We’ve all seen the commercials where a minor TV celebrity tells us about a life insurance policy that doesn’t require a medical exam. But for many people, the only way to buy and hold insurance protection is through these “guaranteed issue” or “guaranteed acceptance” individual life insurance policies. Guaranteed issue individual life insurance insures any or everyone who buys a policy, with no medical examination or medical questions asked, and this type of policy is usually targeted to senior citizens who have a difficult time obtaining insurance after the age of 65. These guaranteed issue individual life insurance policies should not be confused with “quick issue” or ‘simplified issue” individual life insurance since insurers for these other parties are required to ask medical history questions but do not require a medical exam.
If there sounds like a catch, you’re right. In fact, there are a few. Most guaranteed issue life insurance provide only for funeral expenses, and some insurers will only sell policies to people between the ages of 50 and 85. If you want a quarterly or semi-annual payment plan, you will probably pay more for the policy. And also, since guaranteed issue life insurance policies don’t have medical information to set their premiums, the cost can be exorbitant. Other policy types, such as term life insurance, use medical information on policy holders in order to offer people who can prove they are in good health the lower rates. Because there is no medical exam, insurance companies have no information other than a policy holder’s gender and age to be able to base premium rates.
Guaranteed issue life insurance is probably a less desirable option for healthy individuals because of the high premiums and the low face amount for the death benefit. Many people often end up spending more in paying for the premiums than their beneficiaries ever receive from the guaranteed issue life insurance company that sold them the policy.
Guaranteed issue life insurance policies are usually bought to cover burial expenses, medical bills and other debts that might be left in the estate. On the plus side, the cash value in a guaranteed issue life insurance can be used to cover emergency expenses while the policy holder is still alive. The money can be withdrawn, the policy ended or the policy holder can negotiate for a lower death benefit. The cash value can even be borrowed against with the benefits intact once the loan is paid. But most guaranteed issue life insurance policies have a limited death benefit amount, and it’s rare for a policy to be more than $50,000. The nice thing is we currently offer up to $500,000 in our guaranteed life insurance policies.
Guaranteed issue life insurance policies are definitely not for everyone, but they can be great because they are so simple and convenient. If you’ve been turned down for other policies because of your age or health and you have benefits to pass on to a beneficiary, guaranteed issue life insurance might be your best or only option.
