How Does Guaranteed Life Insurance Work?
Article by Marilyn Katz
Can Life Insurance Really Be Guaranteed Issue?
Yes, many companies market a product called guaranteed issue life insurance. Now these policies will probably have some age levels, and all plans may not be available in all areas. These policies will accept every applicant as long as they meet the age and location requirements!
If you have ever applied for a policy, youp probably had to answer dozens of questions. You probably had to provide details about your health, your parent’s health, and even health habits. Some questions even could be about any trouble with the law a person has had, drugs they take, and many other personal details that a person may not want to talk about.
Guaranteed issue life insurance policies do not require any underwriting questions beyond the applicant’s age and zip code. Rates will be set by rates and zip codes and nothing else. But these types of policies will insure any applicant within the age and locations specified.
How can insurers make money if they accept everybody? You may wonder who the company protects itself is it accepts all risks, even people who have terminal diseases. Well, you should not spend time worrying about the ability of these companies to make money!
Waiting Periods – Instead of underwriting, these types of plans use a waiting period. Sometimes the period lasts for 2 to 3 years, and until it has expired, the full death benefit will not be paid. Before the time ends, if the insured person passes away, they may refund premiums, and they may even refund them with interest. Sometimes, after a portion of the time expires, the plans will pay a portion of the death benefit.
Should you buy a guranteed issue policy? Well, they are not for everybody. For those who are older, or with major health issues, this can be a good solution. After all, if premiums are refunded with interest if the insured person passes away before the waiting period, there is really little risk.
However, if a person is fairly healthy, they may be able to qualify for an immediate death benefit policy, and those options will usually cost less too.
On the other hand, a product called simplified issue, does not ask a lot of health questions. They have been designed to allow most people in the age bracket to qualify. And since the death benefit will be immediate, and the premiums will be lower, it would be good to check these out first.
If a person has the good fortune to have a very clean health history, then it is certainly worth the trouble to go through a complete underwriting. The more good information an insurer has about an applicant, the more likely they are to offer larger policies at lower rates.
Your own situation, budget, and needs will determine which type of insurance you should buy.
A person who enjoys good health and health habits should fly through the underwriting to find cheaper insurance. Simplified issue, not guaranteed issue, will provide an immediate death benefit and more affordable premiums. A very old or infirm person, however, may find that guaranteed issue life insurance will be a good option for them.
About the Author
Learn more about guaranteed issue life insurance for seniors.http://www.nomedical.net/seniorlifeinsurance.html