This type insurance is great for those who have health conditions that would make it prohibitive or impossible to afford life insurance.
Apart from the higher premiums, a guaranteed-issue life insurance policy doesn't provide a death benefit to your beneficiaries until your policy has been in place for a set amount of time. This usually ranges between one and two years depending on what life insurance company you have. This is commonly known as graded benefit in the insurance industry.
Guaranteed issue policies can build cash value that you can access via a loan. The amount you owe on the loan will reduce the payout to your beneficiaries if you fail to repay it before you die.
In general, guaranteed life insurance plans come with a waiting period before their benefits become effective.
A lot of life insurance policies will allow you to purchase insurance for a sum of more than one million dollars. However, guaranteed issue policies often limit the insurance policy to $50,000 or perhaps $100,000.
Both guaranteed issue and simplified-issue life insurance can be used to insure burials. Guaranteed issue insurance is more suitable for seniors and people who aren't eligible for other types of life insurance. It is almost impossible to turn down anyone.
Let's suppose you die in the first two or three-years of your policy for any reason other that an accident. In this case, the beneficiary will receive interest and a refund for any premiums paid. While interest amounts paid to beneficiaries can vary from one company to the next, they could range between 10% to 30%. If the death is caused by an accident, such a car wreck, the policy will cover your beneficiaries up to the maximum amount, even if you purchased it recently.
Guaranteed life insurance companies frequently use graded deaths benefits to protect them from severe-ill customers.
For those with pre-existing diseases, guaranteed issue insurance may not be the best option. Though policies differ from one insurer to the next, some policies may include coverage for those with chronic illness. If you have a condition that is pre-existing, find out what options you have.
Certain guaranteed issue policies have cash value which you can access by taking out a loan. You will lose your right to receive the cash value of the loan if you don't repay it in full before your death. Additionally, the payout to your heirs depends on the coverage amount, not the cash value.
While you can't be denied coverage for health reasons, most policies include a waiting period, often 2-3 years, before the full death benefit is paid out. If you die during this period, the beneficiaries may only receive a refund of premiums paid, plus interest.
Guaranteed issue life insurance is a type of life insurance policy that does not require a medical exam or health questionnaire. Anyone who meets the basic age requirements is automatically approved, regardless of their health history.
Premiums for guaranteed issue life insurance tend to be higher than for policies that require medical underwriting, since insurers assume more risk by offering coverage without health questions. The cost will depend on factors such as your age, gender, and the amount of coverage.