Final expense vs. guaranteed issue life insurance

A guaranteed issue policy allows you to skip the life insurance medical exam and full health questionnaire, and is one of two kinds of final expense insurance.

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Amanda Shih

Amanda Shih

Editor & Licensed Life Insurance Expert

Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

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Kristi Sullivan, CFP®

Kristi Sullivan, CFP®

Certified Financial Planner

Kristi Sullivan, CFP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, she was a regional consultant at Fidelity Investments for nine years.

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Final expense policies are small life insurance policies in which the death benefit is often used for funeral expenses. Guaranteed issue life insurance is a type of final expense policy that doesn't require a medical exam or a thorough medical questionnaire.

The other type of final expense policy, simplified issue, also allows you to skip the medical exam but does require a medical questionnaire. However, final expense is costly and comes with some restrictions. If you have enough assets for your beneficiaries to pay final expenses out of your estate, you likely do not need these policies. Here’s how to decide which type of life insurance fits your needs.

Key Takeaways

  • Final expense insurance provides coverage for end-of-life expenses.

  • Guaranteed issue life insurance is a type of final expense insurance that offers near-guaranteed acceptance.

  • Simplified issue, the other type of final expense insurance, has a required health questionnaire.

  • If you qualify for a term policy, you’ll get more coverage at lower rates.

How does final expense insurance work?

Final expense life insurance, also known as burial insurance, is a type of permanent life insurance that offers small coverage amounts — typically up to $25,000 or $40,000 — to people who may not otherwise qualify for traditional term or whole life insurance.

There are two types of final expense life insurance. Both offer lifelong coverage and no cash value

  • Guaranteed issue life insurance doesn't require medical questions or a medical exam for approval. Most companies offer guaranteed approval for guaranteed issue plans.

  • Simplified issue life insurance requires you to answer questions about your health, but doesn't require a medical exam. You could be denied if you have a critical illness or reside in an assisted living facility.

Some guaranteed issue policies come with graded death benefits, meaning your policy won’t pay out the full death benefit if you die within the first two years of coverage. Instead, your beneficiaries receive a payment equal to 110% of the premiums you’ve paid into the policy.

Simplified issue vs. guaranteed issue life insurance: Quick comparison

Simplified issue insuranceGuaranteed issue insurance
Term lengthLifeLife
Coverage amounts$2,000 to $40,000$2,000 to $25,000
Sample premiums$97.94/month$186.07/month
Age requirements45 to 85 years50 to 80 years
Underwriting requirementsApplication and medical questionnaireApplication for coverage
Cash valueNoNo
Best forIndividuals in moderate health who need limited coverage or don’t qualify for traditional policiesIndividuals with serious health concerns who may not qualify for simplified issue or traditional life insurance

Methodology: Based on policies offered by AIG and Mutual of Omaha through Policygenius in December 2021. Sample rates are for a 60-year-old male non-smoker buying a $25,000 simplified issue and $25,000 guaranteed issue life insurance policy. Individual rates will vary as specific circumstances will affect each customer's rate.

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Final expense insurance vs. term life insurance

If you still have dependents or debts, like a mortgage, you probably need more than final expense insurance to cover your financial obligations. The death benefit from final expense insurance is enough to cover the cost of a funeral, but not enough to support your loved ones long-term. 

Term policies require a more thorough medical review during the underwriting process, which makes final expense a better choice if you have a critical illness or are in poor health. But if you’re able to qualify, a term policy will offer more coverage for your money. In the table below, the term life rate is higher, but pays for a $250,000 policy compared to a $25,000 simplified issue policy.

Final expense vs. term life insurance: Quick comparison

Final expense insuranceTerm life insurance
Term lengthLife10 to 30 years
Coverage amounts$2,000 to $40,000$250,000+
Sample premiums$97.94/month$76.28/month
Age requirements45 to 85 years18 to 80 years
Underwriting requirementsMedical questionnaire and demographic information (simplified issue) or demographic information only (guaranteed issue)Medical exam (with exceptions), prescription check, medical records check, and phone interview
Cash valueNoNo
Best forSeniors, people with complex health issues, and those with low coverage needsAdults who need financial protection beyond funeral expenses

Methodology: Based on policies offered by Policygenius in December 2021. Sample rates are for a 60-year-old male non-smoker in a Preferred health rating and buying a $25,000 simplified issue life insurance policy and a $250,000, 10-year term life insurance policy. Individual rates will vary as specific circumstances will affect each customer's rate.

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If you're a senior or have health concerns, it’s worth getting quotes for term life insurance before you write off the option. You may be able to qualify for cost-effective term life policies if you’re matched with the right provider. A licensed expert can help you choose the best plan to protect your loved ones.

Frequently asked questions

What is the difference between final expense and guaranteed issue life insurance?

Guaranteed issue life insurance is a type of final expense insurance. Guaranteed issue policies allow you to skip the medical exam and provide a small payout meant for burial expenses.

Should I get simplified issue or guaranteed issue life insurance?

Simplified issue is better if you have a non-critical health condition that makes it more difficult to qualify for traditional life insurance. Guaranteed issue is best if you have serious medical concerns and would benefit from skipping a medical review entirely.

Is final expense insurance worth it?

Final expense insurance is worth considering if you don’t qualify for cheaper coverage. It offers less coverage at a higher cost than traditional whole or term life policies.