Buying a guaranteed issue life insurance policy has its pros and cons. These life insurance policies are not the best option for most people. Buying the wrong type of policy can cost you more than it should.
You will probably pay less and get a better policy if they purchase a standard or medically underwritten policy. Even if you take a few medications or have some medical conditions, you should consider guaranteed issue life insurance, no exam life insurance and simplified issued life insurance only after you have been denied a standard policy. These policies are almost always more expensive.
Most people qualify for less expensive medically underwritten policies. “Regular” or medically underwritten life insurance is relatively easy to qualify for. Even if you have been denied coverage for health insurance or disability insurance, you are probably healthy enough to qualify for a medically underwritten life insurance policy.
When you apply for a life insurance policy and are asked about your medical history, the company will assign you to a rate class. You may qualify for a preferred rate. You may qualify for a standard rate. You may be charged a rate that is higher than the standard rate.
Even the highest rate is likely to be lower than the rate you would pay for a guaranteed issue policy. By answering a few medical questions and you may pay half the price for the same amount of coverage.
Other Negatives of Guaranteed Issue Life Insurance
Guaranteed issue life insurance often has other negatives. You may get hurt in several ways. The most obvious is the monthly premium. The areas where they “get you” are the cash value and the time it takes to qualify for the death benefit.
Some life insurance policies will build cash values that you can borrow against or receive if you decide to terminate the policy and cash it in. The cash values in a medically underwritten policies will tend to build up much faster than for comparably priced guaranteed issue life policies.
Many if not most guaranteed issue life policies are modified benefit policies. This means that the full death benefit isn’t paid if the insured dies too soon.
The insured’s family may only receive a small percentage of the death benefit if the insured dies in the first few years after taking out the policy.
Life Insurance Recommendations
If you do not have a major medical condition, you should simply shop around for the best life insurance policy and apply for it. Do not consider any of the guaranteed issue policies.
If you have a significant medical issue, you should still look at underwritten policies first. You can always apply for a guaranteed issue policy afterwords if you get denied.
Guaranteed issue life insurance policies have been made to look attractive by some good advertising campaigns. These campaigns have strongly implied that it is very hard to medically qualify for other types of policies. That simply isn’t true.
Be sure to exhaust your options with cheaper policies before considering any policy that guarantees your acceptance. There is a good chance that you will qualify for a life insurance policy that is not only cheaper but better.