Guaranteed issue life insurance is not available to everyone.
The application process for guaranteed issue insurance is usually done by phone. Once you have submitted your application, an agent could contact you to confirm that there aren't any disqualifying factors and that you're purchasing the right amount.
In order to be guaranteed, policies are not subject to the same level or information of underwriting. Therefore, a guaranteed life insurance policy is more expensive than a medically underwritten one. This is the compromise in order to eliminate medical exams and other tests.
Imagine that you are unable to live for the policy's first two- or three year period due to any other reason than an accident. In such a case, your beneficiary would receive the full amount of the premiums paid plus interest. Although interest rates paid vary depending on the company, they can range from 10% to 30%. If your death is due to an accident (e.g. a car crash), the policy will pay all the coverage amount to your beneficiaries even if it was purchased recently.
Certain guaranteed issue policies have cash value which you can access by taking out a loan. You will lose your right to receive the cash value of the loan if you don't repay it in full before your death. Additionally, the payout to your heirs depends on the coverage amount, not the cash value.
You can borrow against a policy loan to access cash value from guaranteed issue policies. Your beneficiaries' payouts will be affected if the loan is not paid back in full by the due date. Also, the payout to your heirs includes the coverage amount of the policy and not the cash value.
You can probably save substantial money by buying a more traditional approach, unless you have severe medical conditions that make purchasing other policies impossible. For example, a 70 year old female could pay $18,700 over 10 years for a guaranteed life insurance policy with $20,000 of coverage. Over ten years, a $20,000 life insurance policy would cost her $12,000.
Both types of burial insurance include guaranteed issue and simple issue life insurance. But, guaranteed-issue insurance is better for seniors who can't be turned down for other life insurance.
For seniors, or those who cannot qualify for traditional life insurance but are at moderate health risk, simplified-issue life insurance is best. The coverage limits are slightly higher and require a complete medical questionnaire.
Many life insurance policies require some medical coverage. Medical underwriting is based on results from exams, blood tests and pharmacy history. This allows for an evaluation of the applicant's overall health. An experienced underwriter who is skilled in interpretive and health conditions will approve or decline an insurance application. An underwriter assigns a rating to the applicant that will determine the amount of premium they will pay. The underwriter can help consumers determine the best premiums to cover their medical condition. Healthier people tend to pay lower than those in poor health.
The same information is not required for guaranteed issue policies. The cost of a guaranteed policy of life insurance will be more expensive than one that is medically underwritten. This is the compromise that eliminates the need to undergo medical exams.
