might differ slightly.