Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Sep 7, 2021

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Similar to the concept of assigned risk insurance for property and casualty insurance, “guaranteed issue life insurance,” sometimes referred to as “simple issue life insurance,” is just that.

A guarantee that a company will issue you a life insurance policy when you standard insurers will not offer you one.

It’s a novel idea, in that when you are at the end of your rope as far as obtaining a life insurance policy, you can opt for guaranteed issue and get some coverage.

Guaranteed issue life insurance is a type of whole life insurance policy that doesn’t ask you to answer health questions, take a medical exam, or let an insurance company review your medical or prescription record. Some people call it ‘no questions life insurance’ or ‘no questions final expense insurance’.

The insurance company guarantees that they will provide a life insurance policy as long as you are within the specified age range. The typical age range is between 50-80 years old.

Considering the age requirements and the lack of medical underwriting (no medical questions), it’s quite understandable why insurance companies market these types of policies to this age group.

The only thing that can disrupt coverage is non-payment of insurance premium, which would result in a cancellation of any insurance policy.

How to obtain Guaranteed Issue Life Insurance

There are no hurdles to obtaining this type of policy. If you pass away during the waiting period, your beneficiaries will not be able to get the policy’s death benefit. Most policies have a two-year waiting period. If you die during the waiting period, the insurer will pay back all your insurance premiums to your beneficiaries, plus the interest rate.

You typically only have to divulge if you are male for female and let the insurance company know how old you are…

Both answers will help determine exactly how much you pay (which you can expect to be substantially more than what you would pay for term life insurance or whole life insurance).

Answering those two questions is a walk in the park compared to the typical application process for a life insurance policy, which may require blood and urine samples as well as a whole battery of physical health tests. The downside again, is the cost.

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When is Guaranteed Life Insurance the best option?

As discussed above, this is your best option if you can’t obtain coverage in the standard market.

This certainly does not mean if you are turned down by one insurance company you should run off and purchase the first guaranteed issue life insurance policy you come across.

It is highly recommended you pursue this avenue as a LAST RESORT. This means you should contact several different insurance agents and brokers prior to going this direction. Leave no stone unturned, as the difference in premium between standard insurance and this type of coverage can be as high as 500%.

Guaranteed life insurance is for people who need life insurance but don’t have any other options. For example, some may want to provide money for their heirs to pay for funeral expenses. This type of insurance will help people who have a medical condition that makes it unaffordable to buy a whole life insurance policy; have limited budgets for life insurance or want only a small amount of life insurance coverage.

So, unless severe health conditions make purchasing other types of policies unaffordable/impossible, you can save a significant amount of money with a traditional policy.

And don’t let one agent tell you they tried to place you with several different companies to no avail. There are thousands of insurance companies in the United States.

It wouldn’t be a bad idea to keep a running list of those who turned you down and compare it to a master list of every company you can find.

What are the downsides of Guaranteed Issue Life Insurance?

Price…we get it. What are the other potential pitfalls of this type of life insurance policy?

Well, for starters, guaranteed life usually has a very limited pay out.

You can forget the $1,000,000 and $500,000 policy limits you might find with a standard insurer. Expect to see policy limits as low as $5,000 and as high as $50,000, if that.

This is because the companies that issue these types of policies expect to pay out much sooner than companies that issue standard policies (and collect your premium payments for several years before having to cough up benefits). It is simply the nature of the guaranteed issue policy.

Another potential downside to a guaranteed issue life insurance policy is it may contain a clause that states the insurer will not pay out the entire (or any) of the death benefit if the death occurs within a specified time period of policy issuance.

[How much life insurance do I need?]

You may, with some policies, only receive the exact premium you paid-in up until the time of death.

This is done to insulate the insurer against issuing policies to critically ill individuals.

For example, the insurance company would be bankrupt overnight if they were to sell hundreds, if not thousands, of these policies for $50,000 and have to pay all that money out after collecting only a few thousand dollars in premium.

Again; this is just the nature of insurance. A life insurer’s goal is to collect as much money as possible (then invest it for financial returns) prior to having to pay out on a loss, in this case a death.

Get online insurance quotes or speak with several independent insurance agents if you are in the market for life insurance, especially if you have been turned down by a few insurers and are contemplating opting for a guaranteed issue life policy.

It may mean the difference between your beneficiary actually receiving a death benefit or not.

Read more: Is life insurance tax deductible?