You may have heard of a guaranteed issue life insurance policy before. They are advertised in senior magazines, on television, and spot lighted through different senior programs around the nation. Buying guaranteed issued life insurance affords you the opportunity to get life insurance where you otherwise might not qualify, but that doesn’t mean that it’s always the best option.
The idea behind a guaranteed life insurance policy is the ability to get life insurance coverage where you may have been declined for medical reasons, or simply a way to get insurance without having to go through lengthy applications and medical exams.
Most guaranteed life insurance quotes require only your resident state, age, gender and whether or not you use tobacco. And there’s not much more when applying either. It’s as simple as that, but that convenience normally comes at a cost.
Guaranteed acceptance life insurance plans are called guaranteed because you won’t be declined for your health history, or for failing a medical exam. This is because they aren’t even required. With few companies requiring you answer five or six questions, most don’t require any questions be answered other than basic contact and personal information.
You can also apply without having to go through extensive medical exams, such as urinalysis, blood work, or other annoying and invasive screenings. You can get life insurance coverage in as little as 24 hours, some can cover you within a couple of hours.
It may seem extremely convenient, and it is, but unfortunately, there are some drawbacks to escaping most of the life insurance underwriting hassles. Costs will likely be much higher, and you will be limited on coverage amount.
The typical guaranteed issue life insurance plans have limited coverage amounts, such as $25,000, depending on your age. Each company varies, and may only be able to cover up to $10,000 if you’re in an older age bracket.
They typically allow for issue ages up to 85 years old, although this can fluctuate up and down depending on which company you’re applying with, and how much coverage you’re looking to get.
Each plan is structured to be a permanent insurance product, similar or equal to a whole life insurance policy. This means you’ll get a level death benefit for as long as you hold the policy, and your premium will be level also, so you don’t have to worry about rate hikes when you need the coverage most.
Unlike whole life, though, there might be some stipulations on payout depending on how long you’ve held the policy when you die. If you have only had the insurance policy for one or two years, you could be denied payment, depending on the small print of the policy you purchase. This is how the insurance company can leverage it’s risk when someone knows they are terminal, for example, and try to buy life insurance anyway.
As mentioned, quotes are fairly easy to obtain, only generally requiring the state you currently live in, the coverage amount you want to apply for, your date of birth, gender and whether or not you use tobacco products.
Because the life insurance guaranteed issue, your age and gender will automatically place you in a rating class of all other people your same age and gender. There aren’t multiple risk classes like in a regularly underwritten type of insurance product, so there isn’t a need to do any additional research or classification.
Other than smoker or non-smoker, your age, gender and coverage amount all directly correlate to what premium you’ll pay, without variation to health class ratings.
For some, guaranteed issue life insurance is the only option, and because that means poor health is almost a sure bet, the insurance company has a much higher risk in issuing the policy. Therefore, rates are much higher.
If you are simply buying life insurance guaranteed issue for its conveniences, you’re probably paying way too much. If you can still qualify using your health, your premiums could be drastically reduced by going through the full process.
While rates are pretty high for these types of policies, their main advantage is still as good as other life insurance policies: they leverage your dollars for a death benefit. What this means is, rather than paying $10,000 out of pocket when you die, you’ll pay something like $5,000 from now until you pass. So if this were true, you’re getting $2 back for every $1 you put in.
A guaranteed life insurance policy may or may not work for your situation, but if you have poor health, have already been declined, or don’t think you’ll be able to qualify on a standard issue policy, it may be an option.
Just remember, buy a policy that is affordable. There is no sense in paying a high premium for years, then having to drop the policy later because you can no longer afford those premiums. As with any permanent life insurance policy, also research the company from which you’re buying from, as they do make a difference.
As you can see, these guaranteed life insurance policies have several benefits, quick, easy, and convenient, but they also have several disadvantages. You need to weigh those pros and cons and see if one of these plans works for you. Don’t make any decisions until you’ve considered all of your options.
Life insurance is a vital purchase that could drastically impact your family if anything tragic were to happen to you. It’s important that you make the right decision for you and your family.
If you’re in poor health, or have a severe pre-existing condition, don’t think that guaranteed life insurance is your only option. Even if you’ve been declined in the past, there is a chance that you can still get an affordable traditional policy with medical underwriting.
Because each company is different, all of them look at various health conditions differently. For example, some companies have more experience working with diabetics, which means they may view anyone with diabetes more favorably than other companies. That’s why it’s important to find the perfect company for you.
Unless you just want to secure life insurance coverage quickly, guaranteed issue life insurance should always be your last option. These policies are going to more expensive that any other life insurance plan. In most cases, if you can be accepted to a term life insurance policy, they are going to be the most affordable option.
Life insurance is one of the most important purchases that you can make for you and your loved ones. While it isn’t going to be the most fun buying experience, it’s one that you have to have. If you were to pass away tomorrow, your family would be left with all of your debt. For some families, they could find themselves with thousands and thousands of dollars of unpaid expenses. For a family that is struggling through the loss of a loved one, these bills can be staggering. This is where life insurance comes in.
Regardless of which type of policy that you buy, it’s important that you have coverage and that you have ENOUGH coverage. Before you purchase a plan, make sure that you’re getting enough coverage. There are several things that you have to consider when deciding how much life insurance coverage you need.
As we mentioned earlier, one of the main purposes of life insurance is getting yore family enough money to pay off your debts if you were to pass away. Make sure that you sit down and add up all of your unpaid expenses. A lot of applicants are surprised to see just how much debt they actually have with mortgages, car payments, credit card bills, and more. After you know how much debt you have, make sure that your policy will pay off all of that. With a guaranteed issue plan, you may not be able to get enough coverage from one plan.
Another goal of life insurance is to replace your income if you were to pass away. If you have family members that rely on your salary, would they struggle if they no longer had that income? How would they replace it? This is why life insurance is so important. It will give your family time to find other ways to replace your salary. There is no “magic number” but most insurance agents say that ten times your annual salary is a good target.
Because there are so few factors that go into determining your life insurance rates, there are only a couple ways that you can lower your rates, but one of the best ways is to drop the cigarettes. We mentioned that the only questions the insurance company is going to ask you is your birthday, gender, and if you use tobacco products. Two of these things you can’t really change, but one of them you can, your tobacco usage.
Being listed as a smoker on your life insurance “application” can cause your monthly premiums to double or triple. Because you’re going to be paying more for your guaranteed issue policy, it’s important that you get the lowest rates possible, and the best way is by kicking your tobacco habits. Before you start your life insurance search, take the time to drop the cigarettes. Your doctor and your wallet are going to thank you.
The best way to ensure that you’re getting the lowest rates possible is by doing some comparison-shopping for your policy. Because there are so few factors that go into calculating your monthly premiums, each company could have drastically different rates. It’s important that you get quotes from several different companies before you choose the one that works best for you. There are hundreds of different companies that sell guaranteed issue policies. Instead of spending hours and hours on the phone talking to different agents, let us do all of the work for you. Simply fill out the quote form on the side and all of the best quotes will come to you.
Please feel free to contact us with any questions or concerns you may have, not only about guaranteed issue insurance coverage but about other needs as well such as declining term life insurance coverage, we can help you with many different life insurance needs! It’s important that you make the best life insurance decision. Our agents are extremely knowledgeable about the different types of life insurance and can point you in the direction of the best policy to fit your needs.