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

Published October 14, 2020

KEY TAKEAWAYS

  • Final expense policies provide coverage for end-of-life expenses

  • You’ll be accepted for guaranteed issue life insurance except in rare cases of critical illness

  • Simplified issue, the other type of final expense insurance, allows you to skip the life insurance medical exam but not the health questionnaire

  • If you can qualify for a term policy, you’ll receive a greater death benefit for less money than with final expense

Final expense policies are small life insurance policies in which the death benefit is often used for funeral expenses. Guaranteed issue life insurance policies are a type of final expense policy that doesn't require a medical exam or even a thorough medical questionnaire, though an underwriter may ask whether you have a terminal illness or reside in a nursing home.

The other kind of final expense policy, simplified issue, also allows you to skip the medical exam but does require a medical questionnaire. If you’re 45 years or older, in poor health, and only want a small amount of life insurance coverage, a final expense policy may be right for you. However, if you need your coverage to provide for more than end-of-life expenses, you’ll benefit most from term life insurance.

Final expense vs. guaranteed issue life insurance

Final expense life insurance, also known as burial insurance, is a type of whole life insurance that offers small coverage amounts — typically up to $25,000 or $50,000, depending on the type of policy — to people who may not otherwise qualify for standard term or whole life policy.

There are two types of final expense policies:

  • Simplified issue life insurance , which requires you to answer questions about your health and may involve a prescription or medical records check, but doesn't require a medical exam.

  • Guaranteed issue life insurance, which doesn't require medical questions or a medical exam for approval. (You could face denials from some companies if you have a terminal illness, HIV/AIDS, or currently live in a nursing home.)

Simplified issue vs. guaranteed issue life insurance

Simplified issue insuranceGuaranteed issue insurance
Term lengthLifeLife
Coverage amounts$2,000-40,000$2,000-25,000
Age requirements45-80 years50-85 years
Underwriting requirementsMedical questionnaire, prescription check, and medical records checkPossibly limited health questions related to HIV/AIDS, terminal illness, or nursing home care
Cash valueYesYes
Best forSeniors and individuals without terminal illnesses who would have difficulty qualifying for a traditional term or whole life policySeniors and individuals with serious health concerns who would have difficulty qualifying for simplified issue or term life insurance

Methodology: Based on policies offered by AIG and Mutual of Omaha through Policygenius in October 2020.

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Final expense insurance vs. term life insurance

If you still have dependents or debts, like a mortgage or auto loan, 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. If you’re able to qualify, a term life insurance policy will offer more coverage for your money.

Final expense insuranceTerm life insurance
Term lengthLife10-30 years
Coverage amounts$2,000-40,000$250,000+
Age requirements45-85 years18-80 years
Underwriting requirementsMedical questionnaire, prescription check, and medical records check (simplified issue) or limited health questions (guaranteed issue)Medical exam (except for accelerated underwriting policies), prescription check, medical records check, and phone interview
Cash valueYesNo
Best forSeniors, individuals with serious health issues, or those who only need a small death benefit for end-of-life expensesAnyone without serious illness or who wants to provide financial support to their beneficiaries beyond funeral expenses

Methodology: Based on policies offered by Policygenius in October 2020

It’s easier to qualify for final expense insurance than term life because most term policies require you to undergo a more thorough medical review during underwriting, which can translate to higher premiums or occasionally, application rejections. However, final expense insurance typically costs more than term life and offers lower coverage amounts.

Even if you're a senior or have health issues, it’s worth getting quotes for term life before you write off the option. People with health conditions like diabetes or a history of cancer can qualify for affordable term life policies if they’re matched with the right provider, and won’t need to pursue guaranteed or simplified issue. Talk to a licensed expert about your coverage options so you make the right decision to protect your loved ones.

Final expense vs. guaranteed issue life insurance FAQ:

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

Guaranteed issue life insurance is one type of final expense insurance, the other type being simplified issue life insurance. All final expense policies come with small death benefits mainly meant to provide for end-of-life expenses. Guaranteed issue allows you to skip the medical exam and a thorough medical questionnaire, while simplified issue does not.

Should I get simplified issue or guaranteed issue life insurance?

If you’re set on a final expense policy, simplified issue is better for you if you have some health issues that make it more difficult to qualify for a term or whole life policy. Guaranteed issue is best if you have serious medical concerns and would benefit from skipping a medical review entirely.

Is final expense insurance a good deal?

Final expense insurance offers less coverage than traditional whole or term life policies and is more expensive than term life insurance. If you’re not seriously ill, a term life policy may be the better deal. If you’re a senior or have major health concerns, then final expense may be right for you.

Insurance Expert

Amanda Shih

Insurance Expert

Amanda Shih is an insurance editor at Policygenius in New York City. Previously, she worked in nonfiction book publishing and freelance content marketing. Amanda has a B.A. in literature and communication from New York University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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