Are pre-existing health issues preventing you from qualifying for traditional life insurance? Are you repeatedly turned down for life insurance that would allow you to pay for your final expenses such as funeral costs, nursing home care expenses, or outstanding medical bills?
Guaranteed issue, or guaranteed acceptance as it’s commonly known, is a life insurance policy suitable for those that have been unable to obtain life insurance through traditional means. However, some compromise will need to take place between the insurer and the applicant.
In this article, we will provide you with the appropriate information you will need in order to apply for a guaranteed issue life insurance policy.
With this type of life insurance, you will receive coverage for your final expenses, which will also give your loved ones the peace of mind that they will need.
Why Do Life Insurance Policies Get Declined in the First Place?
Life insurance rates are primarily determined by an applicant’s health status and age. Unfortunately, there is a large portion of consumers that do not qualify for coverage based on these factors. Typically, it’s the presence of multiple health issues that disqualify an applicant from receiving coverage because most providers issue policies for ages up to 80 years old.
Let’s say for instance that a 60-year-old man is attempting to purchase affordable term life insurance, and needs to undergo a medical exam in order to receive the best rates. While it’s already known that he has hypertension (high blood pressure), the agent feels confident that as long as no other health issues are revealed during a medical exam, the application will be accepted.
However, during the medical exam portion of the application process, it is discovered that the applicant also has Hepatitis C. A letter is then sent by the underwriter respectfully declining to insure the applicant.
Unfortunately, most seniors are dealing with one or more health issues, and due to the fact that the insurance provider is looking to make a profit, most companies are hesitant to provide coverage. In fact, it’s quite common for seniors to have one or more of the following health matters present:
- Heart Disease – The number one health issue killing American seniors, with over 600,000 Americans dying from heart disease annually.
- Cancer – This is the second leading cause of death of Americans over the age of 65. It’s estimated that 37% of American senior men and 26% of American senior women are presently living with cancer.
- Alzheimer’s – This is the third leading cause of death among American seniors. One-third of seniors pass from dementia or Alzheimer’s every year.
Although there are numerous other health conditions present among seniors, dealing with any of the top three definitely decreases your chances of getting approved for traditional life insurance.
Guaranteed Issue Life Insurance is the Alternative
Luckily, there are a few life insurance providers that provide guaranteed issue for those seniors unable to qualify for traditional life insurance policies due to medical conditions.
These plans typically leave out the usual health questions and do not require medical examinations. How do these companies make their profit? By charging higher rates and the addition of policy restrictions.
The following are a few of the conditions the applicant must accept when applying for guaranteed issue life insurance:
- A Waiting Period – This is usually a two or three year period that the applicant will have to wait in order for their beneficiaries to collect the full death benefit should the policyholder pass from natural causes. If the policyholder dies during this waiting period, the insurance company will pay all premiums paid up until the date of death, plus 10%.
However, if the cause of death is an accident, most companies will pay the full death benefit from the first day of coverage.
- Lower Death Benefit – Due to the fact that no medical exam is required and the provider is accepting unknown health risks, the maximum death benefit will cap between $20,000 to $25,000, which is lower than the typical maximum death benefit.
- Higher Premiums – Besides the lower death benefit and waiting period, higher premiums will be charged in comparison to other traditional life insurance policies. This is because anyone is able to qualify, regardless of their health history.
How Much Higher are the Premiums?
Just like most businesses, life insurance companies are in it to turn a profit, which is why they charge more for their guaranteed issue policies. Life insurance premiums are calculated according to age and health status. Naturally, if the insurer is unaware of any health conditions, this higher risk means higher insurance premiums.
Here is a rate comparison between Guaranteed Issue Final Expense life insurance and Traditional Final Expense life insurance for a male non-smoker with $15,000 in coverage:
|Age of Applicant||Level Benefit||Guaranteed Issue|
As this chart reflects, the cost for guaranteed issue life insurance is substantially more when compared to traditional life insurance. Additionally, there will be a two or three-year waiting period before the policy will pay the full death benefit.
The #1 Question – Is it Worth It?
It’s completely your decision whether the substantial rate increase and the waiting period is worth it to provide your loved ones with peace of mind regarding your final expenses. Keep in mind that you can also get by with less life insurance by choosing cremation.
Here’s how the math works out:
An 80-year-old male with a $15,000 death benefit and a two-year waiting period dies from natural causes during the 25th month of coverage.
$340.42 X 25 = $8,510.50
Death Benefit = $15,000
Savings versus Cash = $6,489.50
The Bottom Line
Despite the fact that applicants will be forced to pay higher rates for guaranteed issue life insurance, it is still much better than leaving your loved ones with your funeral and burial expenses, which often costs anywhere between $10,000 and $12,000 for even a moderately priced funeral.
Of course, your estate can be dissolved in order to pay such funeral expenses, but this could take much longer causing your loved ones to pay out-of-pocket expenses. There is no better time to think about securing final expense insurance than the present.
It’s fast and easy. Simply use the instant insurance quote form on the right of the page or call us at tel:844-528-8688 during normal business hours for more information.