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Is guaranteed issue life insurance worth it?

You can qualify for coverage — no questions asked — with this term or whole life policy, but you'll pay for that privilege.

Usually sold to seniors to cover end-of-life expenses, guaranteed issue life insurance doesn’t require a medical exam or health questionnaire. While it’s convenient, it’s the most expensive and inflexible type of coverage.

What’s guaranteed issue life insurance?

Guaranteed issue life insurance is exactly that: guaranteed. Anyone can apply for coverage, and you aren’t required to take a medical exam or fill out a health questionnaire. This type of policy is typically marketed to the elderly and ill who would otherwise not qualify for coverage.

Most insurers cap their guaranteed issue policies between $5,000 to $50,000. With this type of coverage, the provider doesn’t have information about the person they’re insuring, so they charge higher rates to make up for the risk.

What’s the difference between a guaranteed issue and simplified issue policy?

The main difference is the application process. With simplified issue policies, you’ll need to fill out a questionnaire about your health and lifestyle — but you don’t have to take a medical exam. Unlike guaranteed issue life insurance, approval isn’t guaranteed.

Can I get a guaranteed issue policy while I’m in the hospital?

Yes. Since this type of insurance doesn’t require a health questionnaire or medical exam, you can apply for it at any time — including while hospitalized. Keep in mind that you’ll pay more for coverage because your insurer doesn’t have a complete picture of who it’s covering.

Is guaranteed issue life insurance worth it?

Guaranteed issue policies are expensive and limited to smaller amounts than traditional policies, so they’re best for seniors in poor health who have exhausted other options. Keep in mind that some guaranteed issue policies have graded death benefits, which means the full death benefit isn’t paid out if you die within the first two years of taking out the policy.

If you’re healthy, you could purchase more protection and save on your premium by applying for a regular term or permanent policy.

How do I know if guaranteed issue life insurance is right for me?

Guaranteed issue life insurance might be a good fit in these situations:

  • You need coverage right now. Guaranteed issue policies are typically issued on the same day. To compare, you might wait four to eight weeks for traditional life insurance coverage to kick in.
  • You want to skip the medical exam. The medical exam records things like your height, weight and blood pressure. It’s basic, but if you dislike doctors or want to avoid answering questions about your family’s medical history, you can opt for a no medical exam policy, like guaranteed issue life insurance.
  • You want your life insurance policy to cover your final expenses. If you’re ill or elderly, you might want to leave your beneficiaries with the money to take care of your funeral costs and medical bills. A guaranteed issue policy works, though alternatives like final expense insurance might be better if this is your only consideration.
  • You’re a senior who hasn’t had a physical in a while. A medical exam could reveal high cholesterol or blood pressure levels or a developing health condition, which would raise your rates. If you can afford the higher premiums and want to play it safe, you could buy a guaranteed issue policy and skip both the medical exam and health questionnaire.
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Pros and cons of guaranteed issue life insurance

  • Simple application. Since guaranteed issue policies dismiss the need for a medical exam and health questionnaire, the application is quick and easy.
  • Instant coverage. These policies are typically issued on the same day, making them ideal if you want your life insurance coverage effective immediately.
  • Accessible. Anyone can apply for coverage — and it’s guaranteed as long as you pay your premiums.
  • Expensive. The insurer assumes more risk with a guaranteed issue policy, so they charge higher premiums to compensate.
  • Limited coverage. Most policies are issued in small amounts, typically $5,000 to $50,000. If you have financial obligations and debt totaling more, this could leave you underinsured.
  • Non-customizable. You can’t enhance your policy with riders.

5 of the best guaranteed issue life insurance companies

These insurers stand out for their policy offerings and industry reputation:

    • Mutual of Omaha. Issues guaranteed universal life policies up to age 85, and waives the medical exam for policies worth less than $250,000.
    • AIG. AIG’s whole life policy offers guaranteed issue to those aged 50 to 85, and the policy builds cash value at a set interest rate.
    • Americo. Offers between $2,000 to $30,000 in coverage to seniors aged 50 to 85, with optional riders including accelerated death benefits.
    • United Home Life. Sells three guaranteed issue policies, including a graded benefit policy that offers a refund of insurance premiums in the first two years.
    • Fidelity Life. Issues a guaranteed issue whole life policy, with up to $25,000 in coverage for individuals ages 50-80.

    Alternatives to guaranteed issue life insurance

    If guaranteed issue life insurance isn’t right for you, here are some options:

    • Simplified issue life insurance. This policy skips the medical exam in favor of a health questionnaire, and the coverage takes effect immediately. It’s similar to guaranteed issue life insurance in that it’s expensive, and coverage is capped at smaller amounts. But coverage isn’t guaranteed. If you have a disability or have recently been diagnosed with a serious illness like cancer or HIV, you’ll be denied coverage.
    • Term life insurance. If you’re under 65, reasonably healthy, and only need life insurance for a specific time period, look into term life insurance. Available in various lengths, like 10, 15, and 20 years, this policy pays out a lump sum benefit to your beneficiaries when you die. It’s one of the cheapest types of coverage, and you’ll be able to purchase a policy with riders and a higher death benefit.
    • Whole life insurance. If you need lifelong coverage, this policy builds cash value at a fixed rate set by your insurer. For this reason, it’s less risky than other permanent policies, which have variable interest rates.
    • Accidental death and dismemberment (AD&D) insurance. This hybrid policy pays out if you die or are seriously injured in an accident. But keep in mind that it won’t pay out if you die from an illness or medical condition.

    Bottom line

    If you’re sick, elderly or need to lock in life insurance as soon as possible, a guaranteed issue policy could be a viable option. But if you’re willing to take the medical exam or health questionnaire, you might be better off applying for a simplified issue, final expense or term life policy.

    Get the strongest possible policy for this stage of your life by comparing life insurance companies.

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