Guaranteed Issue Life Insurance: The Ultimate Guide
Posted in Guaranteed Issue last updated on February 19, 2021
What is Guaranteed Issue Life Insurance?
Guaranteed Issue Life Insurance, just as it sounds, is life insurance that is guaranteed to be issued. Regardless of your health, you can’t be turned down or declined by the life insurance company.
Guaranteed Issue Life Insurance is guaranteed whole life insurance. That means the payments won’t ever increase, the death benefit will not decrease, and the policy will not expire at a certain age as long as the premiums are paid.
Here are the quick facts on Guaranteed Issue Life Insurance:
- Your application for life insurance is guaranteed to be issued.
- There are no medical exams.
- Should be used only as a last resort when no other options for life insurance are available.
- Coverage amounts are often much lower than traditional life insurance.
- Premiums are higher than traditional life insurance.
- Living Benefits may be available.
Let’s take a look at Guaranteed Issue Life Insurance in more detail.
Guaranteed Issue Life Insurance Avoids Medical Underwriting
Traditional life insurance has always meant going through medical underwriting. That would involve the life insurance company not only going through your medical records, but also sending a nurse to your home to poke you with a needle, take your vital signs, and make you pee in a cup.
Guaranteed Issue Life Insurance is different. Because the life insurance company is guaranteed to issue your policy, the medical underwriting is largely unnecessary. That is why guaranteed issue life insurance is so appealing at first glance.
Pre-existing Conditions
With traditional life insurance, there are many factors that go into determining if a life insurance company will accept your application, including the dreaded pre-existing conditions. If you had health issues like diabetes, cancer, etc., life insurance was almost out of the question.
Of course, someone with a pre-existing condition needs life insurance more than someone without, so what is the answer? The answer is guaranteed issue life insurance. Did I mention your approval is guaranteed? Yes, even for people with pre-existing conditions. Those that need it most can still find coverage!
Graded vs. Level Benefits
I know what you’re thinking. Life insurance companies can’t go around passing out policies to everybody. They would go out of business. You’re right, so what’s the catch? The catch is Graded Benefits which, as catches go, isn’t all that bad.
What’s a Graded Benefit? A Graded Benefit is how an insurance company protects itself against loss on the most difficult cases. It simply means that during the first two (or sometimes three) years of a policy, the insurance company will not pay out the death benefit. Instead, it will simply give your beneficiaries all the premiums paid out during the time of the policy plus interest of usually about 10%.
So while the death benefit was not paid out, nothing was lost either since the money paid in is returned. I told you the catch wasn’t all that bad.
How will you know if your policy will have Graded Benefits?
That will be determined by your answer to a few simple health questions.
Here are some examples of the Graded Benefit health questions you might see:
- In the last two years, have you been a patient in hospice, a hospital, or a nursing home for five or more days?
- Are you unable to independently perform routine activities such as bathing, dressing, eating, toileting, or transferring to or from a bed or chair?
- In the last two years, have you been diagnosed with, been prescribed medication for or treated by a healthcare provider for any of the following diseases: Cancer (other than basal cell carcinoma), Tumor, Insulin-Dependent Diabetes, Human Immunodeficiency Virus (HIV), Acquired Immune Deficiency Syndrome (AIDS), or Acquired Immune Deficiency Syndrome-Related Complex (ARC), or any Disorder of the Blood, Kidney, Lung, Brain, Heart, Circulatory System, or Liver?
If all of these health questions are answer “No,” then Graded Benefits probably won’t apply to your policy.
There is one exception where the insurance company will pay out the full death benefit, even if you have Graded Benefits. That exception is if you death is due to an accident. Accidental death will result in the full face amount of the policy being paid to your beneficiaries.
When is Guaranteed Issue Life Insurance a Good Buy?
If you can’t qualify for any other type of life insurance. Remember, Guaranteed Issue Life Insurance should be used as a last resort. But it’s nice to have a last resort, so if you have a health condition that other types of life insurance are not willing to insure, then this type of policy is for you. Some of the health conditions that may disqualify you from traditional life insurance are:
- Terminal Illness
- Cancer
- AIDS
- Dialysis
- In hospice
When is Guaranteed Issue Life Insurance NOT a Good Buy?
If you CAN qualify for any other type of life insurance. Did I mention Guaranteed Issue Life Insurance is a policy of last resort? Last means last so if you can get a different type of life insurance policy, do it. There are even plenty of other ways to get life insurance without a medical exam.
Term life insurance is another option. It’s different because the coverage term has limits versus lifetime protection. It’s a much cheaper option but also harder to qualify for.
Final Expense life insurance may also be an option. It’s a similar type of policy, will be less expensive, but will also be harder to qualify for.
You may also qualify for life insurance through work, although that is not always the best option either.
Is There an Age Requirement to Buy Guaranteed Issue Life Insurance?
Guaranteed Issue Life Insurance is generally not for the young. Most policies will only accept you if you are over 50 years old while a few will offer coverage to those as young as 40.
At the other end of the age spectrum, you’ll find that this type of policy won’t offer coverage to people over 80 years old, with some companies allowing purchases up to age 85.
How Much Guaranteed Issue Life Insurance Can I Buy?
One of the downsides of Guaranteed Issue Life Insurance is the small amount of coverage available. Most insurance companies will only offer up to $25,000 in coverage with some going up to $40,000. The average funeral cost today is around $11,000. That doesn’t leave much left to pay off debts or provide for the care of children.
Insurance companies are hesitant to offer large amounts of coverage on a guaranteed issue basis because these policies generally are purchased by those in the worst health.
Did I mention these policies should be used as a last resort? Just checking again.
The Best Guaranteed Issue Life Insurance Companies
AIG’s Guaranteed Issue Whole Life Policy provides secure, budget-based financial protection that you and your family can count on.
A.M. Best Rating: A (Excellent)
Ages: 50 – 85
Graded Benefits: Yes, during the first 2 years
Amount of Coverage: $5,000 – $25,000
Living Benefits: Chronic Illness Rider at no additional charge. Terminal Illness Rider.
Choose AIG if: You are over age 80. You want the familiarity of the AIG name. You want Living Benefits.
Sample AIG Rates:
| Age & Sex | $10,000 | $15,0000 | $20,000 | $25,000 |
|---|---|---|---|---|
| 50 year old male | $51.92 | $76.89 | $101.85 | $126.81 |
| 50 year old female | $35.83 | $66.70 | $88.27 | $109.84 |
| 60 year old male | $63.17 | $93.75 | $124.33 | $154.92 |
| 60 year old female | $45.14 | $66.70 | $88.27 | $109.84 |
| 70 year old male | $93.14 | $138.71 | $184.28 | $229.85 |
| 70 year old female | $70.41 | $104.62 | $138.83 | $173.03 |
| 80 year old male | $175.15 | $261.72 | $348.30 | $434.87 |
| 80 year old female | $135.12 | $201.69 | $268.25 | $334.81 |
Gerber Life’s Guaranteed Whole Life Coverage can provide the peace of mind that comes from knowing you’ve planned ahead to ease the burden of final expenses.
A.M. Best Rating: A (Excellent)
Ages: 50 – 80
Graded Benefits: Yes, during the first 2 years
Amount of Coverage: $5,000 – $25,000
Living Benefits: None
Choose Gerber Life if: You want the familiarity of the Gerber Life name.
Sample Gerber Life Rates:
| Age & Sex | $10,000 | $15,0000 | $20,000 | $25,000 |
|---|---|---|---|---|
| 50 year old male | $44.09 | $65.68 | $87.27 | $108.86 |
| 50 year old female | $34.47 | $51.24 | $68.02 | $84.79 |
| 60 year old male | $63.89 | $95.38 | $126.87 | $158.36 |
| 60 year old female | $51.06 | $76.13 | $101.20 | $126.27 |
| 70 year old male | $99.18 | $148.32 | $197.45 | $246.59 |
| 70 year old female | $75.53 | $112.84 | $150.15 | $187.46 |
| 80 year old male | $247.32 | $370.52 | $493.72 | $616.92 |
| 80 year old female | $176.37 | $264.09 | $351.82 | $439.55 |
Great Western’s Guaranteed Assurance has a unique design to help pay for your final expenses and includes important riders that will better protect your family.
A.M. Best Rating: A- (Excellent)
Ages: 40 – 80
Graded Benefits: During the first 2 years only with certain health conditions
Amount of Coverage: $1,000 – $40,000
Living Benefits: Terminal Illness and Chronic Illness if you qualify for Assurance Plus
Choose Great Western if: You want a coverage amount of up to $40,000. You are between 40-50 years old. You want Level Benefits and Living Benefits (you must qualify)
Sample Great Western Rates:
| Age & Sex | $10,000 | $15,0000 | $20,000 | $25,000 |
|---|---|---|---|---|
| 50 year old male | $59.58 | $87.92 | $116.25 | $144.58 |
| 50 year old female | $49.58 | $72.92 | $96.25 | $119.58 |
| 60 year old male | $75.42 | $111.67 | $147.92 | $184.17 |
| 60 year old female | $66.25 | $97.92 | $129.58 | $161.25 |
| 70 year old male | $119.58 | $177.92 | $236.25 | $294.58 |
| 70 year old female | $102.08 | $151.67 | $201.25 | $250.83 |
| 80 year old male | $227.92 | $340.42 | $452.92 | $565.42 |
| 80 year old female | $190.42 | $284.17 | $377.92 | $471.67 |
Where to Buy Guaranteed Issue Life Insurance
The best place to start shopping for your Guaranteed Issue Life Insurance policy is with an licensed independent life insurance agent. Independent agents don’t work for one company. Instead they have contracts with several life insurance companies which allow them to match your specific case to the insurance company that fits your unique situation and provides the best rates.
You can begin shopping right here, right now with instant online quotes.
