Guaranteed issue life insurance is a fantastic choice for people who would otherwise be unable to get traditional life insurance. It sounds easy. (It is.) The catch is that life insurance companies charge more for these type of policies.
If you found your way here at the start of the life insurance process, we strongly recommend saving yourself money by going through traditional routes for life insurance first. If life insurance companies have previously declined or postponed your applications, guaranteed issue could be right for you and your family.
What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance simply means that the life insurance company guarantees your approval. There is no medical exam. Many companies won’t even ask health questions. All you need to do is fill out the short application.
The advantage (in addition to automatic approval) of this type of life insurance is that approval times are fast. Many companies will do same day approval or at most 48 hours. Compared to the couple weeks it can take to go the traditional route, it’s an easy way to get the life insurance process out of the way.
Who Should Buy a Guaranteed Issue Life Insurance Policy?
Guaranteed issue life insurance should be a last resort. After exhausting the traditional policy options, this is a means to protect your family. (Albeit a sometimes limited means.) Most people looking for guaranteed issue have been declined or postponed for traditional policies.
Also known as GI or guaranteed acceptance, this particular form of insurance best suits people who meet the following criteria:
- Permanently disabled
- Serious or life-threatening health issue
- Debilitating psychological health condition
- Permanently residing in a nursing home
- Repeatedly declined for life insurance
- Social security or SSDI as the sole source of income
- Cannot buy life insurance through an employer
Guaranteed issue is also a form of final expense (aka burial) life insurance which you may have seen advertised on TV. Keep in mind that there are many different types of final expense life insurance and they are not all the same.
If you aren’t sure whether guaranteed issue life insurance is for you, then speak with an independent agent about your options. Independent agents work with dozens of companies so they may be able to find something better suited to your needs and your wallet.
Medical Conditions That Typically Get Declined
for Traditional Policies
Below is a list of the most common types of medical conditions, situations, and medications which may cause a life insurance company to decline your application for standard life insurance.
Keep in mind that there are mild forms of many of these diseases. Mild forms of many of these will still qualify for traditional insurance. This means that you can get more coverage for less money. So don’t assume you’ll be declined if you have or are taking something on this list.
Instead, tell your agent about it up front so they can see what they can do for you.
Here is the list of medical conditions and situations where many people have experienced declines for life insurance. In these cases, the conditions are either life-threatening or not medically controlled:
- Severe Alcoholism or Drug Addiction
- Diagnosis of HIV, AIDS or ARC
- ALS (Lou Gehrig’s Disease)
- Diagnosis of Alzheimer’s or Dementia
- Cirrhosis of the Liver or Other Liver Disease
- Combination of Severe High Blood Pressure and Cholesterol Levels
- Severe COPD
- Cystic Fibrosis
- Diabetes (Type 1 – Uncontrolled and with complications)
- Extreme Obesity
- Extreme Colitis and Crohn’s Disease
- Heart Attack within Past 5 Years of Application
- Huntington’s Disease
- Invasive Cancer (Spread to other organs/ tissue/ bone)
- Kidney Failure with Dialysis
- Major Stroke
- Major Advised Surgery
- Multiple Sclerosis
- Organ Transplant
- Parkinson’s Disease
- Residing in a Nursing Facility
- Currently hospitalized
- Current use of Oxygen
- Other terminal Illness
Red Flag Medications
This is by no means a comprehensive list of medications which make life insurance companies nervous. They’re just some of the most common ones that cause concerns in underwriting.
- Antabuse®/Disulfiram: Used to treat alcoholism
- Aranesp®/Darbepoetin: Used for those suffering from anemia and suggest kidney problems renal failure or cancer
- Aricept®/Donepezil: Used for Alzheimer’s Disease and general dementia.
- Campral®/Acamprosate: Prescribed for withdrawal of alcoholism
- Cognex®/Tacrine: Used or mild or moderate forms of Alzheimer’s and dementia.
- Depade®/Naltrexone: Prescribed withdrawal from addiction to heroin and other opiates.
- Epogen®/Epoetin Alfa: Medication is used for those undergoing dialysis because of renal failure
- Exelon®/Rivastigmine: Another form of medication for Alzheimer’s, moderate memory loss and/or Parkinson’s Disease.
- Flolan®/Epoprostenol Sodium: Prescribed for blood clots and pulmonary arterial hypertension.
- Methotrexate: Often used in treatments for arthritis, lupus and even various types of cancer.
- Namenda®/Memantine: Also used to treat Alzheimer’s, memory loss and changes in a person’s mental state.
- Prednisone: A synthetic corticosteroid medication used for inflammatory diseases and suppress pain and various forms of cancer treatments.
- Procrit®/Epoetin Alfa: Used for those kidney disease or renal failure.
- Prozac: An anti-depressant prescription
- Razadyne®/Galantamine Hydrobromide: An oral prescription for Alzheimer’s, dementia, memory loss and related conditions.
- Remodulin®/Treprostinil Sodium: Used to treat individuals with pulmonary arterial hypertension
- ReVia®/Naltrexone: Used for those who suffer from alcoholism.
- Suboxone®/Buprenorphine (Naloxone): An opioid that treats chronic pain
- Tracleer®/Bosentan: Prescribed for certain types of pulmonary arterial hypertension.
- Ventavis®/Iloprost: A hormone to treat pulmonary arterial hypertension and prevents platelet aggregation.
- Vivitrol®/Naltrexone: Also used for alcoholism
- Warfarin: An anticoagulant medication typically used to reduce or prevent blood clots in veins or arteries.
Again, be upfront with your insurance agent about what you are taking. The more you tell them, the better job they can do of finding you a company who will treat you fairly.
Why Should Someone Buy Guaranteed Issue Life Insurance?
The average cost of a funeral in America ranges between $7,000 and $10,000. Social Security only pays $255 towards funeral expenses. That’s nowhere close to covering any of it.
Most Americans also have some form of debt, like credit cards or personal loans.
Without any form of life insurance, the cost of a funeral and any outstanding debts can eat up any money in your estate, leaving nothing for your spouse or children. Worse, your spouse may be on the hook for covering those debts and paying for any final expenses.
If that’s not bad enough, people who become seriously ill before passing can rack up enormous medical expenses for anything not covered by your current health insurance. These outstanding medical costs do not always die with you. Sometimes your family can inherit these.
The point of guaranteed issue life insurance, especially for people with potentially terminal illnesses, is to ensure that your suffering is not passed on to your loved one.
On the other hand, if you have the cash (or liquid investments) to cover any debts and funeral costs and family members are financially independent, then you may not need life insurance at all.
What Questions Should I Ask a Life Insurance Agent About Guaranteed Issue Policies?
Not all guaranteed issue policies are the same. Each life insurance company offering this type of policy probably has different underwriting guidelines, face amounts, waiting period lengths, amounts paid during the waiting periods, age limits for applications and age limits for when policies expire. It can quickly get complicated to choose the best policy for your family.
When talking to your life insurance agent about guaranteed issue policies, make sure to ask the following questions:
- When will the policy expire?
- How long is the waiting period and what will it pay out to my beneficiary?
- Will death benefits decrease? (If so, when?)
- Will premiums increase or remain the same?
- What type of GI policy does the company offer - term or permanent?
Frequently Asked Questions on Guaranteed Issue Policies
We wish guaranteed issue life insurance were as simple as it initially sounds. Since it unfortunately becomes more complicated the more you look at it, here are the most common questions we get.
Are there age restrictions?
Yes. Most life insurance companies generally have age limits on applications for guaranteed issue policies. This usually ranges between 50 and 85 years of age for most companies.
There are a couple of companies who will cover younger people. For more information on this, take a look at the Association Plan Guaranteed Issue below in the Featured Companies section.
How much coverage can I buy?
The face amount (also called death benefit) is generally low compared to traditional life insurance policies. Because the underwriting is exceptionally light, they companies offset the risk by offering policies ranging from $5,000 to $25,000.
You can use a life insurance needs calculator to calculate how much your family may need.
What else should I know about guaranteed issue life insurance?
One important consideration which features prominently in all forms of guaranteed issue life insurance is that they all have a waiting period. Sometimes you will see this called graded death benefits. It’s a restriction which applies only to guaranteed issue policies.
Most companies have a 2-year waiting period. The insured must survive the two years before benefits will be paid out to their beneficiaries. This prevents the company from essentially handing out free money to people suffering from terminal illness. If they did that, they would be out of business and wouldn’t be able to insure any families.
Most guaranteed issue life insurance policies will pay out the full death benefit from day 1 if the death is accidental. If you don't have a terminal illness, it most likely could be an accident that causes your death in the next 2 years. These "accidental deaths" are covered by the full death benefit.
This isn’t to say that there are no benefits if someone passes from a non-accident before the end of the two year waiting period. Their families will receive a lesser amount, usually 110% of premiums paid. This amount varies from company to company. Some offer more. Others only refund the premiums paid.
Types of Guaranteed Issue Policies
There are two types of guaranteed issue life insurance policies available, term GI policies and permanent GI policies. (These are different than standard term or permanent policies.)
Term Guaranteed Issue Policies
Guaranteed issue term life insurance is similar to term life insurance as it covers a span of time, such as 10 or 20 years. When the term expires, you can choose to renew the policy. The new rates will reflect your age at the time of renewal. Some GI term policies require renewal every five years.
A term guaranteed issue policy represents more of a risk to you. Rates surge considerably each time you renew.
Permanent Guaranteed Issue Policies
Permanent GI policies can be a better financial decision for someone with a longer life expectancy. Rates will be a little higher initially, but they won’t skyrocket every 5 or 10 years when you go to renew the policy.
Typically, the insurance company will guarantee your coverage up to a specified age or for life. The most common policies will cover someone to age 80, many go to age 100. Your death benefits also remain the same throughout the life of the policy, like the premiums.
Another advantage of a permanent GI policy that they come with a cash value accumulation portion. This grows throughout the life of the policy. You can borrow against this cash value. (Some companies will charge interest so ask your agent.) Many families use this to cover unexpected medical expenses or even vacations.
Our 3 Favorite Guaranteed Issue Life Insurance Policies
The three companies showcased below are a few of our favorites for guaranteed issue life insurance. They have robust policies with no surprise gimmicks. They also don’t charge as much as other companies which can make the difference for many families reasonably affording life insurance.
These companies are:
- Gerber Life Insurance
- American General Life Insurance
- Association Plan
Gerber Guaranteed Issue Life Insurance
The Gerber GI policy is a whole life policy for people between 50 and 80 years old. The premiums and death benefits are both level. You never need to worry about increasing rates or decreasing benefits.
Some of the more prominent features are:
- Up to $25,000 death benefit
- No medical exam
- No health questions
- Brief application
Gerber uses a graded benefit plan. The full death benefit will only be paid to your beneficiaries after two years. Before then, they will receive 110% of premiums paid. They will also pay a year's premiums plus 10% interest if the insured person passes between six months and a year.
Accidental deaths do not fall under the graded benefit category. Gerber will pay the entire face amount to the beneficiaries if an accident is the cause of death.
The one drawback is for South Dakota residents. They are only eligible for $15,000 in death benefits instead of the $25,000 for all other states.
Gerber Guaranteed Issue Life Insurance Sample Rates (paid monthly):
American General (AIG) Guaranteed Issue Whole Life (GIWL)
American General extends the age range by a few years on the older side. They offer their GI policy to anyone between 50 and 85. All applications meet with guaranteed approval.
Some of the major points on the AIG policy are:
- Face amount ranges from $10,000 to $25,000
- No medical exam
- Coverage for life (no renewals needed)
- Includes a Chronic Illness Rider (except in California)
- Includes a Terminal Illness Rider (except in California)
The policy has a graded benefit structure. The full amount of the death benefits will only go to your beneficiaries after holding the policy for two years. If the insured person passes before the two-year mark, AIG will pay the beneficiaries 110% of the paid premiums.
For accidental deaths, there is no grading on the benefits. AIG will pay the full amount from day 1.
American General Guaranteed Issue Life Insurance Sample Rates
Association Plan Guaranteed Issue Term Life Insurance
The association plan works a little differently. First, it is a 5-year renewable term. Second, your membership grants you discounts on other things like prescriptions and dental care. (The full list is below.)
The rates on this plan make it a better choice for younger people. Premiums begin to skyrocket once you reach age 65. Anyone can enroll between ages 18 and 75 with automatic approval.
Below are the prominent features of the association plan:
- No medical exam
- 5-year term
- Choose $10,000 to $50,000 death benefit in $10,000 increments
- One-time enrollment fee of $25.00
- Only available in some states
Your membership in the association plan will also get you discounts on the following:
- Vision Care
- Dental Care
- Medical Bill assistance
- Vitamins and Supplements
- Lab Testing
- Hearing Care
This policy has a super easy application. You can complete it online here. You will received a text to authorize your signature. Then your application is complete.
If you are a life insurance agent and want to offer this option to your clients, you can learn more about the guaranteed issue term life insurance here. Feel free to contact us with any questions.
Sample Rates for Association GI Term Policy
Unlike most life insurance companies, Protection PLUS does not have separate rates for men and women.
Can I get more than 1 Guaranteed Issue Life Insurance Policy?
Yes. You can combine policies if you need more coverage than 1 policy provides. Many people will accumulate 2, 3, 4 or more life insurance policies as their needs change over time.
How to Find the Best Guaranteed Issue Life Insurance Policy for Your Family
The most important point to remember is that guaranteed issue policies are best for people who would struggle to get traditional life insurance. Companies do a great job advertising guaranteed life insurance as easy and cheap. They can be, but with a little research, you can find better and less expensive policies.
If you are reasonably healthy (regardless of your age), then you should first try for traditional life insurance. You can talk to an independent agent who can shop the market for you. You could also do it yourself by using our Instant Quotes tool to the left. (Top if you're on mobile.)
If you’ve exhausted all the traditional option and your insurance agent says that you may have to look into a guaranteed issue policy, first figure out exactly how much life insurance you need. Next, work with your doctor to get an estimate of your expected lifespan. This will help you figure out whether a term GI or whole life GI policy will make more sense for you and your family.
Whether you’ve been turned down before or are worried about a pre-existing medical condition affecting your life insurance, give us a call at 858-703-6178. We can help you navigate all your options to make sure there are no alternatives for your unique situation before turning to guaranteed issue life insurance.