The Purpose of Guaranteed Issue Life Insurance
Guaranteed issue insurance focuses on covering funeral and burial costs without taking from an inheritance or estate. Typically, guaranteed issue death benefits are smaller than traditional life insurance products, and the premiums are higher.
How Does It Work?
A guaranteed issue policy is oriented towards providing a form of life insurance for those who may not qualify for other options because of age or health. Most policy seekers can’t be turned down unless they land below or above an age range requirement.
The death benefit payout usually varies from $5,000 to $25,000. If the policyholder passes away within the first few years after being issued the policy, the insurers may have the option to refund the premiums paid up to that time. This is known as graded benefits, and it may result in a slightly lower premium for the policyholder.
When to Buy a Guaranteed Issue Policy
Premiums for these policies can be much higher than for term life and even higher than whole life insurance policies in certain cases. High premiums and a low death benefit make them a last-ditch effort for most people.
However, if you’re having trouble getting life insurance after a term life policy has completed, or because of advanced age or health concerns, a guaranteed issue policy can help you fund your final expenses. It can also protect your beneficiaries from increasing funeral and burial costs.