Guaranteed issue life insurance: what “no health questions” really costs

At a glance

What it is

Whole life that accepts applicants in a set age range with no health questions

Amounts

Small, typically $2,000 to $25,000

Graded period

Commonly 2 years; natural-cause death in that window pays premiums back plus interest, not the full benefit

Cost

Highest price per dollar of coverage, because no one is declined

How guaranteed issue life insurance works

Guaranteed issue (sometimes called guaranteed acceptance) life insurance is whole life sold without medical questions, an exam or a prescription check. Anyone in the eligible age range, often 45 or 50 to 80 or 85, is accepted. Because the insurer cannot price for health, the premium per dollar of coverage is higher than a simplified issue policy, and the policy has a graded death benefit.

The graded period is the key term to understand. During it, commonly the first two years, death from natural causes pays a return of premiums paid plus interest (often 10 percent) rather than the face amount. Accidental death usually pays in full from the start.

Before you choose guaranteed issue

Many people who assume they cannot qualify for anything else are accepted by a simplified issue policy with a full benefit from day one. Conditions that were declines a decade ago are often insurable now. It is worth answering the health questions with a licensed professional before defaulting to guaranteed issue; the difference can be a lower premium and no waiting period.

• Recent cancer treatment, dialysis, oxygen use or memory-care diagnoses are the situations where guaranteed issue most often becomes the practical choice
• Controlled diabetes, high blood pressure, past heart events and many other conditions are frequently insurable with health questions