Many people look at guaranteed issue life insurance as a last resort, as this type of insurance is issued to the policy holder no matter what. Usually, only a few questions are asked about the person’s age and as long as the premiums are paid, the insurance policy gets issued. There aren't any medical questions or exams to go through and qualifying for the policy can be done by pretty much anybody with enough cash to pay the premiums.
Most other life insurance policies have nurses that will actually visit your house and perform an in-house exam. This gives you the best chance of qualifying because there isn't a lot of stress involved. However, guaranteed issue life insurance differs because the criteria to qualify is much less strict.
Guaranteed issue life insurance works well for people who can't seem to land a policy anywhere else. If people who have had bad luck in their life try and attain a guaranteed issue life insurance policy, they will usually be successful. Premium amounts for this type of guaranteed inclusion life insurance are high for that very reason. The insurance company must acquire enough premium payments from policy holders in order to validate the pay out of the policy upon the death of the insured. This means costs must remain high in order to keep the insurance company alive and well. Just how much more expensive is it? Four to five times the normal rate of comparable insurance policies!
Guaranteed Issue Life Insurance as a “Last Resort” Option
Many people aren't able to get the coverage they need anywhere else. In a similar fashion to pay day loans, this type of insurance provides a last resort option for people with no other recourse. But, don't be so sure that this type of insurance is right for you just because you can get qualified. You may find that just because you have been denied insurance coverage at specific insurance companies, that doesn't mean that all insurance companies will feel the same negativity toward your circumstance. In fact, many insurance companies may feel the exact opposite about your situation.
To understand that fact, you have to understand how insurance companies work. Insurance companies are run by actuaries. Actuaries determine what your chances of dying are. Accordingly, they make up policies for potential policy holders with a generally fair rate. So, if you don't have a very good chance of dying, the chances of you being able to secure a life insurance policy are pretty good.
And, the reason that insurance companies look at situations differently is because they assess the death risks differently. Each insurance company has their own way of doing this, the way that keeps them in business the best.
With guaranteed issue life insurance, there is one major factor to remember. If you die within two years of taking out the insurance policy, the award benefit doesn't get paid. You simply receive a refund for the premiums you have paid into the policy. This is to protect the insurance company from policies taken out on people who are near death already. Considering there is no medical exam, there is no way for them to ensure they don't get taken advantage of. That is, except for that caveat.
However, on the opposite side of the issue, many people acquire this type of guaranteed issue life insurance because their health situation is at its worst. Generally, these people qualify for coverage. Whether or not they die within the two years of issuance is part of this type of life insurance risk to the company!
The amounts issued for these life insurance benefits are usually small. Around $5,000 - $50,000 is a fair estimate on what is usually paid out upon the death of an insured. The limit is set at around $50,000 for most companies, as this limits their liability to produce a large amount of funds for the unusually high amount of claims that need to be paid out.
In some cases, you can't be turned down for this type of insurance, regardless of your health situation. However, if you are shopping for insurance and feel you have no other options, don't be so quick to acquire this form of life insurance. There are many insurance companies that have different types of death risk assessment that may fit your specific situation to a T. You'll never know unless you explore your options fully.
People who reside in nursing homes, hospitals or other long term care facilities may not be eligible for this type of insurance. It all depends on the carrier.
Make an Informed Decision!
So what do you think of guaranteed issue life insurance now that you know the fine details? Here is a quick advisement on who should acquire this type of insurance. People with terminal illness who still live in their homes, not expected to die within the first three years of policy inclusion should try and acquire this insurance. Most other insurance policies will look at terminal illness like an uninsurable factor, not worth the risk of death expectancy.
Remember, the average cost for this type of insurance is four to five times higher than the average insurance cost. The companies know there is a higher risk involved and must make financial collections that coincide with the cost of an insurance company doing business. This is your best chance at securing up to $50,000 of an award amount if you die past the two to three year period of initial policy status.
Be sure to research your other available life insurance options, as the cost can truly defeat the purpose per the given situation.