Basics of Guaranteed Issue Life Insurance
Guaranteed issue insurance coverage amounts focus on funeral and burial expenses without taking from an inheritance or estate. Typically, guaranteed issue death benefits are smaller than traditional life insurance products, and the premiums are higher
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.
The exact cost of a guaranteed issue policy will depend on a variety of factors, including the policyholder’s age, the amount of coverage they are seeking, and the length of the policy term.
It’s important to note that guaranteed issue policies often have a waiting period before the full death benefit is payable. During this waiting period, which is typically two or three years, the policy will only pay out a limited benefit, such as the premiums paid plus interest. This waiting period is in place to prevent policyholders from taking out a policy with the intention of immediately claiming the full death benefit.
When to Buy a Guaranteed Issue Policy
Monthly payments or monthly 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 been 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.