Among the many different types of life insurance such as permanent, term, group or individual, here is another type of life insurance, a guaranteed issue insurance, which is usually offered to the elderly people and to those with some serious medical conditions. The most important characteristic of this type is that it does not require any kind of medical exam and there will also be very few or no questions at all related to your health.
Although this may sound quite attractive, there are, of course, certain restrictions. The point is that most policies of this kind offer only a very small face value which is usually no more than $20,000. The reason behind this is that these policies are made for a special purpose and this is to pay the expenses of the funeral. Accordingly, some insuring companies only offer this kind of policies to a small range of clients – to those from the age of fifty to eighty five.
Also, if you wish to have some kind of payment plan such as quarterly bills or the semi-annual ones, you will probably have to pay more. And because you do not have to undergo a medical exam and the premiums are not determined according to your medical information, the cost will also be high.
So, when you have very high premiums and also very low face value, it is very likely that the total of what you pay in premiums will be far more than what your beneficiaries will get. This is why such offers are not so convenient for healthy persons and this is also why you should very carefully calculate the amount of money that you will have paid to the insurance company in five, ten or fifteen years.
Another point that you should be careful about is the so-called graded benefit and this is the case when the insurance company pays to your beneficiaries only a part of the death benefit should you die in the first several years. Since this differs from company to company you should check the details of your policy to see how it is graded.
Of course, these restrictions are meant to protect the insurance companies from people who, for example, know that they will die soon and then they buy as much insurance as possible. Some companies, however, will pay the full amount of face value in cases of death by an accident.
To sum up, guaranteed issue life insurance may sound very convenient since it does not include any kind of medical questions. However, when you take a closer look, you may see that it is really meant for a very small number of people and that it is not made for people to make money, but to be able to cover the expenses that occur when a person dies. So, you should very carefully consider all the details of this type of insurance and then conclude whether you should really take it or not.