Do you have schizophrenia and are looking for life insurance? However, do you feel you are at a dead end because life insurance companies decline you?

Yes, John. I’ve applied and been declined. I don’t know what to do next. 

I understand. You’ve come to the right place. We have helped many people with schizophrenia obtain life insurance.

Even to those who have been declined?

Yes, even to those people who have been declined. I am happy to say we have helped many people with schizophrenia obtain life insurance.

However, one major thing to understand is that schizophrenia is a serious mental health condition. Carriers know this and they underwrite your situation accordingly. We will discuss more about this in the article.

First, let’s give an overview of what we will discuss in this article:

• Can People With Schizophrenia Get Life Insurance?
• Your Severity And Life Insurance Coverage Matters
• Underwriting Process For People With Schizophrenia
• How We Administer The Application Process
• 3 Life Insurance Options For People With Schizophrenia
• FAQs About Life Insurance And Schizophrenia
• How We Can Help You Obtain Life Insurance

Let’s answer the question, “Can people with Schizophrenia obtain life insurance?”

Can People With Schizophrenia Obtain Life Insurance?

Yes, people with Schizophrenia can obtain life insurance. The types of life insurance available to them include:

• term life insurance,
• whole life insurance,
• universal life insurance,
• simplified issue policies, and
• guaranteed issue policies

We will discuss all of these options in the article. We have helped people with schizophrenia obtain life insurance in all of these aforementioned plans.

What kinds of life insurance are available to you? That depends on how much coverage you want as well as the severity of your schizophrenia. We discuss this intersection next.

Your Severity Matters To How Much Coverage You Want

Let me first say that if you want life insurance, it won’t be perfect. You have to understand that.

What, John? Other websites say that I can get life insurance easily!

I am aware of that. Unfortunately, those articles tend to misrepresent the underwriting process (which we discuss next). What I mean is that you will generally have to pay higher premiums than someone who doesn’t have schizophrenia. Moreover, depending on the severity of your condition, life insurance companies may limit the type of life insurance available, the death benefit, or some combination of both.

For example, a person on SSDI for schizophrenia will not be able to obtain $500,000 of term life insurance. He or she probably won’t be able to get $100,000 of term life, either. Just look at this real excerpt from an underwriting guide. Schizophrenia is a mental illness and a serious medical condition at that.

However, he or she should be able to get some amount of life insurance, like $25,000 or $50,000. We discuss more in the article.

That is what I mean when I say that life insurance may not be “perfect”. If you have a severe medical history, then life insurance carriers will limit your coverage one way or another. They will increase the life insurance rates, the type of life insurance, the death benefit amount, or some combination.

Now is a really good time to discuss the underwriting process for someone with schizophrenia. Underwriting is the foundation of the life insurance decision process.

Life Insurance Underwriting Process For Someone With Schizophrenia

Many other websites and agents overlook the underwriting process. However, underwriting, hands down, has to be the most important step in this whole process.

Yes, John. I am aware of that. I was declined for life insurance recently. 

Unfortunately, that is what I hear from many people with schizophrenia. However, as I said before, we can get you life insurance, even if you have been declined before. And, it all has to do with underwriting.

As I mentioned before, you have to understand that, because you have schizophrenia, the life insurance won’t be perfect. Life insurers will adjust your policy one way or another by:

• increasing your life insurance rates (known as table rating),
• limiting your death benefit,
• limiting the type of life insurance available, or
• some combination

You might be asking yourself why they do this. You are healthy every other way, but you have a schizophrenia diagnosis, right? Here is why. While studies vary, they all conclude that people with schizophrenia have a life expectancy of about 15 years less than someone who doesn’t.

Life insurance companies know this. They know the comorbidities associated with schizophrenia, which include potential heart issues, substance abuse, cognitive impairment, etc.

This is a formidable reason why. However, as I said, that doesn’t mean you can’t get life insurance.

One thing to remember is that some carriers simply and automatically decline people with schizophrenia. While you may think that is discriminatory, it isn’t. Carriers that do are just unsure of the risk (i.e. the risk of dying too soon). So, they err on the side of caution and decline applications from people with schizophrenia.

Because the underwriting process is so important to your approval, we will discuss the process in detail and what carriers look for.

What Life Insurance Underwriters Look For In An Application From Someone With Schizophrenia

We are going to discuss in detail what life insurance underwriters look at in an application from someone who has schizophrenia. Note that the information is generalized and not specific to any one particular carrier. Carriers may have additional requirements.

The Severity Of Your Schizophrenia & History Of Mental Illness

The first thing is that carriers want to know the severity of your schizophrenia. Please reference the graph below. If your schizophrenia is mild, is managed well with a doctor, and has been stable, then you should have many life insurance options available. If it is moderate, then expect fewer options. Additionally, if it is severe, then expect very few life insurance options available.

Guidelines

What is mild, moderate, and severe in terms of schizophrenia? Here is a general guideline:

• Has your medication been stable for the last several years? If yes, then mild. If there have been many changes, then could be a moderate to severe situation.
• Do you routinely see your doctor or psychiatrist for care? If yes, great. Carriers like that. It shows you are dedicated to your care. However, if you do not routinely see your doctor or you do not follow his or her treatment plan, expect a severe situation.
• Have you had any hospitalizations due to your schizophrenia? Favorable underwriting attributes include: your hospitalization (if any) occurred 10 years ago or more, was a one-time event, and hasn’t reoccurred since. If you have had recent hospitalizations and/or suicide attempts, then that is a severe situation.
• Are you gainfully employed? This is huge. You won’t hear this from any other agent or broker. If you are gainfully employed and have been without missing work due to schizophrenia, carriers like that. It shows you can maintain relationships and have the mindset to earn an income. If you are on SSDI due to schizophrenia, we still have life insurance options, but fewer options exist.
• What type of medication are you on? That matters. We discuss that separately next.
• Do you have other mental health issues, like PTSD?
• Can you perform activities of daily living? Does your condition affect your daily life?

Does this give you a good idea of what life insurance underwriters are looking for? Again, if you are in a severe situation, do not worry; we can still get you life insurance.

Carriers will order your medical records from your doctor to gauge your mental health history. Your medical records will confirm the stability and severity of your schizophrenia.

What Medication Are You Taking?

The medication you are taking matters.

Are you taking antipsychotic medication like Clozapine, Haldol, Latuda, etc?  If so, the use of antipsychotic medication can lead to lower mortality compared to someone who doesn’t take these kinds of medications. Again, carriers know this, and they will adjust their approval offer accordingly (see above).

However, studies have shown that the use of antipsychotic medication yields longer lifespans for people with schizophrenia and can make a positive impact on their lives. Again, if you are taking antipsychotic medication, stable, and gainfully employed, then carriers generally see that as a mild situation.

If you are only on mood stabilizers like Lamictal, that could be better for underwriting. Same with first-line anxiety and/or depression medication.

Other Health Issues

Life insurers factor in other health conditions to the decision-making / underwriting process. Do you have other mental health disorders? Many times, people with schizophrenia have an overlap of bipolar disorder, anxiety disorder, or depression.

If these situations are also stable with first-line medication treatment, then that is generally a positive for your underwriting outcome.

However, if you have severe anxiety, clinical depression / severe depression, or serious mental illnesses like post-traumatic stress disorder, then carriers may limit your coverage one way or another.

Additionally, other health conditions like substance abuse, sleep apnea, overweight issues, etc. play an important role in the underwriting process.

You must disclose all health conditions, even those conditions you feel are immaterial to your situation.  Carriers look up your medical background through the MIB and prescription drug database anyway. Moreover, in your situation, they will order doctor records, so it is better to be truthful upfront about your overall health situation. Often, if you disclose your overall situation and severity upfront, we can get a good estimate of what your underwriting outcome could be. This saves a lot of time and effort for everyone.

Other Issues Material To The Application

Life insurers look at other factors in your application, including:

• your driving history
• any felonies or misdemeanors
• hazardous activities like skydiving
• bankruptcies and credit issues
• smoking, substance abuse, or marijuana use

Again, no matter your situation, we can get you life insurance.

Let’s talk about our application process next.

How We Administer The Life Insurance Application Process

We are a little different than other brokers and agents. First, we have helped many people with schizophrenia obtain life insurance, so we have a good idea of what carriers look for in an application. Second, we don’t like to waste your time. Have you gone through the entire underwriting and application process, only to get declined right at the end of it?

Yes, John. It stunk. I even went through the paramedical with blood and urine tests. 

Unfortunately, that is a comment I hear often from my clients with schizophrenia.

Life Insurance Application Process

They went through the entire process, only to get declined. These people could have had a good idea of their estimated underwriting outcome at the beginning of the process.

Here’s how we administer the application process:

#1 Contact us – Please reach out to us either through phone, text, or our contact us link

#2 Tell us your schizophrenia situation – be honest with us and tell us the severity of your schizophrenia, hospitalizations, employment, etc.

#3 Tell us your overall health situation – including other mental disorders, height and weight, etc.

#4 We contact the favorable life insurance carriers on your behalf – if we need to, we will send out a risk assessment to the life insurance companies favorable for people with schizophrenia

#5 Review – we review the estimated premium results with you and discuss the specific underwriting steps

#6 Apply – when you are ready, apply with us

#7 Approval (hopefully) – if you were upfront and honest with your condition and background, you should get approved. Looking back at the people who were unfortunately declined through this process, they either:

• did not disclose other material issues
• misdiagnosed their condition (i.e. said they were mild when the underwriter deemed them moderate or severe after medical records review)
• forgot to mention other issues that they thought were immaterial, but the carrier deemed them important

As I mentioned, it is best to be upfront and honest so we know, going into a potential life insurance application, what the outcome could be.

Now is a good time to discuss the 3 life insurance options for people with schizophrenia.

3 Life Insurance Options Approved For People With Schizophrenia

We will now discuss the 3 life insurance options available for people with schizophrenia. I know other websites tout the “best life insurance” for people with schizophrenia. While favorable carriers exist for people with schizophrenia, there is not one “best”. The best one is the one that approves your application at the best rates available.

Fully Underwritten Life Insurance

If you have a stable situation, are following your doctor’s treatment plan, are gainfully employed, and your schizophrenia has not caused any disruption or disability in your life, then fully underwritten life insurance is available. What is “fully underwritten”? It means that carriers will apply the “full” underwriting process in your situation.

That means, underwriters will (along with your application):

• review your medical information in the MIB
• confirm medication through the prescription drug database
• order your doctor’s records to confirm the status of your condition
• require a paramedical exam (like a medical examination) with a blood sample and urine sample (i.e. medical underwriting)
• require anything else material to your application like legal databases, driving history, etc.

What types of life insurance qualifies for fully underwritten life insurance? You are eligible for these types:

• term life insurance
• whole life insurance
• universal life insurance like indexed universal life

Because you are going through a complete underwriting process, a fully underwritten process yields the most affordable rates. However, remember, that carriers will likely charge a table rating.

John. Another website said I would be eligible for standard rates! 

I’ve seen that, too. While that is possible, it is very improbable. Generally speaking, just being on antipsychotic medication yields a table rating. If you were only taking first-line medication treatment for depression or a mood stabilizer, then a standard rate may be possible. However, it is highly unlikely.

If your situation is stable, then expect a table rating around table 4.

Feel free to check out term life insurance rates here. Just know that the rates you will see will likely be higher because the quoting tool does not adjust for table ratings.

Simplified Issue Life Insurance

Simplified issue life insurance is available for moderate situations. What is simplified issue life insurance? Simply, carriers that offer simplified issue life insurance have removed several components of the underwriting process to make it more “simple”. For example, it is very common for simplified issue carriers to NOT require a paramedical exam with blood and urine tests. Others don’t require an MIB or prescription drug database.

On the one hand, that sounds great. However, on the other, limitations exist. For one, simplified issue plans cost comparatively more than their fully underwritten counterparts. Why? Because fully underwritten plans have detailed underwriting.

Simplified issue life insurance includes whole life insurance with small death benefits like $50,000. These plans are typically known as burial insurance or final expense insurance. They are designed to fund your funeral and leave some money behind for your loved ones.

The Benefit Of Simplified Issue Life Insurance

The benefit of final expense insurance is the application process. It is extremely easy. Most times, you just get on the phone with me. I prequalify you and select a favorable carrier that insures people with schizophrenia. You apply with me over the phone. I fill out the application, which is then emailed to you for your electronic signature. The carrier underwrites the application. If all checks out, the carrier approves your application, and you have life insurance. Moreover, your premium already factors in your health conditions. The process is simple.

John, my friend says he got simplified issue term life insurance. Is that available?

While simplified issue term plans are available, they are likely not available for people with schizophrenia. Simplified issue term plans tend to automatically decline people with serious mental health conditions like bipolar disorder, PTSD, and schizophrenia. Just look at these excerpts from underwriting guides:

As we mentioned, simplified issue plans usually are whole life insurance plans. If you’d like to search rates, feel free to quote below.

Note: fully underwritten term life insurance plans might be available for moderate situations. However, expect a table rating of around 8 or more.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance is available for severe schizophrenia situations. It is simply life insurance without any underwriting. That means the carrier doesn’t look up your medical history or prescription drug usage. It also doesn’t require a paramedical exam or anything like that. You just apply, and you then have life insurance.

While that sounds great, be aware of the following:

• premiums rates are much higher because no underwriting exists. Carriers know people who purchase guaranteed issue life insurance are in serious situations where they don’t qualify for other types of life insurance. They are higher risk, so carriers charge more.
• a waiting period exists. Remember, the carrier doesn’t underwrite. To prevent death benefit payouts on quick deaths, carriers implement a waiting period. The waiting period can be 1 year or 2 years depending on the carrier. If you pass away during this timeframe, carriers will generally pay back the premiums you paid.

We work with both guaranteed issue term life and guaranteed issue whole life. Moreover,  we work with a few carriers that offer life insurance for those people under the age of 40.

We offer many guaranteed issue life insurance options, even a term plan that you can self-enroll here.

Feel free to check out the guaranteed issue whole life insurance plans below. Please contact us if you have any questions.

Frequently Asked Questions About Life Insurance And Schizophrenia

We discuss and answer several questions about life insurance for people with schizophrenia.

What Are the Options for Life Insurance for Individuals with Schizophrenia?

The life insurance options for people with schizophrenia depend on the severity of the person’s condition (see our underwriting section above). Generally speaking, the types of life insurance policies available are:

• term life insurance other fully underwritten plans – people with a mild and stable history
• simplified issue life insurance – people with a moderate history and limited stability
• guaranteed issue life insurance – people with a severe history and are disabled on SSDI

We have helped many people with schizophrenia obtain life insurance. Feel free to contact us with any questions.

Can People with Schizophrenia Qualify for Traditional Life Insurance Policies?

Yes, people with a mild condition, healthy lifestyle, and stable history can obtain traditional life insurance policies. Moreover, people with a moderate history can obtain traditional life insurance, but likely at much higher premium rates. Note: carriers will likely charge a higher rate through a table rating.

How Does the Underwriting Process Differ for Individuals with Schizophrenia?

If you want a fully underwritten life insurance policy, expect a complete underwriting process which includes a paramedical exam with blood/urine sample, MIB and prescription drug lookup, doctor records review, etc.

If you want something more simple, then simplified issue and guaranteed issue life insurance plans are available.

What Information is Required During the Application Process?

The information depends on the type of life insurance you want, the death benefit amount, and the severity of your condition.

If you want a fully underwritten life insurance policy with, say, a death benefit of $100,000 or more, then life insurers will want:

• paramedical exam with blood and urine sample
• medical records review
• MIB and prescription drug history lookup
• Application
• Anything else material to the decision like bankruptcies, hazardous hobbies, driving record (etc)

If you want a simple life insurance policy with, say, a $25,000 death benefit, then carriers want:

• the application
• MIB and prescription drug look up (some don’t require that)
• phone interview (not very common anymore)

You can see the simplified issue plans are very “simple” to apply for. However, the double-edged sword is that carriers will only offer $25,000 to $50,000 maximum coverage.

Then, if you don’t want the carrier to look up any of your health history or answer any health questions (some people don’t), we have many guaranteed issue life insurance plans. Just know that guaranteed issue plans come with a waiting period because the carrier does not underwrite.

Can Medication and Treatment History Impact Life Insurance Approval?

Yes. Generally speaking, the prescription of antipsychotic medication will yield a table rating if you want a fully underwritten policy. Taking too much antipsychotic medication could mean a severe situation. Carriers will decline fully underwritten applications in those situations. However, simplified issue and/or guaranteed issue life insurance might be available.

How Do Mental Health Records Affect the Life Insurance Application?

If you apply for a fully underwritten life insurance policy, carriers will always order your mental health records. They do this to confirm the stability of your condition.

As we discussed earlier, simplified issue underwriting won’t obtain your medical records. Moreover, guaranteed issue life insurance has no underwriting, so carriers won’t ask for medical records in those cases as well.

How Does Family Medical History Influence Life Insurance Premiums for Those with Schizophrenia?

Not so much. Having family members or a family history of schizophrenia doesn’t impact the life insurance approval decision. Carriers want to know about your situation. Moreover, most carriers don’t ask about a family history of schizophrenia or mental illness on the application.

Below is a real excerpt from an application. You can see the carrier asks about heart disease, cancer, Huntington’s disease, etc.

Are There Waiting Periods or Restricted Coverage for Individuals with Schizophrenia?

Guaranteed issue life insurance typically has 1 or 2-year waiting periods on their death benefit. Essentially, that means if you pass away during the waiting period, your beneficiaries receive either the premiums you paid back or some percentage of the death benefit.  The definition of the waiting period varies depending on the carrier. You will want to understand the waiting period before accepting a plan.

Is Group Life Insurance a Viable Option for Individuals with Schizophrenia?

Yes, if you work and qualify for group life insurance, then that is an option. However, know that group life insurance generally terminates if you lose your job or you move on to a new job. Some group plans allow you to take the life insurance with you for a higher price.

Now You Know The Life Insurance Options Available For People With Schizophrenia

Yes, people with schizophrenia can obtain life insurance. Three life insurance options include:

• fully underwritten life insurance, like term and whole life – for mild, stable, and some moderate cases
• simplified issue life insurance – for moderate situations
• guaranteed issue life insurance – for severe cases and where people do not work / are on SSDI

We discussed how the severity of your schizophrenia matters and the underwriting process.

Do you have any questions or would like to see what life insurance plans are available? Contact us or use the form below.

I know people nowadays are hesitant to reach out to insurance brokers or have brokers contact them. People are afraid of getting 1,000 phone calls and emails a day. It’s annoying!

I feel that way, too. We aren’t like that. We respect your privacy. If you don’t want our help, just tell us that. You can always reach back out to us in the future. Many clients do.

Moreover, we only work in your best interests and place you in a plan that benefits you and your family, not us. If we can’t help you, we will point you in the right direction as best we can. You can always reach back out to us if your needs change.

Many people get confused about the face amount of a life insurance policy.

The reason is that there are other names for the face amount. For example, some people think the cash surrender value is the face amount of a life insurance policy, but it’s not.

Coverage amount is another name for the face amount.

Moreover, the face amount really depends on the type of life insurance you have.

It’s important to understand the face amount of a life insurance policy, so you know what your beneficiaries will receive upon your death.

In this article, we are going to discuss:

• What Is The Face Amount Of A Life Insurance Policy?
• The Type Of Life Insurance Matters
• Understand What Is Life Insurance Face Value Vs Cash Value
• What Is The Face Amount Vs. Death Benefit?
• How Do You Determine The Right Face Amount For You?
• How Do Life Insurance Companies Determine The Face Amount Of Life Insurance?
• FAQs About The Face Amount Of Life Insurance
• How We Can Help

Let’s jump in and discuss and answer the question, “What is the Face Amount of a Life Insurance Policy?”

What Is The Face Amount Of A Life Insurance Policy?

The face amount of a life insurance policy is the amount of money a life insurance carrier pays to your beneficiaries when you, as the insured, pass away.

It is that simple. For example, if your policy says you have a $250,000 death benefit, then that’s the amount your beneficiaries receive upon your death.

The face amount of a life insurance policy is the amount of money a life insurance carrier pays to your beneficiaries when you, as the insured, pass away.

Sometimes, the face amount is known as the:

• face value
• coverage amount
• death benefit amount

While these all mean, generally, the same thing, sometimes they can be different.

What, John? Sounds like you are talking out of both sides of your mouth!

Sorry. Let’s go deeper. The face value of a life insurance policy really depends on the type of life insurance you have. Let’s discuss more.

The Face Amount Depends On The Type Of Life Insurance You Have

A policy’s death benefit or face amount really depends on the type of life insurance you have. The three main types of life insurance include:

• term life insurance
• whole life insurance
• universal life insurance

When you apply for life insurance, you apply for the face amount. Upon your death, your beneficiaries receive the death benefit, which may or may not be the face amount.

With term life policies, the face amount is the death benefit stated in the contract. See this example:

So, if you have a term life insurance policy with a $1,000,000 death benefit, that is the face amount. If you pass away within the term (let’s say 20 years), then your beneficiary receives $1,000,000.

However, as with all term policies, if you pass away outside the term after your policy expires, your beneficiaries receive $0. Your death benefit is $0.

So, with term insurance, the face amount is the amount that is stated on the contract.

The face amount is different when it comes to permanent life insurance policies. We discuss those next.

What Is The Face Amount On A Whole Life Insurance Policy?

Whole life insurance is a type of permanent life insurance. Permanent life insurance is designed to last your entire life and pay the death benefit upon your death.

The face amount on whole life policies differs from that of term life policies.

Whole life insurance policies contain guaranteed and non-guaranteed elements in their contract. They guarantee the:

• premium payments
• cash value
• death benefit

Non-guaranteed elements exist. These include:

• premium payments (you can pay more if you want, up to an IRS limit)
• cash value component
• dividends
• death benefit

A non-guaranteed death benefit can exist with whole life insurance. The reason is due to the structure of whole life insurance and if the policy offers dividends.

When you make premium payments to a whole life insurance policy, part of that premium goes to the cash value. Without getting too detailed, as the cash value account grows, the carrier’s “net amount at risk” declines.

However, when the whole life insurance policy offers dividends (i.e. participating whole life insurance) your death benefit potentially increases.

See the comparison below. This is a $100,000 face amount for a 30-year-old man. His guaranteed premium is $82.54 per month (about $990 annually) and a guaranteed death benefit of $100,000. Through the use of dividends and using the dividends to buy more life insurance on himself (also known as paid-up additions) he increases the death benefit to potentially $109,984 at age 57 (for example).

Let’s say he passes away at age 57. His beneficiary could potentially receive the $109,984 with a guaranteed face amount of $100,000.

What Is The Face Amount On A Universal Life Insurance Policy?

The face amount of a universal life policy is different. It depends on the type of death benefit selected. (Note: I am not going to get into the details on universal life policies. Universal life is structured much differently than whole life. However, if you have any questions, please contact me.)

Most carriers that offer universal life offer 2 types of death benefit:

(1) level death benefit

(2) increasing death benefit

The level death benefit is just how it sounds. Your death benefit remains the same throughout the life of the policy, provided your premium payments are enough to maintain the cost of insurance and other fees. The level death benefit is similar to that of the guaranteed death benefit / face amount on a whole life insurance policy (except, technically, the universal life death benefit isn’t guaranteed – again, a little outside the scope of this article).

The increasing death benefit is different. In this case, the policy’s cash value is added to the face amount (as you apply for on your life insurance application) for a total death benefit. Upon your death, your beneficiaries will receive the policy’s cash value + the face amount (equals the death benefit) – any policy loans and/or withdrawals.

So, for example, let’s say Joe and Tim each have universal life insurance policies of $100,000. Joe has a level benefit and Tim has an increasing death benefit.

At age 50, they both unexpectedly pass away. Joe and Tim each have $50,000 of cash value at the time of their death. Let’s assume no outstanding loans or withdrawals.

Joe’s beneficiaries receive $100,000 (because he has a level death benefit) and Tim’s beneficiaries receive $150,000 (because he has an increasing death benefit).

What Is Face Value Vs. Cash Value?

We just discussed the face amounts for term life insurance, whole life insurance, and universal life insurance. The type of death benefit / face amount available to your beneficiaries really depends on the type of policy you have.

I receive many questions about cash value. As I described earlier, cash value is a key component to the makeup of permanent policies (whole life and universal life). Many people think cash value is the face amount of a life insurance policy.

It is not.

Cash value is simply the build-up or growth of money that builds inside a permanent life insurance policy. Generally speaking, as you pay your premiums, your cash value grows over time. Carriers typically offer an attractive interest rate on the cash value. You technically can’t lose money on the cash value (except to pay for any policy fees or surrender costs). It is a safe way to grow your money. Think of it as a savings account (but it is not).

The policy’s cash value will always be less than the policy’s face value (until, technically, when the insured reaches age 121, then the life insurance “endows”). Look at our whole life excerpt again.

In this example, the guaranteed cash value is $31,310 and the guaranteed death benefit is $100,000. The plan offers a potential cash value of $36,229 with a non-guaranteed death benefit of $109,984.

If at age 57, the policy owner decides to cancel the policy, he will receive the cash value of potentially $36,229 in the policy.

What Is The Face Value Of A Policy Vs. Death Benefit?

We touched on this in our section about the face amount of a universal life insurance policy. A person who owns a universal life insurance policy with an increasing death benefit has both the face amount and a death benefit.

The face amount is the amount of life insurance the policy owner applied for at the time of application (and, assuming he was approved for said amount).

The death benefit is the cash value in the universal life policy + the face amount (A +B, see below).

Upon a policyholder’s death, assuming no loans or withdrawals, the policyholder’s beneficiary will receive the death benefit (cash value + face amount).

How To Determine The Right Life Insurance Face Amount For You?

Most people just blindly pull a number out of the air and say, “I need $250,000 of life insurance.”

Obviously, that is the wrong tactic.

For example, if you make $100,000 and are the breadwinner of your family, $250,000 won’t go very far upon your death, depending on your situation.

If you have children, a spouse who doesn’t work, and a mortgage, that $250,000 is gone in a year’s time.

Some agents use the “10 X” rule of thumb. They say that whatever you make, you multiply that number by 10. That is then the right amount of coverage for you.

So, for example, if you make $100,000, then you should have $1,000,000 on yourself.

That is better than the “pulling numbers out of the air approach”, but still isn’t specific enough to meet your family’s needs upon your death.

Some carriers have these life insurance calculators on their websites. Honestly, they just muddle and complicate things with how they present their calculators.

It doesn’t have to be complicated. Look at this life insurance needs worksheet we created. It is straightforward and self-explanatory.

The worksheet is already pre-filled with some “dummy” numbers. Enter your own situation and play around with the death benefit to see what makes sense.

Nevertheless, the attachment helps you determine the right face amount for your particular needs and situation.

How Does A Life Insurance Company Determine The Face Amount?

Some people think they can apply for any amount of life insurance. However, that is not the case.

Carriers limit the face value of life insurance in one way or another.

For example, a 50-year-old man on SSDI won’t ever get approved for $1,000,000 in term life insurance. Why?

He is on SSDI, which means he can’t work. Being gainfully employed and working is an important factor to many life insurance companies.

He could, though, get $50,000 and maybe up to $100,000 if his SSDI is due to an injury.

That brings us to our first point. Many life insurance companies limit the face amount based on an income or salary factor. This factor is based on the applicant’s age, type of insurance, and salary/income.

Look at the excerpt below on this carrier’s limit. So, for example, a 30-year-old woman making $100,000 can apply up to $4,000,000 of life insurance.

If she already has $2,000,000 in place with another company, she can only apply for an additional $2,000,000 (for $4,000,000 in total).

However, salary isn’t the only factor. Companies also limit the life insurance death benefit through underwriting.

They look at your health, lifestyle, credit history, and other situations they deem material to your risk (i.e. risk of dying too soon). If one of these factors is too adverse, carriers may limit the face amount or decline your application altogether.

Contact us if you have any questions. We are one of the few brokers that can get anyone life insurance. It may not be the face amount you are looking for, but we usually can get people some amount of life insurance in nearly all cases.

Frequently Asked Questions About The Face Amount Of Life Insurance?

We answer frequently asked questions about the face amount of life insurance.

What Is the Face Amount Of A Life Insurance Policy?

The face amount of a life insurance policy is the dollar amount of money that will be paid out to a beneficiary upon your death. This amount differs based on the type of life insurance you have. Term life insurance provides the same face amount as the death benefit. For example, if you purchased a policy with a face amount of $250,000 and pass away during the term period, your beneficiaries receive a $250,000 death benefit.

The face amount or death benefit amount is different with permanent policies. With whole life, the death benefit amount is the face value/face amount you applied for + any paid-up insurance – any outstanding loans. For universal life with an increasing death benefit, the death benefit contains the face amount applied for + any cash value – any loans or withdrawals.

How Is The Face Amount Determined For Life Insurance Coverage?

Several factors are involved when determining the face amount of life insurance. These factors include:

• your age
• salary or income you make
• what your needs are

Additionally, underwriting comes into play. Ultimately, your face amount depends on:

• your health
• any lifestyle situations like hazardous hobbies like skydiving
• citizenship status
• anything material to the underwriting decision. like felonies

These all affect your life insurance premium which may affect the face amount. For example, let’s say you applied for $500,000, 30-year term for $75 per month. However, because of past health issues, the underwriter determined your rate should be $150 per month for $500,000. You’d like to stick with a budget of $75 per month, so you ask the carrier to modify the face amount to $250,000.

Can I Adjust The Face Amount Of My Life Insurance Policy Over Time?

Not necessarily. Some types of life insurance allow you to adjust the face amount over time. Additionally, some term life insurance policies exist where the face amount decreases over time (to follow the declining balance on a loan or mortgage). However, most face amounts remain fixed over time. This is particularly true with term life insurance.

With permanent policies, the death benefit can adjust with increases in cash value or decreases with loans.

How Does My Age Impact The Face Amount I Should Select?

It can. Generally speaking, the older you are, the higher your monthly premiums (all things being equal). If you are on a budget, then your budget may limit the amount of life insurance.

For example, you are 55 and want $250,000 of term life which costs $100 per month. But, you can only afford $50 per month. Therefore, you apply for a lower face amount.

As we mentioned earlier, many carriers limit the face amount based on your age and the income you make.

What Is the Difference Between Face Amount And Cash Value In Permanent Life Insurance?

The face amount is, generally speaking, the amount of money your beneficiaries receive upon your death. Cash value applies with permanent life insurance policies. The cash value really starts at $0 and grows over time as you make premium payments and as the cash value earns a return. Even when your cash value is $0, you still have a death benefit.

For example, Joe applies for $100,000 universal life insurance. He makes the first premium payment. His cash value is $0 right now, but if he passes away tomorrow, his beneficiary will receive a $100,000 death benefit.

How Does Your Health Conditions Influence The Face Amount I Can Secure?

Health conditions can affect the face amount. If you have a moderate to severe health condition, carriers may limit the death benefit to limit their risk. Alternatively, they may keep the face amount the same, but they increase the premiums through table ratings to offset their risk.

What Happens If The Face Amount Is Insufficient To Cover My Beneficiaries’ Needs?

If the face amount is insufficient for your beneficiaries upon your death, then you need to purchase additional life insurance. You don’t want to wait on this. If you develop a serious health condition or unexpectedly pass away before the additional insurance, then your beneficiaries might face a tough financial situation.

How Often Should I Review and Potentially Adjust the Face Amount of My Policy?

You should review your life insurance situation at least every few years and make sure your current life insurance policies fulfill your beneficiary needs. The following situations likely lead to a change in life insurance needs:

• an increase in your lifestyle
• a new baby
• a death in the family
• divorce
• loan agreement
• purchase of a business

How Does the Purpose of the Policy Affect the Face Amount Selection?

One advantage of life insurance is the flexibility of its use. The purpose of the life insurance affects the face amount. For example, if you want life insurance to pay for your funeral, you can apply for burial insurance. Burial insurance is a whole life policy with a low face amount, like $30,000. Upon your death, your beneficiary can use this money to pay for your funeral. Moreover, some carriers allow you to assign part of the death benefit, or all of it, to a funeral home of your choice.

As you can see, needing life insurance to pay for your funeral is different than needing it to pay for your unexpected death. This is where a term life policy shines. It is common to see life insurance face amounts of $1,000,000; $2,000,000; or even more if the applicant has a young family, a significant mortgage, and/or the main provider of the family.

Likewise, it is common for banks or lenders to require life insurance on a borrower. In this case, if the borrower passes away during the loan repayment period, the lender receives the death benefit money that makes them whole.

How We Can Help With The Face Amount Of Life Insurance

I hope you learned more about the face amount of a life insurance policy. As you read, the face amount is much more involved than at first glance. We answered what the face amount is as well as contrasted the face amount and death benefit for permanent insurance policies. We also discussed what is involved in determining the face amount and how carriers can limit the face amount.

Do you have any questions or need assistance? Do you feel like you need more life insurance, but don’t know where to start?

Contact us or use the form below. I am happy to assist and answer any questions you have.

We have helped many people obtain life insurance, placing their needs before our own. Isn’t that how a trusted relationship is supposed to be? We have your best interests first. We also don’t contact you 1,000 times per day. If you ever feel like you don’t need our help, just tell us. You can always reach back out to us if your needs change.

Did you know guaranteed issue term life insurance exists?

No, John. I’ve only heard about guaranteed issue whole life insurance.

Right. This is guaranteed issue term life.

Same thing. No health questions (however, one does have some general questions to answer).

No MIB lookup or underwriting. Carriers don’t ask any health questions.

You fill out the online application. Then, pay via credit card or with a debit card.

You then have life insurance.

There are some differences. Notably, this is term life insurance.

We work with 3 guaranteed issue term life insurance plans.

John, tell me more.

We’ll go through all the details.

Here’s what we will discuss:

• How Does Guaranteed Issue Term Life Insurance Work?
• 3 Guaranteed Issue Term Life Insurance Plans
• How Much Does It Cost?
• Where Is It Available?
• Who Is This Good For?
• How Do I Apply?
• What If I Need More Coverage?
• FAQs About Guaranteed Issue Term
• How We Can Help

Let’s jump in and discuss how the guaranteed issue term life insurance works.

How Does The Guaranteed Issue Term Life Insurance Work?

I know what you are thinking.

John, how am I able to obtain guaranteed issue term life insurance? I only heard of guaranteed issue whole life insurance.

Here’s how you can obtain term life insurance with no health questions or underwriting.

These guaranteed issue term life insurance options are through associations. In order to obtain the term life insurance, you have to join the association.

Note that the guaranteed issue term life insurance depends on where you live. Not all associations are available in all states.

We will get into the associations in the next section. However, you will need to agree to the terms of the association membership if you want the life insurance. In other words, you’ll have to pay a membership fee as well as the premium for the life insurance itself.

That’s not so bad because nearly all of the associations offer value-added benefits along with the life insurance plan.

Additionally, like guaranteed issue whole life, some term plans have waiting periods. In other words, the life insurance doesn’t take effect until the waiting period elapses. For example, if a plan has a 2-year waiting period, the life insurance isn’t in effect until the 2-year period finishes.

In the meantime, you have access to other benefits offered by the association. Some plans will pay a benefit if you pass away from an accident during the waiting period as well.

Like Term Life Insurance Through Your Job

Finally, the term life insurance operates on a group/employer foundation. It is like the term life insurance one can get through an employer (i.e. your job). Like group employer term life insurance, the association or the life insurance carrier can terminate the plan anytime (please understand: no premium refunds if this happens).

Generally speaking, everyone is accepted. One association we work with does not require a social security number.

Let’s discuss the 3 guaranteed issue term life insurance options.

3 Guaranteed Issue Term Life Insurance Options

Here are the 3 associations and their corresponding guaranteed issue term life insurance options.

Elevate To Wellness Association

One association we work with is the Elevate to Wellness Association.

As you can read on their website, their mission is to promote health and wellness options for employees at small-to-mid-sized companies.

You are probably aware that small business owners and employees get “priced out” of competitive insurance and financial products.

The Elevate to Wellness Association offers various financial and insurance products to employees at discounted rates (similar to big corporations). These products include:

• life insurance
• dental and vision insurance
• critical illness insurance
• accident insurance
• hospital indemnity plans
• medical plans
• pet insurance
• prescription discount drug plans
• lifestyle options such as identity theft protection, computer services, wellness, etc.

They offer many robust insurance plans.

In terms of the life insurance option, you can purchase up to $50,000 at guaranteed issue. It is term to age 85. However, in order to obtain the life insurance (or any of these plans), you must be gainfully employed. If you are not working because of illness or injury, then you can’t join.

We require some type of current pay stub to show proof of your gainful employment. You must also work 20 or more hours per week.

Premiums are pretty cheap. We helped a 24-year-old woman obtain $50,000 for $10 per month, including the membership fee.

How to enroll? You have to contact us. The only plans the association offers through its website are their lifestyle plans which include $7,000 of term life insurance only. If you are interested, we can get you set up.

Emergency Management Alliance

The next association is the Emergency Management Alliance.

They offer up to $20,000 in term life insurance for a member for a flat $59.95 per month for 1 member.

Even better, they offer family plans for $89.95 per month which includes $20,000 on the enrolling member, $10,000 on a spouse, and $5,000 each on children.

Eligible ages are 18 to 74.

It is term to age 100, so it lasts your lifetime.

However, the association requires answers to 3 pre-qualifying questions. See the snippet. This is like “almost” guaranteed issue life insurance.

So, the applicants can’t be terminally ill or confined to a nursing home, etc. Moreover, the enrolling member must work in gainful employment.

But, John. I am 70 years old. I am retired, but I’m able-bodied and can work if I need to.

If you are retired, that is OK, as long as you are able-bodied and can work or have the ability to work if you want to. You can then enroll in the life insurance. The association doesn’t accept individuals who unfortunately are not able-bodied (physically and mentally) to work in gainful employment.

That brings us to this point, this term life plan is a great option for able-bodied seniors looking for life insurance.

As specified in the brochure, the death benefit does reduce at age 70 to $10,000. (More on why in a minute.)

However, compare these options. A $10,000 policy with the EMA costs $59.95 per month for a 71-year-old man. The same 71 year-old-man can buy a $10,000 guaranteed issue whole life insurance policy for about $108 per month.

There is a 1 year waiting period on the life insurance.

If you’d like to apply, you can do so here: calstarbenefits.com/index.cfm?id=713217

Contact us if you have any questions.

United Service Association For Health Care (USA+)

The final association is the United Service Association for Health Care (USA+).

They were established in 1983 and have provided a member term life insurance since 1987.

They offer 3 term life insurance options (all term to age 85):

• ages 18 to 64, $10,000 costs $42 per month
• ages 18 to 64, $25,000 costs $65 per month
• ages 65 to 69, $10,000 costs $69 per month

A 1-year waiting period exists on the life insurance. After 1 year, the life insurance is in force.

Unlike the other 2 associations, this is a true guaranteed issue term life insurance plan. No health questions or anything.

Moreover, they will take people who are under a qualified and properly constructed POA or guardianship (i.e. it has to give you the right or authority to purchase life insurance). You just have to submit the POA or guardianship along with the application.

A brochure is available here.

Additional, no-cost benefits include:

• vision discount program
• emergency helicopter (e.g. life flight)
• identity theft

In my opinion, the offerings through the USA+ Association are excellent. Rates are affordable. Moreover, most people could use a vision plan. Additionally, everyone could use an identity theft plan. Again, these are part of the membership.

If you’d like to apply, you can access the application. Then return it to us for our signature and processing.

How Much Does Guaranteed Issue Term Life Insurance Cost?

The premium rates for the term life insurance in the Elevate to Wellness Association depend on your age.

Conversely, the premium rates for the term life insurance plans through the EMA and USA+ are fixed no matter your age. The guaranteed issue term rates for the EMA and USA+ are $59.95 and $65 per month, respectively.

One thing: these associations all have a one-time, non-refundable administrative fee of $20 to $25.

Where Is The Guaranteed Issue Term Life Insurance Available?

The guaranteed issue term life insurance plans are not available in every state.

The best thing to do is contact us. We can search the 3 associations and see if plans are available.

If not, we typically have other options available for you.

However, one of the great aspects of these 3 associations is that their term life insurance plans are available to New York state residents. While outside the scope of this article, not many carriers exist in New York due to state regulations. These life insurance options are available in New York.

Who Is The Guaranteed Issue Term Life Insurance Good For?

Who is the guaranteed issue term life insurance good for?

Anyone, really, but here is a list of people who might benefit from this plan.

These include, but are not limited to:

• Undocumented immigrants and non-citizens
• US-born people who opt out of a social security number
• People on Medicaid
• People on SSDI or disability
• Those who are currently on parole or probation.
• People with HIV or AIDS.
• Those living with Huntington’s Disease
• People taking suboxone or another type of substance abuse prevention medication
• Those in current cancer treatments, but have a good prognosis for recovery
• People with cerebral palsy or muscular dystrophy
• Those confined to a wheelchair
• People on oxygen for COPD
• Families who have siblings, children, or relatives with autism or Down Syndrome (remember, one plan will accept proper POA or Guardianship)
• People who simply don’t want to go through underwriting

The list goes on.

People who are in tough situations due to health conditions or lifestyle situations should consider this guaranteed issue term life insurance.

How Do I Apply For The Guaranteed Issue Term Life Insurance?

Applying for the guaranteed issue term life insurance is easy.

You will want to contact us if you want to apply for the term life insurance through the Elevate to Wellness Association.

The other Associations accept a self-enrollment process or the PDF application.

What If I Need More Coverage?

John, the $50,000 is a good step, but I need more.

If you need more, contact us.

We’ve helped many people secure the life insurance they need.

We’ve even helped people who were declined before, sometimes with a traditional policy (i.e. an immediate benefit – no waiting period). Feel free to search at plans below:

If your situation dictates a guaranteed issue whole life insurance plan, we have many options.

We have a plan that is available for people under the age of 40. Also, we have many affordable options, including one from a Catholic Fraternal Benefits Society.

We need to know more about you so we can make an educated recommendation.

Frequently Asked Questions About The Guaranteed Issue Term Life Insurance

We answer commonly asked questions about the guaranteed issue term life insurance products through associations.

Is This Legit?

Yes. The term life products are legitimate products through associations. As long as you meet the requirements, they are guaranteed issue. (The term life plan through the EMA does have 3 questions to which a majority of people can say “no”. If not, we have the plan through USA+.)

Can The Association Cancel The Life Insurance Anytime?

Yes. Term life insurance plans through associations operate similarly to employer/group term life insurance. In those cases, carriers or the company can terminate the plan. The same with associations and the corresponding term life carrier.

However, no indication exists that either the association or the carrier will terminate the association’s term life insurance plans.

Do I Receive A Policy?

You actually don’t receive a policy. The association is the policyholder, and they will issue you a certificate upon joining. The certificate contains all the important details of your coverage, beneficiary, death benefit amount, etc.

Most certificates arrive in the mail within 15 business days of the effective date of your membership.

Why Is There A Waiting Period?

As we explain in our guaranteed issue life insurance guide, the reason carriers do this is to avoid quick payouts of the death benefit. There’s no underwriting, so carriers must mitigate their risk somehow (in order for the premiums to be reasonable and their plan solvent and competitive).

Who Are The Underlying Life Insurance Carriers?

The life insurance carriers who underwrite the association term plans are all A-rated carriers. You can read about them in their respective brochures or contact us.

Why Does The Death Benefit Decrease?

This is a common characteristic of group term life insurance. The death benefit stays consistent until sometime after normal working age, whereupon it decreases.

Carriers do this to keep costs low for everyone. Obviously, people have a higher probability of dying when they are older versus when they are younger. Carriers know this. They also know that this is term life insurance. Term life insurance rarely goes beyond age 80, although these 3 associations allow it (with a reduction in the death benefit).

How We Can Help You Obtain Guaranteed Issue Term Life Insurance

We at My Family Life Insurance are happy to help you with guaranteed issue term life insurance products.

Please let us know if you have any questions about it. You can contact us or use the form below.

If you need more insurance, let us know. We can help.

We always work in your best interest, and there’s no risk in contacting us. If we can’t help you, we’ll part as friends and point you in the right direction as best we can. You can always contact us later if your situation changes.

Additionally, remember, that we work with many carriers and can likely find you more coverage or better coverage.