What are the basics of guaranteed issue life insurance?
 A guaranteed issue individual life insurance policy is a policy that you can purchase without taking the medical exam.
For some people, this is the only life insurance policy that they can purchase. These guaranteed issue policies are often marketed to the elderly because of the fact that they might need it most.
It is important not to confuse these issues with quick or simplified issue individual life insurance. In simplified or quick issue individual life insurance, insurers will ask medical history questions, but will not require an examination.
Bill Schreiner, an actuary with the American Council of Life Insurers claims, "There are some 'short form' life insurance policies that you shouldn't confuse with guaranteed issue. For a true guaranteed issue policy, there are no medical questions - you just send your money and get insurance.'
This sounds like a pretty convenient way to purchase life insurance - is there a catch? Most guaranteed issue life insurance policies, only cover funeral expenses, so it might be difficult to find a company who will sell a policy with a face amount of a larger sum than $15,000 to $20,000.
Another important factor of this policy is the price. Keep in mind that the price for a guaranteed life insurance policy will be much higher than a regular policy because they do not rely on medical information to set premiums.
Insurance companies have no information other than the applicant's age and gender on which to base the premiums on the guaranteed issue life insurance policy because they don't have the medical history of the applicant.
Because the prices of a guaranteed life insurance policy are so high and because the coverage options are so low, this might not be the best option for many people. However, if a person is extremely ill and no insurance company will be willing to give a policy with the medical history, a guaranteed life insurance policy is the best option to go for.
According to Ernst Csiszar, the director of the South Carolina Department of Insurance and the chairman of the NAIC working group on small face value life insurance, insurance companies aren't making a lot of profits with these types of policies.
Caiazar claims, "We are developing a disclosure statement that would warn consumers of the possibility that they might pay more in premiums than the face value of the policy. Anything more than that would potentially be a form of rate regulation and the consensus of the NAIC is that we are simply not prepared to regulate the rates of life insurance.' |
