Acceptance is guaranteed
Forget about a medical exam, or even a health qualification. You’re approved, guaranteed.
Guaranteed issue life insurance is the most expensive life insurance product on the market.
Guaranteed acceptance, or guaranteed issue, is another common whole life insurance type for seniors. As the name implies, acceptance is guaranteed. In other words, it doesn’t matter what health issues you have. Approval is guaranteed. Most applications only take a few minutes.
But, while guaranteed acceptance is highly convenient, it comes with a few cons. The biggest con is the cost. Guaranteed acceptance is the most expensive life insurance type on the market.
Another con is the graded death benefit period. Most guaranteed issue policies have a graded death benefit period of 2 years. If the insured passes within these two years, the insurance provider will not pay the coverage amount. Instead, they will return any paid premiums, plus a small percentage.
For example, your $10,000 guaranteed issue policy includes a 2-year graded death benefit. You pay $70 a month for this policy. Unfortunately, you pass away 12 months after the policy goes into force. You would have paid $840 in premiums. Now, rather than your beneficiary receiving $10,000 from the insurance provider, they would receive the $840 you paid in premiums, plus 10% interest, for a total of $924 (the interest amount varies based on the insurance provider).
This type of life insurance is commonly advertised on TV. “You can get coverage for just $9.95 a month. Acceptance is guaranteed!” While that’s true, the critical part these commercials leave out is that $9.95 only gets you about $400 in coverage. And let’s face it, $400 in life insurance coverage won’t cover much—the average funeral costs between $6,000 to $9,000, dependent on your state. A cremation will cost between $4,000 and $5,500.
Is Guaranteed issue a good fit for you?
Between the high cost and the 2-year graded death benefit, guaranteed acceptance insurance is a tough sell. This type of insurance is only recommended if the individual has/had severe health conditions and can’t qualify for any other life insurance type.