Buying life insurance can often be a confusing and in some cases frustrating event. There are several different types of life insurance available and choosing the wrong type of life insurance policy can have devastating effects on those left behind when you die. For this reason it is imperative you learn as much as possible about the type of insurance policy you buy to ensure your loved ones are taken care of when you are no longer here to provide for their needs.
For individuals who have existing health conditions, life insurance options quickly become limited. With most insurance providers requiring a medical exam prior to issuing a life insurance policy, those with medical conditions are often limited to guaranteed life insurance.
What is guaranteed life insurance?
As the name suggests, guaranteed life insurance is a policy that is guaranteed to anyone, regardless of existing health conditions. Guaranteed life insurance polices fall within the whole life insurance category. This means guaranteed life insurance is a permanent policy versus a term policy which expires after a predetermined amount of time.
Graded benefit whole life insurance.
Another term used to describe guaranteed life insurance is graded benefit whole life insurance. This requires no underwriting and describes the way in which benefits are paid on this type of insurance policy. Since insurance companies are taking a bigger risk offering insurance to individuals who already have existing health conditions, the benefits from this policy are described as “graded benefits”. Basically this means if you were to buy a guaranteed life insurance policy today and you pass away withing the next two years, the beneficiaries of your policy will get only a portion of the benefits. The longer the policy is in effect, the more benefits your loved ones will receive at the time of your death.
Who benefits from guaranteed life insurance?
Guaranteed life insurance is generally bought by the elderly or individuals with existing health conditions who are ineligible for other types of life insurance policies. The main purpose of guaranteed life insurance is not necessarily for financial security after your passing, but to cover basic expenses such as final services, debts and medical bills. Guaranteed life insurance benefits both the insured and their beneficiaries. The benefits to the insured are obvious, guaranteed life insurance is often the only available life insurance available to a person who is already sick or dealing with an existing health condition. Beneficiaries have the peace of mind that final expenses and other costs will be covered at the time of death. This relieves a huge financial burden from your loved ones at a time when they least need to deal with financial matters.
A final note on guaranteed life insurance.
While this type of policy is often the only option for individuals with existing medical conditions, it is important to note that premiums are expensive. If you expect to live for at least two years, the cost of the policy may pay for itself in benefits received by your loved ones. If you have received a diagnosis that you have less time remaining, a guaranteed life insurance policy will likely not provide the benefits you wish for those left behind. Carefully consider all of the option available as well as benefits and drawbacks before making any decisions.