What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance is a type of permanent life insurance that doesn’t require medical underwriting. This means you won’t need to answer health questions or undergo a medical exam to qualify, as long as you meet the age requirements.
Key Features of Guaranteed Issue Life Insurance
- No medical exams or health questionnaires are required.
- Premiums remain constant throughout the policy.
- The death benefit typically doesn’t decrease over time, unless affected by withdrawals or loans against the cash value.
- A waiting period, usually two years, is enforced at the start of the policy.
- It’s a type of whole life insurance, meaning it lasts your entire life and builds cash value.
Who is Eligible for Guaranteed Issue Life Insurance?
Eligibility is primarily based on age, typically between 45 to 85 years old, though this can vary by insurer. Your medical history isn’t considered, but your age impacts premium costs due to increased risk.
Coverage and Cost
- Death benefits range from $2,000 to $25,000, mainly used for final expenses like funeral costs.
- Premiums are higher compared to other life insurance types because insurers lack complete health information.
- For example, a 60-year-old woman might pay $1,008 annually for a $20,000 guaranteed issue whole life policy, while a $250,000 term life policy for someone in excellent health might cost $887 annually.
Pros and Cons
Pros:
- No medical exam or health questionnaire is required.
- The death benefit can be used for any purpose.
- Some policies offer additional payouts for accidental deaths.
Cons:
- Coverage is capped at $25,000 or less.
- Policies are relatively expensive.
- There’s a waiting period, usually 1-3 years, before the full death benefit is payable for non-accidental deaths.
Alternatives to Guaranteed Issue Life Insurance
If guaranteed issue life insurance isn’t ideal, consider:
- Simplified issue life insurance, which requires health questions but no medical exam.
- Instant life insurance with accelerated underwriting for same-day policy issuance.
- Group life insurance through employers, though it may not be portable.
- Accidental death and dismemberment policies, which cover only accidental deaths.
Is Guaranteed Issue Life Insurance Right for You?
Consider guaranteed issue life insurance if you have health issues that limit other insurance options. However, it’s generally more expensive and offers less coverage. Always compare different life insurance quotes before deciding.
