To purchase a life insurance policy, most people have to undergo extensive medical evaluations and health history checks. It’s a lot less risky for the insurance company to insure a healthy person than a sick one.
However, you can get life insurance even with a history of health issues. Some policies, like guaranteed life insurance, cater specifically to individuals who have struggled to get traditional life insurance based on their risk factors.
What is guaranteed issue life insurance?
Guaranteed issue life insurance is a type of policy that does not require any health screenings or medical exams to get approved.
Almost everyone who applies gets coverage, so it’s an ideal option for seniors with a history of health problems or individuals who don’t qualify for traditional life insurance. Guaranteed life insurance is sometimes called burial life insurance.
Guaranteed life insurance is a whole life policy, meaning it offers coverage for your entire lifetime. It also builds cash value overtime. When you pass away, your beneficiaries receive the death benefit, which can be used to pay for things like your funeral or unpaid debts.
In most cases, you have to be a policyholder for a minimum of two years before your beneficiaries can claim the death benefit.
How does a guaranteed life insurance policy work?
With a guaranteed life insurance policy, there is no medical exam or health checks. Getting coverage is simple. Most insurance companies allow you to get a quote online, where you submit your state, gender, birthday and desired coverage amount, and get an instant rate. You can even purchase a policy on the spot.
As long as you continue to pay the premiums, your policy stays in effect. Every time you pay your premium, the insurance company allocates some of that money into your cash value account that is invested and grows overtime. As the money grows, you can take it out and spend it, or it can be added to the death benefit.
When you pass away, your beneficiaries will receive the death benefit, assuming the policy has been active for at least two years. As an alternative, you can also designate a funeral home as the beneficiary so the money goes directly towards your funeral costs.
Guaranteed life insurance policies have a pretty low death benefit cap, which is typically around $25,000.
How much is guaranteed issue life insurance?
Guaranteed issue life insurance coverage tends to be expensive. Because there is no required medical exam, the insurance company assumes that you are high-risk and charges you more as a result.
To help you determine an average rate for guaranteed issue life insurance, we received several sample quotes for a 70-year-old woman living in California, with $25,000 in coverage. Here are the rates we got:
- AIG Direct: $204 per month
- AAA Life: $175 per month
- Gerber Life: $186 per month
Guaranteed life insurance premiums are solely based on your state, age, gender and the amount of coverage you want. The older you are, the more money you’ll pay. Additionally, some states are more expensive for life insurance than others. The only way to determine how much you’ll pay is to get a personalized quote.
If you’re on a budget, guaranteed life insurance might not be the best option for you. A better choice would be simplified whole life insurance. Simplified whole life coverage does require a medical questionnaire, but the insurance company isn’t as strict about pre-existing conditions.
Is guaranteed life insurance worth it?
There are a number of benefits to guaranteed life insurance.
First, it’s guaranteed—it’s almost impossible to get denied coverage, even if you have multiple health risks. It’s fast and easy to get coverage, and there’s no waiting period for approval. The other major benefit is that guaranteed life insurance helps cover end-of-life expenses, so your loved ones don’t have to pay any out-of-pocket costs.
However, guaranteed life insurance has downsides. The premiums are incredibly expensive, and you don’t get much in return. Most insurance companies cap the death benefit at $25,000. While that’s usually enough to cover funeral costs, it’s not enough to financially support your loved ones for the future.
Despite the term “guaranteed,” it is possible (although unlikely) that you could get denied coverage. For example, if you live in a nursing home, or if you have been diagnosed with a terminal illness, you might not qualify for coverage. There is also an age cap. If you’re 80 or older, you probably can’t get a new policy.
So, is guaranteed life insurance worth it? Yes—but only for some people. Before you purchase guaranteed life insurance, you should apply for traditional life insurance first. Guaranteed coverage should only be used as a last resort option.
Who is guaranteed life insurance best for?
Here are the people who can benefit from a guaranteed issue policy:
- People with significant health risks
- People who have been denied traditional coverage
- People who only want coverage for end-of-life expenses
Here are the people who should look into a different policy, like simplified whole life insurance:
- Young people under age 50
- People with no or few health risks
- People who want a lower monthly premium
- People who want a high death benefit
Frequently asked questions
What is the best guaranteed issue life insurance?
There isn’t one guaranteed issue life insurance company that is the best for everyone. Every company offers slightly different rates and coverage amounts. If you’re considering a guaranteed life insurance policy, do some research to find a company in your area that offers the amount of coverage you want, has good customer service reviews, and is financially strong.
How much does guaranteed life insurance cost?
The price of guaranteed life insurance is different for everyone. The premium is based on your state, gender, age, and the amount of coverage you want. The older you are, the more you’ll pay for insurance. Higher coverage amounts also equate to a more expensive rate.
What is the age cutoff for guaranteed life insurance?
Most insurance companies only sell guaranteed issue coverage to individuals between the ages of 50-80, although the exact age range might differ slightly.