Guaranteed issue life insurance

Worried you won’t qualify for a traditional life insurance policy because of your age and health? Guaranteed issue life insurance can give you and your loved ones peace of mind for end-of-life costs without the hassle.

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Amanda Shih

Published October 7, 2020

What is guaranteed issue life insurance?

Guaranteed issue life insurance (also called guaranteed or guaranteed acceptance) is a kind of whole life insurance. It’s typically best for seniors or those who can’t qualify for a traditional life insurance policy. Unlike traditional life insurance, guaranteed issue life insurance involves no health questions. It can help you pay for end-of-life expenses such as funeral costs, medical bills, as well as cover any outstanding debts so they don’t get passed on to your family, guaranteed issue life insurance is worth considering.

Guaranteed issue life insurance belongs to a category of policies called final expense life insurance. The other main type of final expense insurance is simplified whole life insurance.

What’s the difference between guaranteed issue life insurance and simplified whole?

Simplified whole life insurance:

  • For seniors or people who can’t qualify for a more traditional life insurance policy, but who are only at moderate health risk. A detailed medical questionnaire is required.

Guaranteed issue life insurance:

  • For seniors or people who can’t qualify for traditional life insurance or simplified whole life. No medical questions are asked and almost no one is turned down.

How does guaranteed issue life insurance work?

  • A basic application is required — no medical exam, health questions, or waiting period.
  • Guaranteed issue life insurance is the most accommodating form of life insurance. Nearly all applicants will be approved.
  • The coverage amount payable to your beneficiary at the end of your life usually has a maximum limit of around $25,000.
  • You’ll pay monthly or annual premiums to keep the policy in force, and it will stay active until the end of your life, as long as you keep paying the premiums.
  • Some guaranteed issue life insurance requires you to hold the policy for at least two years before it will pay the death benefit. If you should pass away before then, your beneficiaries simply get refunded the amount you’ve paid into the policy so far.
  • If you wish, you may designate a funeral home as a beneficiary to be paid directly for your funeral costs. Some facilities will accept the assignment of the policy as prepayment for burial costs.

Unlike a traditional whole life insurance policy, guaranteed issue life insurance doesn’t build “cash value,” or a savings component. You simply make monthly payments in exchange for a fixed amount to be paid out upon your passing.

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How much does guaranteed issue life insurance cost?

Since guaranteed issue life insurance is highly accommodating and covers high-risk people, it’s more expensive than other forms of final expense life insurance — upwards of $200 per month for some consumers — and death benefits are pretty low — usually topping off at around $25,000. Policies last for as long as you pay for them; there is no term limit or expiration date. Usually, you must be a policyholder for two years before you can collect the benefit.

Methodology: Based on guaranteed issue policies offered by Policygenius in 2020.

How are guaranteed issue premiums calculated?

Guaranteed issue life insurance, like other types of life insurance, works by offering coverage in "units." With other types of life insurance, like term, the unit price will change depending on variables like age, location, and medical conditions. The amount of coverage, however, will always stay the same.

With most guaranteed issue life insurance, the unit price is always a fixed amount, such as $9.95 at Colonial Penn. Unlike most other life insurance products, the coverage amount you get is what changes with guaranteed issue. Coverage is usually decided according to three variables: age, sex, and location. When we ran quotes at Colonial Penn, we found that a 60-year-old male from California could get a death benefit of $1,214 for $9.95 per month. A 75-year-old male, on the other hand, could only get a death benefit of $560. You can buy multiple units of coverage in order to get a larger death benefit.

Methodology: Sample quotes based on Colonial Penn policies offered by Policygenius in 2020.

Pros and cons of guaranteed issue life insurance

A guaranteed issue policy is ideal if you wouldn’t qualify for a traditional life insurance policy. Except in a few circumstances you’re guaranteed acceptance and financial support for your loved ones. However, if you can qualify for other types of life insurance, guaranteed issue will be more expensive and offer a lower payout than you would get from a standard policy. Plus, guaranteed issue policies can come with graded death benefits, which may leave your beneficiaries with only a refund of your premiums paid if you die soon after buying coverage.

Guaranteed issue life insurance advantages and disadvantages

ProsCons
Fast, near-guaranteed approvalYou could be denied for terminal illness, HIV/AIDS, or residing in a nursing home
Provides a death benefit to your beneficiariesMore expensive than traditional life insurance
No medical exam requiredPayouts are lower than traditional policies
Graded death benefits mean the policy may not pay out if you die in the first two years

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Which companies sell guaranteed life insurance?

Guaranteed issue life insurance is one of the many products offered by well-known and trusted insurance companies. You may be aware of guaranteed issue life insurance products offered by companies like Colonial Penn and Gerber Life, who frequently advertise their guaranteed issue life insurance products on daytime television. If you’ve seen Alex Trebek try to sell you life insurance, you’ve seen one of these ads.

Check out our top-rated life insurance companies here

How do you buy a guaranteed issue life insurance policy?

Unlike other life insurance products, you usually purchase a guaranteed issue life insurance policy directly from the company offering it. Since quotes are based on only three variables — age, sex, and state of residency — many companies offer their own online quoting engines. However, independent online quoting engines may also offer quotes for guaranteed issue life insurance products.

In the case of companies like State Farm, which has its own agents, you can also go into one of their offices to request more information and get a quote.

An agent or broker may contact you to confirm you have no disqualifying conditions, like a terminal diagnosis, and that you’re buying the right amount and length of coverage. Once you submit your application, you’ll receive a decision quickly, since there’s no medical exam or other reports for the insurer to consider. Your policy is in force as soon as you sign and return your policy and pay your first premium.

Learn more about how to buy life insurance here

What alternatives are there to guaranteed issue life insurance?

Guaranteed issue life insurance is usually described by life insurance agents as a "last resort." If you can’t qualify for the insurance alternatives we’ve listed below, it often is one of your only choices.

Term life insurance

Some shoppers with serious illnesses are too easily discouraged from shopping for a traditional term life insurance policy. Just because you’re rejected from one term life insurance company does not mean that you won’t qualify for term life coverage from another company. Each company has their own underwriting guidelines and view serious illnesses very differently from each other. An independent life insurance broker, like Policygenius, will know which companies view your illness favorably and help you find the right term life insurance coverage.

If you are under the age of 65, there is a good chance that you can qualify for some sort of term life insurance policy. While it may be expensive, you’ll get a higher death benefit and better terms than if you purchased a guaranteed issue life insurance policy. If you’re over the age of 65, your chances of getting a term life insurance policy are much smaller.

Learn more about term life insurance

Simplified whole life insurance

Simplified whole life insurance is less expensive than guaranteed issue life insurance because you have to answer medical questions to qualify. Simplified issue life insurance may also available for higher coverage amounts.

Learn more about simplified whole life insurance

Funeral insurance

There is a special funeral insurance (a type of final expense life insurance) that is primarily sold by funeral homes or funeral directors. Typically, the funeral director is named as the beneficiary. The death benefit usually covers specific services that you pick out in advance with the funeral director. Because you’re buying this insurance in advance, you can often lock in prices for services at their current rate. If the price increases before your death, your estate or family will not have to pay the difference.

Learn more about funeral insurance and other types of final expense life insurance

Pre-need funeral home contracts

Your other option is pre-need life insurance with a funeral home. You still pick out the services you want ahead of time with your funeral director, but instead of buying a life insurance policy, your monthly payment goes directly towards paying for your future funeral. If you die before you’ve paid for the services in full, your family or estate will be expected to pay the difference.

Learn more about pre-need life insurance

Is guaranteed issue life insurance worth it?

You should only look at guaranteed issue life insurance if you have exhausted your other life insurance options, especially if you are under the age of 65. After that, guaranteed issue life insurance may be worth it if you are healthy enough to survive past the graded benefits period (typically two years).

If you’re looking for a product that would help your family pay for your final expenses, you may be better off with alternative insurance products or prepaying your funeral expenses. If you want to leave your next of kin a small inheritance or let them make decisions about your funeral service, a guaranteed issue life insurance policy may be a better choice.

When you’re shopping for life insurance, talk to a licensed and independent agent or broker who can help you analyze your full array of options.

Guaranteed issue life insurance FAQ

What is a guaranteed issue life insurance policy?

Guaranteed issue is a type of whole life insurance in which applicants are almost certain to receive approval for a policy. There is no medical exam and few health questions required to apply.

What is the difference between a guaranteed and non-guaranteed life insurance policy?

Other life insurance policies that are not guaranteed issue usually require a lengthier application process that can include a medical exam and review of your hobbies, finances, and driving record in the underwriting process. Guaranteed issue skips these underwriting steps. However, non-guaranteed policies are more affordable and provide more coverage than guaranteed issue policies.

How much does a guaranteed issue policy cost?

Each insurer will sell a certain amount of life insurance at a set price depending on your age, sex, and location. The more coverage you want, the more you will pay. A 60-year-old might pay $9.95 per month for a $1,214 death benefit, while a 75-year-old could pay the same amount for a $560 benefit amount.

Who should get guaranteed issue life insurance?

If your main concern is providing funds for end-of-life expenses after you die and you would have difficulty qualifying for a traditional term or whole life policy, guaranteed issue could be right for you. Seniors often buy guaranteed issue policies to cover funeral expenses since their age and health may make applying for other policies more complicated.

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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