You might also hear it called guaranteed acceptance of life insurance.
Guaranteed life insurance waiting periods prohibit end-of–life candidates from cashing in the death benefit early. This could cause severe financial stress for most insurance companies.
A majority of life insurance policies require medical underwriting. To assess the applicant's medical status, medical underwriting relies on the results of blood tests, exams, and pharmacy histories. A medical underwriter is an expert in interpreting health results and will approve or deny the insurance application. An underwriter will also assign a rating class to determine how much the applicant will have to pay for insurance. Underwriting for medical purposes allows consumers to choose the right premiums that best suit their needs. People who are healthy tend to pay less than those who are not.
Guaranteed life insurance waiting times prevent end-of–life applicants from cashing in too soon on the death benefits. This would cause severe financial hardship for insurance companies.
So, what's not there to like? You will pay more, have lower coverage and receive less death benefits.
Your age, hobbies, and other factors will all affect the price of your policy.
The price of other types of life insurance will vary depending on factors such as age, hobbies and medical conditions. Guaranteed issue life insurance policies have fixed prices that are determined by your age at the time you apply.
Not only are the premiums higher, but your beneficiaries will not receive a total benefit until the policy has been in force (typically one to two years depending upon the life insurance company). This is often called "Graded Benefits" in the insurance sector.
You can borrow against a policy loan to access cash value from guaranteed issue policies. Your beneficiaries' payouts will be affected if the loan is not paid back in full by the due date. Also, the payout to your heirs includes the coverage amount of the policy and not the cash value.
An application and a phone call are usually required in order to buy guaranteed-issue insurance.
Premiums for guaranteed issue life insurance tend to be higher than for policies that require medical underwriting, since insurers assume more risk by offering coverage without health questions. The cost will depend on factors such as your age, gender, and the amount of coverage.
Guaranteed issue life insurance is a type of life insurance policy that does not require a medical exam or health questionnaire. Anyone who meets the basic age requirements is automatically approved, regardless of their health history.
Coverage amounts for guaranteed issue life insurance are generally lower than traditional life insurance policies, ranging from $5,000 to $25,000, depending on the insurer. This is often intended to cover final expenses such as funeral costs.