Obtaining a health insurance or life insurance may be difficult for people with pre-existing conditions like cancer and diabetes, and for those who underwent heart surgery, a stroke, or are suffering depression, as most insurance companies would decline them. This is where guaranteed issue life insurance comes in.
Guaranteed issue life insurance is a policy guaranteed to anyone, regardless of their age. This kind of insurance is especially for those with illnesses who find it hard to get other insurance policies and expect to live for at least two years. This kind of insurance is also used to cover expenses for burial expenses, payment for debts left in the estate, and payment for medical bills.
1) Guaranteed issue life insurance does not require physical examination for applicants, nor a a medical history. The questions asked are simple yet important like name, age, and address. BenefitHouse says that as long as you are able to answer "yes" or "no" to a few simple questions, you will qualify for this kind of life insurance.
2) If the insured person dies within a specified amount of time, beneficiaries may receive a portion, or none of the death benefits. Policies under the guaranteed issue life insurance pay full benefits usually after two years. Beneficiaries will get a portion, or none, of the benefit if the insured person dies of a certain illness in the year after he buys this kind of insurance. BenefitHouse says that if the insured person dies before the end of the period required by the insurance, the beneficiary receives a return of paid premiums plus interest. If the death occurs after the period required, the full death benefit amount is paid to the beneficiary upon the death of the insured person, BenefitHouse states.
3) Plans may offer coverage even if a person is on kidney dialysis, is AIDS or HIV positive, or having any other medical condition.
4) Guaranteed issue life insurance is a permanent life insurance. The premiums and the death benefit don't change, and the insurance is effective as long as the premiums are paid.
5) The person insured under the guaranteed issue life insurance can use the cash value in its policy for emergency expenses while he or she is still living. The money can be withdrawn and therefore end the policy or the insured person can accept a lower death benefit. According to CompuQuotes, you can borrow against the cash value and keep your benefits the same after you pay the loan.
6) Writer Ivon T. Hughes says the policy proceeds under the guaranteed issue life insurance are usually free of estate tax and policies usually avoid probate once a beneficiary is named.
Guaranteed issue life insurance programs can be expensive and the waiting period can take a long time (and may seem longer to those who badly need it), but it is the only option for those having pre-existing illnesses who want to leave something to their loved ones after death.