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A blog for insurance that is dedicated to publishing the work of our guests, not the views of the webmaster. So if your into insurance enough to blog about it why not submit your content.
A blog for insurance that is dedicated to publishing the work of our guests, not the views of the webmaster. So if your into insurance enough to blog about it why not submit your content.
on July 16th, 2011
Guaranteed issue life insurance (also known as Guaranteed Acceptance Life Insurance) is a type of insurance policy that provides the insured with life insurance protection without medical tests and without asking any health questions.
Guaranteed issue life insurance differs from simplified life insurance in that the latter actually asks the insured a few health questions in the application, although no tests are carried out. Simplified insurance therefore allows people with less severe health problems to get a more favourable rate if they qualify. On the other hand, an applicant may be refused simplified issue life insurance if his or her state of well-being is considered unsatisfactory. For these reasons, guaranteed life insurance is considered a fall-back option or the last resort for those unable to qualify for a traditional policy.
Guaranteed issue life insurance can be great if your health or age scare off traditional life insurance carriers, but there are a few caveats as well. If you cannot reasonably expect to live for more than two years, you may be out of luck. Most insurers protect themselves from the risk of very early death by offering only to pay back your premiums if you die within the first 24 months of your policy by a non-accidental death. (Read the fine print on your policy before you sign if this might concern you.)
This may or may not sound fair to you. On the one hand, accidents are of course unpredictable and unfortunate, so it only makes sense that the insurer has you covered. You do not choose to die in an accident, after all. On the other hand, severe health issues are usually known to you ahead of time, and it would not make business sense for the insurer to cover a person lying on his or her death bed. This is the price clients pay for the benefit of no medical questions.
If you expect to survive for over two years, however, a guaranteed policy might actually make sense for you. When you do your calculations, keep in mind that there is a cap on the premiums and that the most optimistic insurers will cover you up to about $50,000.
Before you approach a guaranteed life insurer, make sure to try out all the other options you have. Any traditional insurance policy you can get will almost certainly be better than a guaranteed issue policy. Discuss your situation with a qualified independent life insurance broker and ask him or her about all your options. Experienced professionals may be able to find you a preferable alternative to guaranteed issue life insurance.
RBC Insurance, BMO Insurance, and Manulife Financial all currently offer guaranteed acceptance policies via their call centre. Other options for Canadians are Edge and Everest.
This article is brought to you by Lorne S. Marr, an experienced insurance broker from Toronto, Canada. Lorne is an expert on hard-to-insure clients and specific life insurance applicants such as immigrants, people with health conditions, and former drug users.
