Many of us have seen spokespeople like Alex Trebek talk about guaranteed acceptance life insurance with no health questions.  Some of us can relate more to the seniors on the commercials talking about how glad they were that their spouse had guaranteed acceptance life insurance from X company.  We hear about it, and we hear that it can cost as little as 23 cents per day!  But what does this get you?

I want to explore and condense the information that you may or may not be learning from the commercials.  Hopefully from this, you will be able to know if this type of plan is right for you or not.  I want to start by exploring what the actual costs are.

Guaranteed Acceptance

Guaranteed AcceptanceSo, what does this term mean?  You will hear both this term and “guaranteed issue” used a lot in the industry.  To the consumer, this basically means just what it sounds like.  You are guaranteed to be accepted.  The plan is guaranteed to be issued.  Someone can be diabetic, a stroke victim, on dialysis, and given a year to live and still get one of these policies without any health questions.  In fact, for some companies, the only questions on the application revolve around who you are, what your birthday is, and how you are going to pay for the policy.  It really is a simple application!  If you have any doubts that you will qualify for any life insurance at all, or you have been turned down, this is definitely a way to go.

For seniors, the age required to get these plans can range from 50 to 60 on the low end and up to age 75 or so on the upper end.  If you have questions as to what companies cover what ages, send me an email or a comment and I’ll try to help get you in the right direction.

The Design

Most of these policies are designed for final expense life insurance policies.  The average maximum amount I’ve seen is about $17K, with maximum amounts ranging from $10,000 to $25,000 depending on the company.  I’m sure you can find some that are higher benefit amounts, but the prices are pretty astronomical for guaranteed acceptance polices with benefits that high.  If you are seeking a higher benefit and are in good health, I would venture to find “simplified issue” polices that may ask 3 or 4 health questions.  The benefit can be higher and have less restrictions (see below under “the catch”).

Twenty-Three Cents per day!

Life Insurance for 23 centsThat amount of premium can be alluring, for sure.  That’s only $6.95 per month!  But, if you are looking for a final expense policy, this definitely will not be enough coverage for you if it is the only coverage you have.  If you are a 50-year-old female paying that per month, your death benefit may only be between $1000 and $2000, depending on the company.  I know the price of the basic funeral in my area is almost four times that amount.  Of course, the older a person is getting into the plan, the more expensive the coverage is.  Also, a male that is the same age as a female will pay a higher rate.  So a 70-year-old male would pay quite a bit more than that 50-year-old female that they base the “23 cents” on.  Expect quotes to be closer to $1-$4 per day on average for adequate final expense coverage.  Get in while you can to save even more.

The Catch

2-Year Waiting PeriodAs you can imagine, a policy that is guaranteed issue that is paying multiple thousands of dollars for a claim is a big risk for insurance companies.  In order to hedge against this risk, you will see all companies have some type of caveat.  The most common one is a waiting period.  Across the board, senior guaranteed issue policies have a 2-year waiting period.  The two years applies to death from natural causes.  So if you happen to die from sickness within the first two years, your beneficiaries will not get the whole death benefit.  After the two years are up, the whole death benefit is paid regardless of the cause of death.  But, wait, there is good news in this.

The first good news is that if a death happens within the “waiting period” and it is due to an accident, the whole death benefit is generally paid.  On top of that, many of the companies offer an accidental death benefit rider than pay extra if it’s and accident.  If your life expectancy is past the two years, you usually don’t have too much to worry about as far as benefits being paid (of course, none of us know exactly how long we have to live).  Then again, if this is the only insurance you can qualify for, there really isn’t much of a choice in this, unfortunately.

The other good news is that there is still a benefit!  Some companies will pay the beneficiary all the premiums that have been paid into the policy.  Some will return that plus a percentage on top of that amount (ranging from 7% to 20%).

Example: If your premium is (for easy math) $100 per month, and the claim needed to be paid out due to a death of natural causes at month 18, $1800 ($100 x 18 months) was the amount of premiums paid into the policy.  If your company pays 10% on top of that, that would mean the actual benefit in this case would be (1800+ 180= $1980).

Other companies will pay a partial benefit amount based on tiers (so on a $10,000 policy, maybe $1500 is paid out based on the face amount of the policy).  The best thing to do is ask your agent what your particular company does in these situations so your family can be prepared.

Questions?

What questions do you have about guaranteed issue life insurance?  What can be explained in more detail?  Leave a comment below and we’ll uncover the mysteries.  You can also look at truths about Medicare Supplements here.

https://simpleseniorhealth.com/wp-content/uploads/2015/06/20150321_123906-1024x576.jpghttps://simpleseniorhealth.com/wp-content/uploads/2015/06/20150321_123906-150x150.jpgRaphaelLife InsuranceMany of us have seen spokespeople like Alex Trebek talk about guaranteed acceptance life insurance with no health questions.  Some of us can relate more to the seniors on the commercials talking about how glad they were that their spouse had guaranteed acceptance life insurance from X company.  We...Making Senior Health Simple