Guaranteed life insurance is a purpose-built product to help insure those without access to traditional underwriting. As this product is designed to insure high-risk individuals, there are a lot of questions regarding who it is best for and why the premiums are higher than other products. Today we ask several professionals:
A summary of their replies is below, with more detailed explanations following in the corresponding sections (the percentage % shows how often a particular answer has been mentioned).
Ready to learn more about guaranteed issue insurance? Let’s get started.
Question #1: When is it best to look into a Guaranteed Issue plan?
The top three answers were:
Question #2: What tips can you share on how to qualify for lower guaranteed life insurance rates?
The top three answers were:
A number of industry experts and thought leaders weigh in on why life insurance is so important. Click on the thought leader’s picture below to explore their perspective.
Guaranteed issue life insurance plans are ideal for people who have either medical, occupational, or lifestyle issues that would exclude them from medically underwritten or simplified issue/non-medical plans. Considering medical issues, someone with very recent serious issues, e.g. stage 4 cancer, serious heart attack with considerable heart muscle death; occupational issues e.g. dangerous jobs such as bomb disposal, SWAT team member, military member, construction high rigger, deep ground miners; or lifestyle issues, e.g. back country skiing/snowboarding, heli-skiing, private pilot, bush pilot, are all issues that will likely either require:
So, if you do not qualify for either of the better plans, guaranteed issue may be your only choice.
Several of these plans are available directly from insurance companies, which encourage you to apply directly and not speak to a person. This is a big mistake as you may qualify for a better plan, but in order to find out you need to speak with a knowledgeable broker with experience in all three plans. Often the staff at the on-line insurance companies are given minimal training, and typically only know about the products they are selling – they only know about the guaranteed issue plan. As a broker I have experienced a few clients who had guaranteed issue policies paying more than they needed to, because they did not know any better. So, they had a policy that cost more than they needed to pay, and most often did not provide the amount of coverage they really needed. My main tip is to speak to an experienced broker that is contracted with all three plan companies.
Guaranteed issue life insurance is best suited for people who need life insurance and don’t have any other options. These people might include people who are uninsurable because of underlying health issues or people on limited budgets who only want coverage under $50,000 for final expenses. It is also for people who do not want to do a medical exam or answer any health questions.
Typically, guaranteed issue plans are the most expensive plans so the best way for clients to get lower rates is to answer as many questions as possible to get the best plan for themselves. Sometimes clients aren’t sure how to answer the questions; they can ask their doctor how they should answer the questions, because if the client does pass away, their doctor may be filling out some of the information on the claimant statement.
It is best to look into a guaranteed issue plan when someone is unable to qualify for traditional fully underwritten policies. This person may be unable to qualify due to either a serious health issue (i.e., recently diagnosed with or treated for cancer or other life threating illness) or lifestyle habits (i.e., drug or alcohol use). Guaranteed issue polices are an excellent fit for people with a fear of needles or doctors, as these policies do not require a medical exam and are usually issued very quickly.
To see if you qualify for lower rates, it is important to look at the timeframe of any previous heath concerns. For example, if you had a health or lifestyle issue in the past (e.g., cancer – more than 3 years ago), you might still quality for a simplified issue policy with lower rates and immediate coverage. The lower rates for coverage will vary based upon when the specific health concern was diagnosed, and when the last treatment for the concern took place.
If you want to avoid nurses (white coat syndrome) or if you have serious health issues or lifestyle issue, look into guaranteed issue insurance.
Work with an independent broker who has access to a variety of carriers and plans to make sure you can get the best rate. Options can vary significantly from one company top another.
Guaranteed issue life insurance (also called guaranteed or guaranteed acceptance) is a kind of whole life insurance. It’s typically best for seniors or those who can’t qualify for a traditional life insurance policy.
Unlike traditional life insurance, guaranteed issue life insurance involves no health questions. It can help you pay for end-of-life expenses such as funeral costs, medical bills, as well as cover any outstanding debts so they don’t get passed on to your family.
Guaranteed issue life insurance is worth considering when other options are unavailable due to pre-existing health conditions.
Best practices are to speak with a licensed life insurance advisor to see if qualifying for a better rate and immediate coverage is available through simplified life insurance before committing to a guaranteed issue policy. Simplified issue products most often provide immediate coverage and will be at a lower monthly premium.
From my experience, guaranteed issue plans are the best option for applicants who are deemed to be uninsurable, or in other words, cannot qualify for any other available option on the market. For example: applicants with medical conditions, such as HIV/AIDS, current or very recent cancer, a very recent cardiac or stroke event, severe chronic kidney disease (e.g., on dialysis), liver disease, severe respiratory condition (e.g., with oxygen treatment), severe mental illness, recent drug or alcohol addictions or overuse, or pending tests or other medical diagnostics.
When it comes to no medical plans, my advice to advisors and applicants who are potentially facing one of the scenarios above or similar is to understand all the available options and seek multiple opinions. Some companies offer underwriting support that is geared to an overall assessment, not only related to that specific company. Specialty Life (SLi), the company I represent, has recently launched a unique four-dimensional pre-assessment tool called Jenie™ Assist. It’s the only tool of its kind that allows advisors to make a quote by selecting the prospect’s date of birth, gender, smoking status, and relevant medical conditions. An advisor can have an exact quote in a matter of minutes, matching the risk, with no “surprises” during the final parts of the application process.
“There ain’t no such thing as a free lunch” certainly applies in this situation. While guaranteed issue has its place and purpose, no one should consider it as a walk in park. This is the last option to consider, the one you will take as a refuge when you have exhausted all other options. When conditions may prevent your client from qualifying for a traditional underwritten solution with immediate coverage at a reasonable price, some insurers will offer lower amounts of coverage to everyone and pay the death benefit as long as it occurs after the waiting period (often two years). The insured gets the insurance policy and pays the required premiums, but essentially will forego coverage for two years after the policy is issued. While there is a sense of being covered, and a desire to protect what was intended (often final expenses), you have to hope death is not premature. The “ease” of getting insurance comes at a price and can provide a false sense of security. Use only when constrained to the last resort.
You might consider simplified life insurance (or simplified issue life insurance). Simplified issue solutions are just that, they offer a more forgiving risk assessment… no paramedical, no pee in a bottle, no blood or needles, no electrocardiogram. Just answer a short set of questions… it’s as simple as that.
Generally, simplified issue solutions are designed in a way that it is able to determine a fair premium to charge, taking into account the profile of the insured from the answers and scope of the questions asked. Based on the medical and lifestyle conditions assessed clearly by way of “yes” or “no” answers, a built-in rating is already taken into account based on the simplified issue solution for which the insured qualifies.
Do not assume an insured will pay more for a simplified issue solution. In fact, if the insured had conditions that would have attracted a rating, chances are they would end up paying a similar premium with the simplified option (you can even find situations where a comparable “traditional non-rated underwritten” solution will cost more).
You can always assume that you will save a lot of time positioning a simplified solution, and leave behind the “uncertainty” that the underwriting process brings to the equation… once a prospect has gone through the questionnaire successfully and truthfully, their advisor knows it most likely will go through without a glitch, and in little time (most often within 48 hours).
If a simplified issue solution leads to deferred coverage (just like guaranteed issue, some simplified issue solutions can have a waiting period, which is often two years after the issue date) it may be time to consider an alternative. Remember not all simplified issue solutions are built the same. Some could very well be immediate at a comparable price, or marginally more.
Life insurance can help provide you and your family with peace of mind knowing your family is protected for life for an amount that may both fit your needs and fit your pocketbook. If you are concerned about or interested in providing tax-free money to pay for end-of-life expenses like funeral costs, medical bills, as well as being available to cover any outstanding debts so they don’t get passed on to your family, then guaranteed issue life insurance is worth considering.
Coverage is generally available for adults who are Canadian residents for income tax purposes. For example, Empire Life Guaranteed Life Protect is available for individuals ages 40-75 (nearest birthday).
You can apply for guaranteed issue life insurance with no medical questions asked and no physical tests to take. You are guaranteed to qualify regardless of your health or pre-existing conditions. However, if death from natural causes occurs within 24 months of the policy taking effect or of any reinstatement, the benefit paid is limited to premiums that have been paid during the 24-month period, without interest. This type of coverage may be best suited for individuals who have poor health and find it difficult to qualify for life insurance. Typically, you need to be in reasonable health to purchase life insurance at standard rates. You may pay more if you have underlying medical conditions or lifestyle habits that place you at a higher risk. Guaranteed issue life insurance can cost more than other types of life insurance that do require health and habits information.
You can submit an inquiry to an insurance company to see if you qualify for life insurance on other terms by providing health and habits information. You are under no obligation to accept an offer from the insurance company.
If your application wasn’t approved from one insurance company, that doesn’t mean you won’t qualify for life insurance coverage from another company. Some individuals with serious illnesses are too easily discouraged from shopping for a more traditional life insurance policy or may simply not want to provide any information on their health or social habits. Dealing with an independent advisor may help here as that advisor can reach out to the market for options and alternatives. You may have to provide health and habits information in exchange for the opportunity to get coverage at lower rates and/or higher amounts than is available with guaranteed life insurance.
