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What is Guaranteed Life Insurance?

Never heard of or given much thought to guaranteed issue life insurance?

Guaranteed life insurance or guaranteed acceptance life is a kind of whole life insurance. It's typically suited for adults between the ages of 50 and 80, or individuals who can't meet all requirements for a traditional life insurance policy because of a terminal disease or condition.

In contrast to regular life insurance, applying for guaranteed issue life insurance is a lot simpler as it doesn’t require you to wait, answer questions regarding health, or take medical exams. While the death benefits are relatively smaller (around $25,000), guaranteed life insurance can still help cover your end-of-life costs such as burial expenses and hospital bills.

A guaranteed insurance policy doesn’t build cash value or give you the savings option (like whole life policies do), functioning more like a term life policy in this regard. However, unlike term life policies, guaranteed life policies last until the end of your life (or as long as you pay the premiums).

A guaranteed life insurance policy typically offers full death benefits to your loved ones or family members only two years after you’ve held the policy. In other words, if you die before owning the policy for at least two years, your family won’t be receiving the death benefit. Instead, they’ll receive 110% of all the premiums you’ve paid into the policy (i.e., if you’ve paid $100 premium dollars, they’ll get $110). Since these policies are typically meant to cover high-risk individuals who wouldn’t qualify for other types of insurance, the premiums are pretty expensive (more than $200 a month for senior buyers).

Pros of guaranteed issue whole life insurance

  • Fast, near-guaranteed approval

  • Provides a death benefit to your beneficiaries

  • No medical exam required

Cons of guaranteed issue whole life insurance

  • You could be denied if you do not meet the product requirements, such as age, state of residency, or citizenship status, or if you have advanced dementia or Alzheimer's disease

  • More expensive than traditional life insurance

  • Payouts are lower than traditional policies

  • Graded death benefits mean the policy won’t pay out in full if you die in the first two years

  • Does not pay out a death benefit in cases of suicide, regardless of when it occurred

To summarize:

Guaranteed issue life insurance falls under the category of final expenses life insurance. Due to the smaller death benefit amounts, guaranteed life insurance is considered a last-resort option for those who can’t qualify for other types of life insurance coverage (like term and whole life). There are only a handful of reasons that could disqualify you from buying this policy. But the biggest selling point for this policy is that almost no one is turned down. A few insurance companies like AIG and Brighthouse offer guaranteed life insurance coverage.

Before you settle on a policy that works for you, make sure to check out and compare insurance rates offered by various companies and policy types. iLifeInsurance allows you to scan through thousands of life insurance quotes without the hassle of persistent (and often biased) insurance agents. If you do need some help choosing a policy, you can talk it out with one of the insurance experts that iLifeInsurance has on standby, ready to answer your questions.

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