Skipping Health Tests: About Guaranteed Issue Life Insurance
October 16, 2024 | Johanna Karlsson
Life insurance is a great benefit for those looking to provide financial security to their families after their death. However, health issues and old age can complicate applying for and being approved for certain life insurance policies. Luckily, options like guaranteed issue life insurance can provide protection without certain pre-approval requirements like health evaluations. While this type of life insurance coverage can be helpful for consumers having trouble finding approval for policies, it’s important for them to evaluate their needs and explore the pros and cons of this type of policy to ensure it meets their financial protection needs.
Many life insurance policies require a medical examination or health questionnaire to receive approval for coverage, but a guaranteed-issue life insurance plan offers coverage without these demands. As the name says, acceptance of these policies is guaranteed for eligible applicants. It is designed to provide an option for applicants, typically between 50 and 85 years old, who might have difficulty obtaining traditional life insurance due to health issues, advanced age, or other risk factors that would normally result in higher premiums or refusal.
An important aspect of guaranteed issue policies is the graded death benefit. If the insured person dies within the policy’s first two to three years (except due to an accident), the beneficiaries may not receive the full death benefit. Instead, they might get a refund of premiums paid plus interest. After this initial period, the full death benefit becomes payable. Guaranteed issue life insurance includes relatively low coverage amounts, usually ranging from $5,000 to $25,000, though some policies may offer up to $50,000. Premiums are generally higher compared to traditional policies due to the increased risk the insurer takes on by not evaluating the applicant’s health.
Can You Really Get Life Insurance Without a Medical Exam?
While many life insurance policies do require medical exams to be completed before receiving approval, consumers do have options when looking for life insurance without undergoing a medical exam. Known as “no-exam” or “simplified issue” life insurance, these policies rely on the applicant’s answers to health questions and medical history like prescription drug prescriptions and motor vehicle records to assess risk. Guaranteed issue policies are increasingly popular because they do not require any health questionnaire or history to be shared for a quicker and more convenient application process.
While a lack of medical exams for life insurance can be beneficial, consumers should be aware that opting for a no-exam policy often comes with trade-offs. Premiums for these policies are typically higher than those for traditional, fully underwritten policies since the insurer is taking on more risk by not conducting a thorough medical assessment.
What Is the Difference Between Guaranteed Issue and Simplified Issue?
While guaranteed and simplified issue insurance policies don’t require medical exams, the underwriting processes and eligibility criteria do differ. Since a guaranteed issue policy requires no health questions or medical exams, it is best for consumers struggling to receive approval for traditional life insurance policies due to serious health conditions. Simplified issue does involve answering some health questions in the application process, but a medical exam is not required. The health questions the insurer requires to be answered help it assess the applicant’s risk. Since simplified insurance has a risk assessment, not every consumer will qualify. Still, these policies are more accessible than fully underwritten policies and offer a middle ground in terms of coverage and cost compared to a critical illness insurance policy.
Does Guaranteed Life Insurance Have a Cash Value?
Guaranteed issue life insurance policies can have a cash value component, but it depends on the specific type of policy. Most guaranteed issue policies are a form of permanent life insurance, typically whole life insurance. These policies often accumulate a cash value over time. The cash value grows at a fixed rate determined by the insurance company, and policyholders can borrow against this cash value or surrender the policy for its cash value if they choose to end the coverage. However, not all guaranteed issue policies have a cash value component since some may be structured as term life insurance, which does not accumulate cash value.
Obtain Guaranteed Issue Life Insurance With HealthPlusLife
Knowing the pros and cons of obtaining guaranteed issue life insurance can help consumers find the ideal policy for their needs. While healthier and younger consumers may not benefit from this type of policy, it can be beneficial for many with health-related issues. However, understanding the variety of life insurance policies is extremely helpful and essential for making informed decisions about what life insurance coverage is needed. This knowledge helps consumers choose a policy that offers the best balance of cost, coverage, and security, which is our goal at HealthPlusLife. By conducting research and using knowledgeable resources like HealthPlusLife, consumers can better navigate the life insurance industry with confidence and ensure their financial legacy is secure. Contact HealthPlusLife by calling 888-828-5064, TTY 711, to learn more today.
Johanna Karlsson Johanna Karlsson is a veteran health and life insurance professional licensed in 50 states. She relocated from the countryside in the south of Sweden and has not looked back. After coming to the United States to attend university, she gained her degree in Public Relations. She brought her public relations skills to a local international health insurance where she discovered a new passion in insurance. After years with that company, Johanna now joins HealthPlusLife to help build a team of licensed insurance agents ready to meet your insurance needs.
