Most types of life insurance require the insured to meet certain eligibility guidelines covering age, health and background. Many also require that applicants have an exhaustive medical examination as proof of their current health. For people that have do not want to undergo such scrutiny or have failed to meet the eligibility requirements of other life insurance, a Guaranteed Issue Whole Life Insurance policy may be the answer.
How to Get Guaranteed Issue Whole Life Insurance
Guaranteed Issue whole life insurance is coverage that virtually anyone can get. You can obtain this type of coverage no matter what your past medical history looks like or what your current health is. In fact, many companies don't even require a full medical examination or a complete rundown of your health history.
However, this "entrance to everyone" type of insurance comes with a price--a higher price. Guaranteed issue is a form of whole life insurance, but carries higher premiums since no one can be turned away. Just as with traditional whole life, guaranteed issue premiums pay two pieces, the cost of insurance which will ultimately pay the death benefit and the cash value.
What You Need to Know
An important distinction with guaranteed issue whole life insurance is that it has what is known as "graded benefits".
This means a couple of things. First, many policies will only pay out the full benefits after two years. So, if for example the insured died after one year, he or she would only receive a portion (or potentially none) of the insurance benefits. In addition to the initial benefit lockout period, many insurance companies have set age limits on these policies so you might have a hard time finding coverage if you are over the age or seventy.
Second, most of these types of policies will place a cap of the death benefit amount. You will probably be hard pressed to find a policy with a benefit greater than $50,000.
Who Can Benefit Most From Guaranteed Issue Whole Life Insurance?
Because of the limited death benefit, this insurance is often used to cover burial and any outstanding medical bills at the time of death.
As a result of the higher premium cost and other limitations like short-term benefit lockout and capped death benefit, guaranteed issue whole life insurance isn't for everyone. However, it can be great option if you have had trouble qualifying for more standard policies. In addition, it can be a great solution for those looking for a policy that can cover burial and other ancillary costs.