Guaranteed issue life insurance- what is it?
Have you ever been declined life insurance protection from a traditionally underwritten application? If so, you know how frustrating and disappointing it can be. Many health conditions such as heart disease, diabetes, use of a defibrillator, cancer history can often times be declined by an insurance carrier.
Guaranteed issue life insurance may offer you a solution to your coverage needs. This coverage is typically available without any medical questions, insurance exams or blood work needed.
But, there are differences in how these policies work as compared to traditional life policies. We will discuss this later in this article.
How much guaranteed issue life insurance coverage can I get?
Okay, so the secret to obtaining the most guaranteed issue life insurance coverage is to work with an independent life agent or agency owner.
Many times they will have access to multiple carriers that will allow you to layer different amounts of protection.
It is true that most life insurance carriers typically only offer $25,000- $50,000 of guaranteed issue coverage. But, depending on the answers to questions on the applications you may be able to layer enough coverage with different carriers to get up to $200,000 – $250,000 of protection.
How do guaranteed issue policies work?
It’s no secret that life insurance companies are not in business to lose money. So, how can they sell life insurance policies that do not require any medical underwriting?
Some carriers are a bit different, but generally most guaranteed issue policies work the same.
As mentioned above one of the things these companies do is limit the amount of coverage they will write. So, $25,000 – $50,000 is the most they are exposed to for any one insured.
Another thing these carriers do is offer graded death benefit policies. This means the carrier doesn’t pay out the full death benefit for the first two years of the contract.
Here is an example: John buys a $50,000 death benefit guaranteed issue policy. If John happens to pass away during the first 12 months of the policy, the insurance company would pay his beneficiaries all premiums back plus 10% interest.
If John passes away in year two the carrier would pay 20% of the death benefit to his beneficiaries. If John passes away in year 3 then his beneficiaries would get the full $50,000 benefit. This is known as a graded death benefit plan and this helps protect the insurance company from early losses.
Are you able to get immediate death benefit guaranteed issue coverage?
The short answer is yes. At the time of this blog there are carriers that will offer immediate death benefit (not graded) for up to $100,000 in benefit.
But, as with all plans there are stipulations such as age and more importantly are you employed at least 20 hours per week and able to do your job with no limitations?
These type plans are typically offered thru association type agreements. These plans can be a life saver for those who cannot find coverage elsewhere and are looking for immediate benefits protection.
It’s important to remember also that not all guaranteed issue life plans are approved for sale in every state.
How much do guaranteed issue life plans cost?
As you can imagine, guaranteed issue life coverage is priced higher than traditional plans due to the fact that there is no medical underwriting. Therefore, the carrier must price the plans to account for the additional risk they are taking. But, guaranteed issue life insurance coverage can be a life saver for those who have found it hard to find affordable coverage elsewhere.
Each person’s rate will depend on their sex, age, amount of coverage if any tobacco usage.
Conclusion-
If you have been denied life insurance coverage for any reason and would like to look at your options for guaranteed issue life insurance coverage, contact us at 678-207-8160 or email mike@specialriskterm.com for a free evaluation.
