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.
A simplified issue policy in life insurance is ideal for seniors and people with moderate to high health risks who are unable to qualify for traditional life insurance policies. It is necessary to fill out a medical questionnaire. You can also get slightly more coverage.
As with other types life insurance, the price you pay for your policy may change depending upon factors like your age, hobbies or medical conditions. Guaranteed issue policies are set prices based on the age of the applicant.
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.
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.
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.
The beneficiary would not be entitled to the death benefit if the insured dies before the waiting period has expired. The insurance company may pay all premiums paid back to the beneficiary with interest.
End-of-life beneficiaries cannot cash in on the death benefit before the guaranteed life insurance waiting period. Insurance companies would be severely affected by this.
Guaranteed issue life insurance is not available to everyone.
