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We can’t stress enough the importance of life insurance. (And, no, we aren’t that type of life insurance agent as displayed in the movie, Groundhog Day). But, we have seen what happens when people and families go without it. Unfortunately, many people just can’t obtain life insurance. They either have a severe lifestyle situation or a health condition that carriers deem too risky to insure, or insure affordably. Conversely, they are healthy, but they don’t want to go through the hassle of underwriting. In this article, we discuss a few options if you can’t obtain life insurance or if you just want a simple process, including affordable guaranteed issue life insurance.
Options If Declined For Life Insurance
Helpless. Sad. Depressed. Angry. Is this how you felt? People describe these feelings when declined for life insurance.
I am assuming you have a situation where you can’t obtain any life insurance. More often than not, the solution is to pivot to another carrier. A carrier that will affordably underwrite your condition or situation. For example, many life insurance carriers decline people who scuba dive. However, there are many who will, and at an affordable insurance premium. What’s the solution? Obviously, it is to work with those carriers that underwrite your unique situation.
If you are working or active in an association, you may have a better chance at obtaining affordable guaranteed issue life insurance. Why? Carriers usually offer guaranteed issue life insurance in these situations. It all has to do with underwriting. In large groups, such as an employer or association, the carrier looks at the entire group and spread its risk across the group. It knows some people are healthy and others are not. That’s OK. If they did their underwriting correctly, they know the higher risk of the population will offset with the healthy, not-so risky remaining population. They will ultimately make a profit and have no need for individual underwriting.
Group employer or association life insurance coverage usually has no underwriting questions, exam, blood draw, etc as with individual life insurance. Premiums are usually higher than that of an individual policy for a healthy individual. However, the ease of attainability makes group employer or association coverage viable. If you have severe health conditions or know you would be rated or declined for life insurance, group employer or association coverage is beneficial.
Some People Just Can’t Obtain Life Insurance
However, some people just can’t get their hands on group employer or association life insurance. These people include, possibly:
(2) people who work for small businesses without benefits
(3) older, elderly, seniors on Medicare
(4) children and/or children with health conditions that will carry with them through their lifetime
(5) people who have moderate to severe health conditions
Guaranteed issue life insurance could be the only option.
What Is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance is simply life insurance without any underwriting. You essentially fill out an application and voilà, you have life insurance.
While that sounds good, there are limitations that you need to be aware of. We discuss these limitations next.
Limitations Of Guaranteed Issue Life Insurance
(1) limited death benefit – carriers that offer guaranteed issue life insurance usually limits the death benefit to $10,000 or $25,000. While this might be adequate for final expense or burial insurance, it isn’t enough to cover a mortgage or other needs upon death.
(2) limited ages – most guaranteed issue life insurance is eligible between ages 50 and 85. This leaves children and young adults – who either have health conditions or simply want an easy application process – out of the picture.
(3) waiting period – all guaranteed issue life insurance plans have a waiting period on the death benefit. Technically, this is called “graded benefit”, but it is, in layman’s terms, a waiting period. Usually, the carrier enforces a 2 year waiting (some carriers have 3 year waiting periods) on your surviving family receiving the death benefit. This waiting period is enforced on sickness and illnesses only. If you die by an accident, the death benefit is 100% paid in full. After the waiting period, the death benefit is paid in full regardless of the cause of death.
What happens if you die within the waiting period by sickness? Your surviving family receives the premiums back + interest. This means that guaranteed issue life insurance is not for those who are terminally ill.
(4) affordability – the premium cost of guaranteed issue life insurance is more expensive than that of a typical underwritten life insurance policy. For example, a 55-year-old, non-tobacco male needing $15,000 for burial insurance could spend $50 per month on an underwritten policy or $85 per month on a guaranteed issue life insurance policy.
These are some of the limitations on guaranteed issue life insurance.
Is Guaranteed Issue Life Insurance Worthless?
You may be thinking, I am not going to spend this kind of money! Guaranteed issue life insurance is not affordable and too many limitations! Before you really decide that, the only person you are hurting is your surviving family. In many of our cases, the surviving family pays for the policy because they don’t want to be stuck with your debts or financial hardship upon your death.
So, no it is not worthless. Although we can likely find you a policy with immediate death benefit coverage, and have stated that in a burial insurance article, guaranteed issue life insurance sometimes is the solution.
While guaranteed issue life insurance is more expensive than a comparable underwritten policy, we do work with one carrier that is very affordable. We discuss that next.
Before we do so, it is important to discuss underwritten policies a bit more. If you are in the market for burial insurance or final expense, there are “waiting period” underwritten policies as well. These situations usually happen when you have a recent or moderate health condition. See the excerpt from a carrier we work with below. You can read that if you answer “yes” to any of the questions, you will be eligible for “graded benefit”. In other words, a life insurance policy with a waiting period. This is what “graded benefit” means. It means a “waiting period” on the death benefit.
In our opinion, sometimes it does not make sense to go through the trouble of an underwritten policy with a waiting period when an affordable guaranteed issue life insurance policy exists with the same waiting period timeframe. Really, the decision depends on your age and state product availability.
We illustrate a comparison to show you what we mean.
Who Can Use Guaranteed Issue Life Insurance?
Anyone. Guaranteed Issue Life Insurance is good for adults who have moderate to severe health conditions. It is also good for children who have moderate to severe health conditions that will carry with them throughout their adult life. Here are some health condition examples of children and adults who could use a guaranteed issue life insurance policy:
moderate to severe autism
type 1 diabetes
type 2 diabetes
amputations related to diabetes
moderate to severe depression or anxiety
internal cancer (recent)
smokers with other health complications
drug use / drug abuse
Prior / recent felonies and crimes
One Affordable Guaranteed Issue Life Insurance Stands Out
We work with many carriers in the guaranteed issue life insurance space, and only one life insurance stands out because of affordability. Moreover, children are eligible as well. Recall that many guaranteed issue life insurance policies start at age 50 (a handful at 40 and one, that we know of, at 25).
Here are the parameters of the guaranteed issue life insurance we like:
* eligible ages 0 to 85 – that means children and young adults are eligible
* up to $25,000 in death benefit
* 2 year waiting period on the death benefit for death by sickness. If by accident, death benefit 100% paid no matter when
* No health questions whatsoever
Comparison Of Graded Benefit And Guaranteed Issue Life Insurance
As we mentioned, many carriers offer “graded benefit” life insurance. This type of insurance is very similar to that of guaranteed issue life insurance. A graded benefit policy carries a waiting period on the death benefit as well. Moreover, sometimes at a higher cost. Our opinion if that is going to happen, it makes no sense to carry through with a graded benefit policy if a guaranteed issue life insurance plan offers an affordable, lower premium.
In the chart below, we compare the guaranteed issue life insurance policy to a:
(1) traditional underwritten whole life policy of a person in good health, just so you can see the premium differences
(2) two popular guaranteed issue life insurance policies
(3) two popular graded benefit life insurance policies
We select the competing carriers based on premium only. Therefore, the comparison is based on the lowest premium life insurance available in their category.
We assume a 55-year-old male non-tobacco user looking for $25,000 in coverage.
As you can see, the affordable guaranteed issue life insurance has a lower premium compared to the other plans, with the exception of the traditional policy.
As for a 15-year-old boy, a $25,000 guaranteed issue life insurance policy costs $29.90 per month. The other graded benefit policies are not available to children. Of course, children can obtain a traditional underwritten whole life policy. A traditional $25,000 policy could cost around $13 per month.
We hope you can see that affordable guaranteed issue life insurance exists. Anyone up to age 85 is eligible. More importantly, this life insurance is affordable.
Do you need assistance? We can help you out. Please contact us or use the form below. As with anything we do, we place your interest first. What does this mean? It means that if another life insurance is better for your situation, that is what we recommend. It doesn’t matter if we have that recommendation or not. If not, then we help you get in touch with the people who can help. This is the only way we know how to work with our clients.