The Truth About Guaranteed Life Insurance

With a guaranteed issue life insurance policy, you get approved for coverage regardless of your health status. Unlike with typical life insurance products, you don’t have to be approved medically, Instead, you’re approved on the spot. You get the policy almost immediately. In this case, “guaranteed” really does mean guaranteed.

If you’re looking for insurance, this probably seems like a pretty attractive process. After all, if you can avoid intrusive tests and questions that are going to suck lots of time out of your week, why wouldn’t you choose this option? Well, it comes down to 3 main reasons:

Cost

$100,000 of coverage in guaranteed life insurance policies will always be slightly more expensive than medically underwritten policies. If you are in good health, applying for guaranteed coverage will only cost you more than applying for traditional life insurance.

What happens when your insurance company doesn’t know anything about your medical history?

When you apply for guaranteed issue life insurance? It’s extremely difficult for them to price your policy. And because insurance companies aren’t in the business of giving away free money, they make up for the lack of information by placing guaranteed life insurance applicants into the highest-risk groups. In other words, if you want to be automatically approved for coverage without providing any medical information, insurance companies will just assume your health is poor and charge you higher premiums. This is why you should apply for medically underwritten policies if your health is in a good condition.

Coverage Amounts 

All Guaranteed life insurance providers limit the amount of coverage you can apply for. With more and more Canadians need more coverage, guaranteed life insurance might not be the right option for you.

Many companies limit coverages to $25,000, $50,000, or even $100,000. However many people will need more coverage than the afford mentioned. This would be another reason why coverage amounts may be a deciding factor for you.

Length Of Coverage 

Guaranteed life insurance used to only come in term insurance, either term 10 or term 20 years. Now you can apply for life payor coverage to age 100. However, these policies often have less coverage than term options.

Everything here can be summed up as not purchasing the right coverage for you. Guaranteed life insurance can seem like the perfect fit, however, you need to factor in if your health actually dictates this type of life insurance being the right fit for you.