Life insurance can be a tricky business. Medical exams, questionnaires, and long waits for approval can make the process feel like a root canal. But what if we told you there’s a secret backdoor way to get life insurance without all the fuss?
Enter guaranteed issue life insurance, the “no questions asked” policy of the life insurance world. It’s like the “I won’t tell if you won’t” of insurance.
With this type of policy, even if you’ve been turned down for traditional life insurance because of health issues, you can still get coverage without the need for pesky medical exams or interrogations. In other words, guaranteed issue life insurance is the insurance equivalent of “Love me, love my baggage.”
Sure, there are a few requirements like being a US citizen, living in a state where these types so life insurance policies are offered, and meeting the minimum age requirement, but given the alternatives out there, that’s nothing!
But before you get too excited, we’ve got to warn you, if it looks too good to be true, it probably is which is why in this article we’re going to dissect exactly what a guaranteed issue life insurance policy, and hopefully help you decide whether or not it’s the right choice for you.
Guaranteed issue life insurance defined
Guaranteed issue life insurance is the “VIP pass” of the insurance world. It’s like the “Skip the line” pass at a theme park, where you get to bypass the lengthy and invasive application process. With this type of policy, the insurance company promises to accept you, no matter what kind of shape you’re in.
Sure, your premiums might be a bit higher, but at least you won’t have to disclose your entire medical history or take a physical exam. It’s like being able to buy a ticket to the “All you can eat buffet” without having to step on the scale first.
But like we said, if it sounds too good to be true, it probably is because while qualifying for a guaranteed issue life insurance policy is super easy, there are going to be some pretty significant drawbacks to these types of policies.
Drawbacks one needs to be aware of will include:
First, these policies typically offer limited coverage amounts, often in the range of $5,000 to $25,000, whereas traditional policies might offer coverage in the hundreds of thousands to millions of dollars. So, sure you might be able to qualify for coverage, but will that be enough coverage to meet your insurance goals?
Second, the major drawback is that the premiums for guaranteed issue life insurance are generally higher than those for traditional life insurance. This is because the insurance company is accepting you without requiring any medical information or exams, which means they are taking on more risk.
Third: “the third strike” against a guaranteed issue life insurance policy which will often be a deal breaker for some is that these types of policies will include a waiting period before the benefits can be paid out, usually 2-3 years, in the case of death due to natural causes. This waiting period will be referred to as a “graded death benefit”, and it’s name should not be mistaken as something that “benefits” you.
So, while guaranteed issue life insurance can provide a way to get coverage for those who might have difficulty getting traditional life insurance, it’s important to weigh the trade-offs and consider whether the policy will provide enough coverage at an affordable premium.
At this point you’re probably asking yourself, why would anyone purchase a policy that’s only going to offer a small amount of coverage, that’s going to charge me more than other types of policies and make me wait 2-3 years before providing me full 100% life insurance?
Explanation of why guaranteed issue life insurance may be necessary.
Let’s face it, not everyone is a perfect specimen of health. Some of us have medical conditions that make it difficult to get traditional life insurance. And let’s be real, none of us are getting any younger and as we age, our health risks increase, and so do the chances of being declined for traditional life insurance.
That’s where guaranteed issue life insurance comes in, like the “Plan B” of the insurance world. It’s the “Just in case” policy that you can rely on when traditional life insurance doesn’t work out.
It’s like having a backup plan, like an umbrella on a sunny day, you might not need it, but it’s always good to have one, just in case it starts raining. It’s also perfect for those who need coverage fast, don’t want to wait for the underwriting process and don’t want to disclose their whole medical history, like an “Instant gratification” policy.
It’s the type of insurance policy that says “We don’t judge, we just insure” no matter what type of health issue you have, as long as you meet the minimum age requirement (usually 50-85 years of age), are a US citizen and live in a state where these policies are offered, a guaranteed issue life insurance has got you covered.
Plus, if you’re in good health, a guaranteed issue life insurance policy will provide coverage for any death caused by an accident, so sometimes, people don’t mind that they’ll have to wait for complete coverage because they don’t anticipate dying from an illness or a disease any time soon!
What are the requirements to qualify for a guaranteed issue life insurance policy?
As we’ve stated before, the requirements to qualify for a guaranteed issue life insurance policy are generally less strict than for traditional life insurance policies. Typically, the only requirement to qualify for a guaranteed issue life insurance policy is that you are a US citizen, usually between 50-85 years old, living in a state where these types of policies are offered and you’re willing to pay the premium.
How does one apply for a guaranteed issue life insurance policy?
The application process for a guaranteed issue life insurance policy is generally simpler than for traditional life insurance policies. Here are the typical steps involved in applying for a guaranteed issue life insurance policy:
- Choose an insurance company: Research different insurance companies that offer guaranteed issue life insurance policies and compare the coverage options and premiums. We can certainly help you out with that.
- Fill out an application: Once you have decided on a policy, you will need to fill out an application. This will typically be done over the phone and/or online and will only require basic personal and contact information.
- Pay the premium: The premium for guaranteed issue life insurance policies will be paid directly to the insurance company once you have been approved for coverage.
- wait for the policy to be issued: Once you’ve completed the application process, the insurance company will issue the policy and provide you with a policy contract and certificate of insurance. Coverage will usually begin within 24-48 hours. Remember full coverage for natural causes of death will not begin until the graded death benefit waiting period has passed.
It’s also important to note that the underwriting process if any, is not as extensive as traditional policies and doesn’t include a medical exam or health questionnaire. Also, as some companies might ask for additional information depending on the company’s policy and regulations. It is best to check with the insurance company about specific requirements for their policy.
So, let’s recap.
Like with most things in life, guaranteed issue life insurance has its pros and cons.
Let’s start with the pros:
- Pro #1: No medical exams or questions required – This is the “no strings attached” of the insurance world. No need to strip down to your skivvies for a medical exam or answer embarrassing questions about your health.
- Pro #2: Coverage when you need it – Guaranteed issue life insurance can provide coverage for those who have been declined for traditional life insurance or who need coverage quickly. It’s like having an “Insurance safety net”
Now for the cons:
- Con #1: Higher premiums – Just like a “luxury” item, guaranteed issue life insurance comes with a higher price tag. But sometimes, peace of mind is worth the extra cost.
- Con #2: Limited coverage – Guaranteed issue life insurance policies typically offer less coverage than traditional policies. It’s like ordering the “small size” of life insurance.
- Con #3: Waiting period – Most guaranteed issue life insurance policies have a waiting period before the benefits are paid out, usually 2-3 years, in case of death due to natural causes. It’s like waiting in line for a roller coaster, it’s frustrating but worth it in the end.
In summary, guaranteed issue life insurance can be a good option for those who have been declined for traditional life insurance or find the underwriting process to be burdensome, but it’s important to weigh the trade-offs and consider whether the policy will provide enough coverage at an affordable premium.
Who should consider a guaranteed issue life insurance policy?
Guaranteed issue life insurance is like the “wild card” of the insurance world, and it’s not for everyone. But there are certain groups of people who might find it especially useful:
- The “frequent flyer” – If you’ve been turned down for traditional life insurance due to health reasons, guaranteed issue life insurance can be your ticket to coverage. It’s like being able to board a plane even with a “pre-existing condition”.
- The “senior citizen” – As we get older, getting traditional life insurance can become more difficult. Guaranteed-issue life insurance can provide coverage for seniors who might otherwise have trouble getting approved.
- The “impatient” – If you need coverage quickly and can’t wait for the underwriting process, guaranteed issue life insurance can provide a fast way to get coverage. It’s like a “drive-thru” option for life insurance.
- The “privacy-conscious” – If you don’t want to disclose your whole medical history, guaranteed issue life insurance is a great option. It’s like a “Confidential” policy, your medical history stays between you and your doctor.
Who shouldn’t consider a guaranteed issue life insurance policy?
Just like a “one size fits all” t-shirt, guaranteed issue life insurance may not be the best fit for everyone. Here are a few groups of people who might want to consider alternative options:
- The “health nut” – If you’re in tip-top shape and have no pre-existing health conditions, traditional life insurance will probably offer better coverage at a lower premium than a guaranteed issue life insurance policy. It’s like buying a “top-of-the-line” insurance policy for a “bargain” price.
- The “thrifty” – If you’re looking for the most coverage for the lowest premium, traditional life insurance is probably the way to go. Guaranteed-issue life insurance policies usually have higher premiums than traditional policies. It’s like buying a “luxury” item on sale.
Now we’ve tried to be about as fair and balanced in this discussion as we possibly can because we realize, that guaranteed issue life insurance policies have a lot of “issues”. But when someone is in a position, where a guaranteed issue life insurance policy really is their only option, we’ve got to say, really can be a game changer despite their shortcomings.
This is why we here at JBM, are always looking to see which companies currently offer the best-guaranteed issue life insurance policies on the market and are sure to offer them to all of our clients, who aren’t able to qualify for a more suitable solution!