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When you’re in the market for life insurance, the option “Guaranteed issue” sounds great, right? No health questions, no medical exam, apply and get approved. If only everything was this simple!
However, this convenience carries a higher risk to the insurance provider. As a result, you’ll end up paying a lot more for the same coverage compared to other life insurance products.
No need to worry. We’ll explain all subjects of guaranteed issue life insurance. When you finish reading this article, you’ll know whether this type of life insurance is right for you or not.
As the name suggests, a guaranteed issue life insurance policy (also called a guaranteed acceptance policy) provides life insurance coverage regardless of your health, or financial history. It’s a type of life insurance that’s generally available for individuals between ages 50 and 85. Some companies make exceptions, like Great Western who’s minimum age is 40.
Guaranteed issue doesn’t qualify you based on your health. As a result, the price for a 50-year-old in supreme health, is the same as for a 50-year-old with a long history of health conditions. Consequently, if you are in good health you could save a lot of money going with a final expense life insurance policy instead.
No life insurance type is perfect for everyone. Here are some of the pros and cons of guaranteed issue life insurance:
A guaranteed issue life insurance policy is more expensive than other products. This is primarily because there are no medical exams or health questions involved. As a result, it is most popular for individuals with less than average health.
The sample rates below are for guaranteed issue life insurance for men (women pay 10% to 15% less on average):
| Age | Coverage | Company | Price |
|---|---|---|---|
| 40 | $25,000 | Great Western | $119.58 |
| 45 | $25,000 | Great Western | $134.17 |
| 50 | $25,000 | Gerber | $108.86 |
| 55 | $25,000 | Gerber | $143.46 |
| 60 | $25,000 | Gerber | $158.36 |
| 65 | $10,000 | AIG | $84.15 |
| 70 | $10,000 | AIG | $98.18 |
Guaranteed acceptance life insurance is more expensive to other alternatives. Therefore, it’s most common for seniors or people that are considered high-risk.
When are you considered high-risk?
The most common reason to be considered high-risk is primarily because of your health, or health history. If diagnosed with a serious health condition, such as cancer, you will be high-risk for many years to come. Other reasons to be flagged as high-risk, are dangerous professions or hobbies. Skydiving or deep-sea diving for example.
If you are a high-risk individual, then a guaranteed issue policy can be a good option. However, most guaranteed acceptance products do have a graded benefit duration of 2 years. For that reason, your beneficiaries will not receive your full coverage amount during this period. Instead, they will receive your paid premiums + 10%. A guaranteed issue policy can provide up to $40,000 of coverage. Enough to pay off debt, pay for funeral costs, or to leave a small inheritance.
Not sure how much you need? The Federal Trade Commission states that a funeral home has to provide you with the cost of the funeral you want.
A life insurance company can have stellar performance when it comes to term life insurance. But that may not be true for their guaranteed acceptance products, or perhaps they don’t offer at all.
We chose the following companies based on our extensive experience.
The best guaranteed issue life insurance companies are Gerber, AIG, and Great Western.
| Gerber | AIG | Great Western | |
|---|---|---|---|
| Age | 50 - 80 | 50 - 80 | 40 - 80 |
| Coverage | $5,000 - $20,000 | $5,500 - $25,000 | $2,500 - $40,000 |
| Graded period | 2 years | 2 years | 2 years |
| Availability | All 50 states | Not in New York | Not in New York |
| Compare rates for these companies | |||
#1 Gerber: If you are between the ages of 50 and 80, you can choose from $5,000 to $25,000 in guaranteed life insurance from Gerber Life Insurance Company. The application process is simple and easy. No medical exam is required and there are no health questions to answer. Your acceptance – regardless of your health – is guaranteed.
#2 AIG: AIG insurance offers $5,000 to $25,000 in coverage for individuals between the ages of 50 and 80. The application process is easy and fast. Most cases have no waiting period and as a result, are processed within 15 minutes. You also can’t be turned down for health reasons.
#3 Great Western: Great Western Life Insurance Company offers the highest coverage amount limit of $40,000 ($48,000 in some scenarios), for individuals between ages 40 and 85. This makes Great Western the only product available for high-risk individuals under the age of 50.
Great Western is 10-25% more expensive than Gerber or AIG, because it’s policy is unique. If you can answer three medical questions, you can get $48,000 in guaranteed acceptance coverage.
Finally, Great Western’s guaranteed acceptance life insurance also includes two additional benefits:
Guaranteed acceptance policies do not take long to go in effect, typically less than 48 hours. Some companies issue your policy as fast as the same day with no waiting period. There’s no medical exam or health questionnaire to evaluate. As a result, the underwriting process is simple and fast. It is important to mention that while your policy can be active the same day, there will be a graded benefit period.
Graded benefit period:
A graded benefit period is a duration of time during which the life insurance policy does not pay the full coverage amount. Rather, if the insured were to pass during this time, the beneficiary would receive all paid premiums + interest (typically 10%).
The best alternatives to guaranteed issue life insurance are term life insurance, final expense life insurance, and lastly, accidental death insurance. Which alternative is best for you depends on your age and your health.
We make shopping for life insurance as simple as possible. You can shop online, or we can assist you in finding the best policy, from the best company, based on your situation.
