Guaranteed Issue Life Insurance Policies
If you have a chronic illness, are overweight or have any past criminal convictions, you may need a guaranteed issue life insurance policy. These policies don't have any underwriting, so you can't be rejected. It's important to read the fine print, though, and make certain you're not paying in more than the policy is worth and that you're aware of any waiting periods or restrictions on the full benefit being paid to your beneficiary.
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Types of Guaranteed Issue Life Insurance
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There are two basic types of guaranteed issue life insurance: term and whole life. Term insurance doesn't build up any cash value, or savings, and the premium is only guaranteed for the term period. It's less expensive than whole life insurance. You can often obtain guaranteed issue term life insurance through an employer, although you may also be able to purchase an individual term policy, depending on the company. Most individual guaranteed issue policies are whole life policies, which build up cash value and have a guaranteed premium.
Obtaining a Policy
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To obtain a policy through work, contact your human resources department. You may need to wait for an open enrollment period; these vary depending on your company's policies. To obtain a policy directly, you can contact your state insurance department for information on what companies are licensed in your state. You may also be able to purchase a policy online or over the phone. However you purchase your policy, be sure to review all written materials you receive.
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Warnings
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Guaranteed issue life insurance may have a graded benefit period. This usually lasts one to three years, with the benefit amount gradually increasing until your full death benefit is reached. If you die during the graded benefit period, you beneficiaries will receive the reduced benefit amount. The premiums may also be high; make sure your premiums don't exceed your death benefit.
Alternatives
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Rather than taking out a guaranteed life insurance policy, particularly one with a graded benefit, you may want to consider an alternative. Savings accounts or certificates of deposit may be an option. You may also want to consider pre-paying your funeral costs. As always, be sure to take the time to examine the details of any contract.
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References
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