What is Guaranteed Issue Life Insurance?
Factors why to Consider Guaranteed Life Insurance.
There are many different types of life insurance policies available today. Regardless of your age or overall health, the choice between the different types is abundant and confusing.
If you have been turned down for a traditional life insurance policy and are facing health issues, then don’t fret, because there is hope for you. We are talking about the guaranteed acceptance life insurance policy, which offers great coverage to every individual, regardless of the health conditions you are currently facing.
The good thing about the guaranteed life insurance policy is that you won’t be refused. All you need to do is apply for the policy and pay your premiums. For anyone who is looking for life insurance policies, the guaranteed life insurance policy could be a gamechanger for you.
You don’t need to get a medical exam to qualify for the policy.
Don’t worry if you don’t have any knowledge about guaranteed life insurance because we are going to cover that in detail.
Here is everything you need to know about guaranteed life insurance.
What Is Guaranteed Issue Life Insurance?
The guaranteed life insurance policy is a version of the whole life insurance policy. It is offered to everyone who is between 50 and 85 years old, regardless of their health conditions. The guaranteed life insurance policy doesn’t require a medical exam, which means that even if you are in poor health, or have faced numerous declines in the past, you can still obtain coverage.
Who Can Apply for Guaranteed Issue Life Insurance?
Everyone who is between 50 and 85 years old in some scenarios. In other scenarios, you may be eligible between the ages of 40-50 as well.
Guaranteed life insurance is perfect for the following:
- Families or individuals that want to cover burial expenses
- People who have been eliminated or declined for acceptance for traditional life insurance.
- People that are permanently disabled
- People who refuse or don’t wish to complete a medical exam
- People who failed their medical exam for coverage previously due to health or pre-existing conditions.
Even though guaranteed life insurance is offered to everyone, not everyone can purchase it including:
- Non- US citizens or nonresidents cannot purchase guaranteed issue life insurance
- People who have been diagnosed with Alzheimer’s or dementia
Anyone who acquires life insurance must know what they are buying into and the coverage they qualify for. Therefore, someone with Alzheimer’s or dementia can’t technically purchase these policies. It’s because they can’t legally consent to the legally binding contract in the first place.
What features should I look for?
When you are buying a guaranteed life insurance policy, you may not get the same bells and whistles with all policies so it’s important to look at all options. Some policies pay smaller interest returned during the 2-year waiting period if death occurs. Some policies are simply just more expensive for no good reason. Additional items to double check would be the following.
- Lifetime coverage with premiums that are paid until a certain age
- Locked-in premiums that won’t change ever
- Full coverage taking effect after 2-years
- Full claim paid for deaths occurring by means of an accident during 2-year waiting period
2 Year Waiting Period
One of the most important things you must know about the guaranteed life insurance policy before you acquire it is that if you die within the first 2 years after acquiring the policy, the insurance company has the right to not pay out the death benefits of the policy. In fact, it’s not just a right it’s a guarantee as well.
The company will not be paying your beneficiary if you pass away by natural causes during the first two years. There’s no secret or any way around this. You’re simply not collecting the money. If you’re told differently, I’d hang up quickly. During this time however, if you pass away you will be returned all your premiums plus 10% interest earned.
This will be referred to in your policy as the 2-year waiting period or graded period. This is done as a means of protection for the insurance company. It reduces adverse selection and people simply wanting to collect insurance after gaining knowledge they are likely to pass away soon.
It is also known as the exclusion period, and some policies will have something along the lines of …” that if you die within 2 years, it will trigger a non-payout and a return of premiums plus interest earned…” in writing.
The insurance company will review the medical records of the policyholder if they die during this period, to ensure you didn’t pass away from natural causes. The insurance company must return all premiums that have been paid if they don’t pay out the death benefits. Plus, all good carriers that offer these products offer interest on top of the premiums up to usually 10%.
Are All Guaranteed Issue Insurance Policies the Same?
There are different types of guaranteed life insurance policy because every insurance company has its own pricing structure and offers different coverage options. You should always discuss the benefits of the insurance policy and if there are any hidden charges or costs involved in the policy before buying it. Here are some of the questions you should ask when you are shopping for guaranteed life insurance policies in the market:
- Are the rates going to increase?
- Is the policy going to expire?
A lot of insurance carriers use tacky marketing techniques that can leave you feeling confused. Alex Trebec does a stunning job of this represent Colonial Penn and advertising there Guaranteed Issue policy. It is recommended that you only purchase guaranteed life insurance policies that offer you the following:
- Guaranteed coverage for life
- Guaranteed rates that will remain the same as you age
- Ideally 10% Interest earned on return of premium if death occurs in the first 2 years.
Most life insurance policies will charge you outrageous rates to have any form of term insurance after the age of 80. In addition, they will only be offering if your already in a term policy with that specific carrier. No life insurance carriers offer term life insurance past age 80. I can assure you also don’t want to wait to this age to gain a guaranteed issue life insurance policy either because it’s also going to be expensive.
How Much Coverage Can I Buy?
Most guaranteed life insurance policies offer you with coverage in $1000 increments, sometimes even increments of $500.00 up to the maximum coverage offered to people which is typically $25,000.00. The policies are meant to provide coverage for burial expenses and final expenses to a family and don’t offer a replacement income to individuals. Unless that income was low and only needed replaced up to $25,000.
Can I Buy More Than One Policy?
That isn’t an option offered by most insurance companies since you can only buy one guaranteed life insurance policy. It’s not just that but your focus needs to be what you can afford. Insurance that lapses or never has to pay the death benefit to make the company a killing. It’s the people who pick coverage accordingly with the budget they are working with that can effectively stick it to an insurance company and make them pay out those death claims.
Features of Guaranteed Acceptance Life Insurance
There are a lot of different features that make the guaranteed life insurance policy a great option for people who failed to qualify for other life insurance policies. There’s also some downfalls. Here are some of the defining features of the guaranteed life insurance policy:
- More expensive than traditional life insurance
- Has age restrictions and is offered to individuals between 50 to 85 years old
- Death benefits are low, and range from $2000.00 to $50,000
- Approval is guaranteed by almost every company that offers these products
- No medical history checkups necessary
- No medical exam required
- The policy doesn’t give out any benefits in the first 2 years. So, if you die within that time, your beneficiary will only receive the paid premiums or a portion of the death benefit. Full death benefits will only activate once the policy has crossed the 2-year threshold. Interest is typically paid up to 10% if premiums are returned due to not making passed the two-year waiting period.
Mistakes to Avoid When Purchasing Guaranteed Issue Insurance
Guaranteed life insurance is a simple life insurance policy so you shouldn’t have any problems understanding its terms and conditions. However, mistakes can always be made, especially when agents misinform their clients about how certain life insurance products work. Therefore, we will cover all bases and highlight the mistakes that you must avoid at all costs when you are buying a guaranteed life insurance policy. These are:
Ø Not asking kids for help
Guaranteed life insurance policies are expensive and there are cases where families have chipped in to cover the costs of the policy. If you don’t have the financial means to pay the premiums for a guaranteed life insurance policy, you should ask your family for help. Talk to an Independent Broker to guide you on your Life Insurance Application.
Ø Buying an expensive policy
It is important that you have the means to pay the premiums of the life insurance policy without compromising your quality of life. There are a lot of cases where people have bought expensive policies that don’t fit into their budget. If you don’t pay the premiums on your policy, you will not get any coverage and the policy will lapse in turn making the insurance company have a nice big smile on their face for the rest of the day.
The benefits you get from life insurance policies are tax-free and certain policies offer you great coverage as well. So, make sure that you don’t buy a policy that is too expensive. Stick within a budget and make sure a death benefit is at least paid in some fashion instead of allowing the policy to lapse.
Ø Underestimating the cost of waiting
The cost of life insurance increases every year when you get older and people who are older must pay higher premium rates. If you think that you can wait around and buy life insurance in old-age then think again. The younger you are, the more affordable the rates will be for you when applying for life insurance, so don’t underestimate the price you may pay for waiting. Not to mention you never know when you will meet your maker or develop a health condition.
Ø Not reading the fine print
There are a lot of people who don’t read the terms and conditions on their life insurance policy, which is a rookie mistake. You should work with an insurance agent, who will handle everything in your policy and will help you understand not only which policy to purchase but exactly how it works. You typically notice when you see terrible reviews of life insurance carriers and the people stating that they paid for this long or that long and then was denied the death claim. Trust me, if it’s legitimate, they pay the claim. Most of these reviews are simply from not understanding the 2-year waiting period attached to the policy.
How Do I Purchase Guaranteed Life Insurance?
There are a lot of different ways you can go about buying guaranteed life insurance. The internet has proved to be a revelation and you can now easily compare different life insurance policies before buying one from an insurance company.
There is so much information available online about guaranteed life insurance policies, and you can also always call Good Life Protection to compare options with dozens of life insurance carriers. We promise to only educate and not force you to make any decisions.
Before buying a guaranteed life insurance policy, you should always discuss the coverage with your family, and then talk things out with an insurance agent. This will provide you with plenty of information and support, and will help you find coverage that is best for you. All life insurance policies have a ‘free-look’ 30-day period, so you have entire month to review the policy before deciding if you want the coverage or if you want to cancel the policy and get a complete refund, then we are here to help with that too!
Is It Worth It?
There are risks involved with every life insurance policy, and guaranteed life insurance is the same. The biggest risk is the 2-year waiting period, because there is no guarantee that you will not die within 2 years of buying the policy. If you do die within the 2-year waiting period, it can create a lot of problems for the beneficiaries because the insurance company will fight tooth and nail to ensure they don’t pay out anything more than the premiums paid plus interest and trust us, they won’t pay it. The other risk is paying too much for your policy and running into a lapsed policy, and that is why you must have complete information about the policy before buying it.
It is advised to look at other life insurance policies before you decide to buy guaranteed life insurance. There are a lot of different insurance policies that offer coverage to people who aren’t in the best health, and checking out all the options even if you are dead set on a guaranteed issue policy is always a good idea.
One of the most important things that you must remember is that buying an expensive guaranteed life insurance policy doesn’t guarantee that it is the best policy for you. You should keep the guaranteed life insurance policy as a backup plan, should you face any difficulties getting approved for a traditional life insurance policy.
It is a good idea to discuss your options with professionals who know the industry such as Good Life Protection. We promise to help find better solutions or help you get a more affordable insurance policy with greater coverage fitting into your budget. There is no denying that a guaranteed life insurance policy ensures some protection in the correct circumstances, but always keep your options open before you buy a life insurance policy and work with knowledgeable experts who can help get you into the perfect life insurance policy for you and your family.