So, is AIG guaranteed issue life insurance a bad deal? This blog post will cover all the facts that you need to know about AIG guaranteed issue life insurance to make that call. Before moving forward with your purchase, you need to read this article. In addition, if you are looking for a full review of AIG Life Insurance Company as a whole, you can see that here.
It will give you the rundown on everything AIG currently has to offer.
What is Guaranteed Issue Life Insurance?
Guaranteed life insurance is a special type of life insurance with 0 health underwriting. That is right, you read that correctly. You can purchase this type of coverage without invasive medical exams or providing the life insurance company medical records. The life insurance company will not even ask you a single medical question.
Guaranteed issue life insurance is generally whole life insurance but now always. Guaranteed issue life insurance was created to provide uninsurable people with a life insurance option to cover their burial and other final expenses, but the death benefit proceeds theoretically can be used for anything.
How Does AIG Guaranteed Issue Life Insurance Work?
AIG Guaranteed Issue Whole Life Insurance can be purchased by anyone between the ages of 50 and 80 years old. Instead of medical underwriting, AIG guaranteed life insurance has a modified death benefit within the first 24 months of the contract.
Pro tip – It is critical that both you AND your beneficiaries are aware of how the modified death benefit works before you purchase an AIG guaranteed issue whole life policy to avoid any confusion when it comes time to file a claim.
How the AIG Guaranteed Issue Modified Death Benefit Works:
The reason for the modified death benefit within the first 24 months of the policy is to protect the solvency of the life insurance company. The life insurance cannot have terminally ill people pay a few months of premium and then receive the full death benefit. They would go out of business if they did that.
In order to protect the solvency of the life insurance company from that risk, the company has the return of premium feature for medically-related deaths in the first 24 months of the policy. A terminal condition is generally defined as a life expectancy of 24 months or less.
Some people are concerned about the modified death benefit, but guaranteed issue life insurance should be evaluated based on the options available. If you cannot qualify for traditional coverage, then guaranteed issue life insurance may be the only option available to you.
While we never truly know when we will pass, there is a good chance that you will outlive the modified death benefit period unless you have a terminal diagnosis. In the event that you do not out life the modified death benefit period, the 10% interest that the life insurance company will pay you in addition to all your premiums paid is substantially higher than current interest rates in a worst-case scenario.
AIG guaranteed issue whole life insurance is a non-participating whole life policy. The policy has guaranteed lifetime premiums, guaranteed cash value growth, and a guaranteed lifetime death benefit. However, the AIG guaranteed issue whole life policy is not eligible to receive dividends like other whole life policies on the market.
Sometimes, clients will inquire about term life insurance for their final expense needs, but we usually will recommend whole life for these purposes. Burial and final expenses are permanent needs and should be insured with permanent life insurance. Sadly, our agency fields calls all the time from people who outlived their term life insurance, but purchasing a new life insurance policy is too costly due to their age.
AIG guaranteed issue whole life insurance also comes with a built-in chronic illness and terminal illness rider. If you get sick with a qualifying chronic illness and need to access a portion of your policy’s benefits early, the chronic illness rider will allow you to accelerate a portion of the policy’s death benefit before you pass away.
Their terminal illness rider functions similarly. If you become terminally ill and need to tap into your policy’s benefits before you pass away, you are eligible to receive up to 50% of your death benefit! Upon your passing, the remaining death benefits will be paid.
When Does AIG Guaranteed Issue Life Insurance Make the Most Sense?
AIG guaranteed issue life insurance generally is a great option for people who need life insurance, but otherwise cannot qualify for life insurance coverage. Our agency will do the best the compare the market place to find you a level or first-day coverage solutions. However, this is not always possible.
If you have had a major medical event within the last 24 months, there is a strong likelihood that you will not be able to qualify for first-day life insurance coverage. Even if you could, that policy may come at a significantly higher price.
Some instances where guaranteed issue life insurance often makes sense are:
Some of these diseases or conditions may not be permanent. After enough times goes by, it may make sense to replace your existing coverage for a new policy so long as there is not another modified death benefit waiting period. However, if your health does not improve at least you locked in coverage today.
So when does AIG guaranteed issue life insurance not make sense? If you can otherwise qualify for and afford first-day coverage, that usually is a better option. Even though people often outlive the modified death benefit period of 24 months, why take the risk if you do not have too?
In addition, if you or your loved ones have been diagnosed with less than 24 months to live, you may want to carefully consider purchasing a guaranteed issue life insurance policy.
How Do I Apply for AIG Guaranteed Life Insurance?
The first step to filling out your AIG guaranteed life insurance application online is requesting a quote. We suggest working with an independent agent who is not affiliated with any one life insurance company over working with AIG directly. An independent agent will qualify you over the phone to be sure that AIG guaranteed life insurance is the right choice for you avoiding any potential conflicts of interests. Assuming it is the best choice, an independent agent can provide you with an AIG guaranteed life quote and take your application for the same exact policy that AIG sells directly.
After your agent has pre-qualified you, they will assist you in filling out your AIG guaranteed life insurance e-application. The entire application can be completed securely through email in literally seconds.
Since you are guaranteed to be approved, AIG guaranteed life insurance will email you your policy for your record within 5-10 business days on average after they process your first premium. Your agent can also provide you with a digital copy of your policy as well for your reference, or you can log into your AIG web portal to view your policy details.
If you have any questions about your policy, you can contact your agent or the company directly. We recommend your agent since our experience with AIG’s call center has been mixed.
AIG Guaranteed Issue Life Insurance Rates
As far as guaranteed issue life insurance goes, AIG has one of the most affordable plans on the market today even after AIG’s recent rate increase! Occasionally, they may lose the number one spot on the charts but not by much. We’re talking pennies to the dollar. Outside of those rare instances, AIG often tends to be the greatest value unless you live in New York State.
Sample AIG Guaranteed Issue Life Insurance Quote: (Age 55)
The Final Word: Is AIG Guaranteed Issue Life Insurance Good or Bad?
Whether or not AIG guaranteed issue life insurance is good or bad is ultimately up to you. Some clients that we work with cannot accept the terms of the modified death benefit not matter regardless of how uncommon it is to pass away during the first 24 months of the policy. On the other hand, there are clients that purchase the policy and are completely fine with waiting the 24 months for the full death benefit to kick in.
What we can say is that as far as guaranteed issue life insurance is concerned, is that we believe it offers value to clients who would otherwise be unable to purchase life insurance without it. If we did not believe in the product, we simply would not broker it.
In our experience, AIG is a leader in the guaranteed issue whole life insurance market. AIG guaranteed issue life insurance consistently comes in the top one or two positions for the lowest rate. From a benefits standpoint, their policy is stacked with a ton of value with the built-in chronic illness and terminal illness riders.
Outside of the policy features, AIG has built up a strong recognizable name over the years in the insurance industry. There are other companies out there that offer similar guaranteed issue products, but those companies are not always household names.
Each life insurance company has different opinions on rates and underwriting. A knowledgeable independent life insurance agent will know what companies will offer you the best value to protect your family.
If you are looking for AIG guaranteed issue life insurance, don’t hesitate. Request a free no-obligation quote, or call on of our veteran life insurance agents for a consultation today.
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Joe is a lifelong learner with a passion for sharing what he has learned with others. Joe has publicly spoken on life insurance in the past to both colleagues at industry conferences and to consumers in educational settings and as a contributor to industry blogs. Additionally, Joe is studying for certifications such as the CFP, CLU, and RICP to further his professional knowledge.