What Is Guaranteed Issue Life Insurance?

Because most types of life insurance are medically underwritten—meaning that they take your health situation into consideration—it can be difficult to get a policy at all if you have major health issues or are over a certain age.

That’s where guaranteed issue life insurance comes in. With this type of life insurance, pretty much everyone can get accepted, even if they have serious health issues. You can think of this as a plan B for people with major health issues who need coverage for final expenses. 

Here’s why people tend to choose 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

Here are the main cons against guaranteed issue life insurance:

• 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 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; your loved ones will get a return of the premiums you’ve paid to date, usually 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. It’s not a great option for people hoping a death benefit will provide for dependents or constitute a large inheritance after their death. 

If you’re able to qualify for a lower-cost or more comprehensive policy, you’ll probably get better value elsewhere. If the main reason you’re looking into guaranteed issue is because you really want to skip the health exam associated with more traditional life insurance policies, no-exam term life insurance or simplified issue insurance may be a better fit.

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. That might include wanting to cover final expenses or small debts, but probably doesn’t include taking care of financial dependents like young children—because the coverage limits are generally on the lower side.

If you’re not sure whether guaranteed issue is right for you, here’s how to think about which kind of no-exam life insurance is the best fit.

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