What is guaranteed issue life insurance?

By Matt Riddle on January 17th, 2011

Question: What is guaranteed issue life insurance?


Guaranteed issue life insurance, also known as guaranteed acceptance life insurance, is a life insurance policy that an insurer issues without the customary medical pre-screening. For some, guaranteed issue life insurance can be advantageous because it does not require a medical examination and asks few or no questions about your medical history. Guaranteed issue policies can insure nearly anyone, hence the name guaranteed issue, and are frequently purchased by those in high-risk occupations and in poor health.

Although guaranteed issue life insurance has several advantages, there are also a few disadvantages:

  • It's expensive. With guaranteed issue life insurance, life insurance companies issue policies without evaluating your health. Rather than undergoing medical underwriting to determine rates, premium payments are usually based on age and gender and result in much higher premium rates.
  • Small life insurance benefit. These policies typically feature small death benefits, the amount paid to beneficiaries when the insured individual dies.
  • Death benefit clauses. The death benefit on guaranteed issue policies may be subject to a clause that allows the insurer to refund the premiums paid, rather than pay the full death benefit, should the insured individual die within the first two to three years of policy purchase.

In addition to the above mentioned disadvantages, some policy premiums are expensive enough that after several years, the total amount of premiums paid is greater than the policy face amount. Many guaranteed issue policy premiums begin to out-pay themselves in about 10 years.

Before buying life insurance, guaranteed issue or any other type, be sure to shop around. No two insurance companies are alike and not all health conditions may prohibit you from buying life insurance. Keep in mind that life insurance companies rate health conditions differently and have unique underwriting criteria. Guaranteed issue life insurance may be more suitable for those who are unable to purchase life insurance after the medical screening.

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