Guaranteed Life Insurance: Should You Buy It? Pros and Cons
Last updated 03/21/2022 byHeather Skyler
- Cannot be turned down. You’ll qualify for this policy as long as you meet the age requirements and are mentally capable of entering into a legal contract.
- Small dollar amount options. Most guaranteed issue (GI) policies allow you to purchase as low as $5,000 in coverage. People buying guaranteed issue are doing so because they want to ensure their final expenses are taken care of. For this reason, it makes sense for people to buy only what they need.
- Most expensive option. Guaranteed issue is the most expensive form of life insurance. Because insurers take on a great deal of risk with this type of insurance, they must charge more to cover their increased risk.
- Death benefit limitations. Typically, guaranteed issue policies will not pay out any death benefit should the insured die from natural causes within the first two years of the policy.
- Small dollar amount maximums. Most insurance companies that offer guaranteed issue policies will have a cap of around $25,000.
Compare Life Insurance Providers
Who should consider guaranteed life insurance?
- It’s your only option due to your health
- It’s your cheapest option due to your health
Health issues that preclude most policies other than Guaranteed Insurance:
- Cancer or you’ve had had cancer in the past
- You are wheelchair-bound due to a chronic illness or disease
- You live in a nursing home
- Terminal illness
- HIV or AIDS
- You have gotten a recommendation to have an organ transplant at any point in your life
- Diabetic nephropathy
Health issues where a graded plan is an option:
- Congestive heart failure (CHF)
- Heart attack within the last 12 months
- Full stroke within the last 12 months (TIA mini-strokes are not in this category)
- Heart or circulatory surgery within the last 12 months
- Cancer or have been treated for cancer within the last 24 months (you also cannot have had cancer more than once)
- You require oxygen to assist with breathing (this doesn’t include oxygen use for sleep apnea)
- Insulin shock within the last 24 months
Guaranteed vs. graded
- Pay less by purchasing a guaranteed life insurance plan, but have no coverage at all for two years
- Pay more by purchasing a graded life insurance plan and have some coverage during the first two years
SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids. Learn more
Loading results ...
Heather Skyler writes about business, finance, family life and more. Her work has appeared in numerous publications, including the New York Times, Newsweek, Catapult, The Rumpus, BizFluent, Career Trend and more. She lives in Athens, Georgia with her husband, son, and daughter.
Share this post: