What Is Guaranteed Issue Life Insurance?

Many types of life insurance are medically underwritten—meaning that they take your health situation into consideration. Because of this, it can be more difficult to get approved for a policy if you have significant health issues or are over a certain age.

That’s where guaranteed issue life insurance comes in. With this type of life insurance, nearly everyone can get accepted, even if they have serious health issues. This can be a helpful way to get coverage to help pay for final expenses.

Guaranteed Issue Life Insurance Definition

Guaranteed issue is a type of permanent life insurance that accepts applicants regardless of health status, as long as they meet age and residency requirements. The application does not ask health questions or require a health exam. Typical coverage amounts may range from a few thousand dollars to $25,000. In many cases, full coverage takes effect after 2-3 years.

Guaranteed issue can be a good fit for people whose age or health makes them ineligible for many traditional life insurance policies. It also has limitations to consider, so it’s worth evaluating the pros and cons of this type of policy.

Guaranteed Issue Life Insurance Advantages and Disadvantages

Like any form of life insurance, guaranteed issue has its own qualities that can make it the right fit for some people and not the best option for others. Here are some reasons why people may seek out guaranteed issue life insurance:

• Coverage for those with serious health problems that would rule out other types of insurance

• Coverage for older adults who may not qualify for a regular term life insurance policy

• No medical exam during the application process

• Some disadvantages to consider about guaranteed issue life insurance are:

• Fairly high premiums (e.g., $100 to $300 per month)

• Low coverage amounts, often maxing out around $25,000

Guaranteed issue policies typically have graded benefits, which means these policies will usually not pay out the death benefit if you die within two or three years of getting a policy, except for accidents. Instead, your beneficiary would typically get a return of the premiums you’ve paid to date, often with about 10% interest added on.

Because of these lower coverage limits, guaranteed issue life insurance benefits are likely to cap around the amount your family would need to cover funeral costs and associated expenses. Guaranteed issue life insurance policies typically don’t offer benefit amounts large enough to provide for dependents long-term or satisfy large debts like an outstanding mortgage balance.

If you’re able to qualify for a lower-cost or more comprehensive policy, you may be able to find better value elsewhere. If the main reason you’re looking into guaranteed issue is because you would prefer to skip the health exam associated with more traditional life insurance policies, no-exam term life insurance or simplified issue insurance may be options worth checking.

Who Should Consider Guaranteed Issue Life Insurance?

People who may not qualify for medically underwritten insurance and who don't have very high coverage needs. A guaranteed issue life insurance policy may be helpful to provide a benefit to use toward final expenses or small debts. Coverage limits are on the lower side, as far as the life insurance industry goes, so the death benefit wouldn’t be high enough to cover ongoing needs for financial dependents like young children. A term life policy or other option that can provide a larger benefit can be worth considering if your goal is to help provide coverage for larger debts or years of family expenses.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

Information provided is general and educational in nature, is not financial advice, and all products or services discussed may not be offered by Fabric by Gerber Life  (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. The views and opinions of third-party content providers are solely those of the author and not Fabric by Gerber Life.