Burial insurance usually is much easier to qualify for than standard life insurance. However, certain people with pre-existing conditions may have a harder time qualifying for regular burial insurance. Those people should consider purchasing guaranteed issue burial insurance. To understand the guaranteed issue burial insurance and whether you should apply, keep reading below.
Basics of Burial Insurance
Burial insurance is a type of small life insurance policy that is typically easy to qualify for. The death benefit, meaning the amount the company will pay your family upon your death, is anywhere from $2,000 to $50,000. Your family can use this money for anything they need at that time. Typically, people choose to use it for funeral expenses, medical debt, or outstanding bills.
The major advantage of burial insurance is its lower monthly premium compared to life insurance. As stated above, it’s also typically much easier to qualify for than life insurance. However, some people may have a more challenging time qualifying.
People Who May Only Qualify for Guaranteed Issue Policies
Guaranteed issue policies are exactly what they sound like—the insurance company is guaranteed to issue a person that policy if they apply for it. This means that people who would otherwise be rejected from a burial insurance policy can have a policy.
Good candidates for guaranteed issue policies are generally people who have serious health problems. Insurance companies flag these people as serious risks. These conditions include:
- Drug or alcohol abuse (within 24 months)
- Multiple DUIs
- Terminal illness
- Active cancer (within 24 months)
- AIDS/HIV
- End-Stage Renal Disease
- Dementia
- Congestive Heart Failure
- Strokes (within 12 months)
- Diabetic Ketoacidosis (within 24 months)
- Surgery on your blood vessels (within 12 months)
- Organ transplant
- Heart surgery (within 12 months)
- Home oxygen use
- Issues with completing your activities of daily living
- Current occupation in a nursing home, hospital, hospice, or skilled nursing facility
Not sure whether you have serious health conditions that may keep you from getting regular insurance policies? Contact an agent today.
Applying for Guaranteed Issue
Applying for guaranteed issue plans is just like applying for other insurance policies. You must fall within the age limitations for the company you choose, normally between 55-85. The plan must be available in your state. You must also be able to enter into a contract legally. For example, if you have dementia, you may not be medically in sound mind and legally be unable to make your own decisions. You, therefore, cannot enter into a contract.
Unlike other burial insurance or life insurance policies, you do not need to answer any health-related questions or have a physical to apply for a guaranteed issue policy. You can apply on the phone, in person, or online. This makes guaranteed issue policies one of the easiest types of policies to apply for.
Benefits of Guaranteed Issue
The benefits of guaranteed issue policies are many. The main benefit for most people is that they’d otherwise be unable to have the financial protection of a burial policy. As stated above, another main benefit is the ease of application. With no medical questions or physical exam requirements, the application process itself is straightforward.
Many people also enjoy certain advantages of the policy itself. The monthly premium is fixed, meaning it will never increase as you age. Likewise, the death benefit never changes, meaning that the benefit you sign up for is the benefit your loved ones will receive. These policies are also never cancelled as some other policies are due to changes in health or aging.
Disadvantages of Guaranteed Issue Plans
There are two major advantages to guaranteed issue plans: the cost and the waiting period. Because insurance companies deem people with severe pre-existing conditions as high risk, the monthly premiums are much more expensive than people without these conditions. Compare the monthly premiums for 65-year-olds below to get a sense of the price disparities.
People Age 65
Female No Waiting Period:
$5,000: $22.11
$10,000: $41.01
$15,000: $59.91
$20,000: $78.82
Female Tobacco & No Waiting Period
$5,000: $29.60
$10,000: $56.00
$15,000: $82.40
$20,000: $108.79
Female Guaranteed Acceptance
$5,000: $28.19
$10,000: $54.51
$15,000: $80.76
$20,000: $107.02
Male No Waiting Period:
$5,000: $29.48
$10,000: $55.76
$15,000: $82.04
$20,000: $108.31
Male Tobacco & No Waiting Period
$5,000: $41.10
$10,000: $78.99
$15,000: $116.88
$20,000: $154.77
Male Guaranteed Acceptance
$5,000: $34.60
$10,000: $68.29
$15,000: $101.98
$20,000: $135.67
People who choose guaranteed issue plans pay more than people who are in good health and do not. This disparity grows even more if you purchase your policy later in life.
The second disadvantage is the waiting period. A waiting period is 24 month-period after you purchase the policy in which your family will not receive the death benefit if you pass away. As long as you do not pass away within that 24-month window, your family will receive the full death benefit. For people who choose guaranteed issue plans because they have serious health problems, this waiting period can be a huge issue if they pass away in this time frame.
The Bottom Line
Guaranteed issue policies are very good policies for people who would otherwise not be able to purchase a burial insurance policy. However, they’re more expensive than standard policies and come with a waiting period. To see whether these plans are the best option for you, call (800) 548-3249 to reach a licensed agent.