Guaranteed Issue Life Insurance an Expensive Scam?
- By Alston Ballkcom
- Published 07/31/2011
Guaranteed issue or simplified issue final expense insurance contracts are the best option for only a small percentage of the population. If you have a major health history, you might not qualify for any other type of policy. Your health history might keep you from qualifying for a standard life insurance contract.
However, this is not the case for most people. This is not even true for most senior citizens. Even if you have some medical issues, you are likely to qualify for a standard contract.
If you take prescriptions for hypertension or restless leg syndrome, you might think that you won't qualify for a standard life insurance policy. For most this is not the case.
You may have a higher premium than a person who is has no medical history, but you will probably not pay nearly as much as you would if you applied for a guaranteed issue or simplified issue life insurance contract.
Guaranteed issue or simplified issue whole life insurance policies can cost you twice as much when compared to other plans. There are other issues. You will probably get a slower future loan value build up. Your family will not receive the all of the face amount if you die in the first two or three years after buying the policy.
The cash value of a life insurance contract is not the first thing most people look at when comparing policies. Typically, people will compare the premiums and the face amount. Many plans also build equity or cash value and this is an important part of many whole life insurance contracts.
Even if you don't plan to spend the cash it can be used to keep your contract in force during hard times. Many contracts will allow you to use a portion of your future loan value to keep the plan going when you are can't pay from your checking account.
Your beneficiary may not get what you expect them to get if you purchase a guaranteed issue or simplified issue life insurance policy. Many of these plans are modified benefit plans. This typically means that if you pass away within two or three years after your plan's effective date only a fraction of the face amount is payable. Your loved one may only receive a small fraction of the face amount.
The only reason to purchase a guaranteed issue contract is if you are convinced that you will not be approved for an underwritten life insurance policy. Before buying a contract of this type, be sure to apply to other plans to see what you are able to qualify for.
Don’t be one of the many people who will grossly overpay for their whole life insurance plan. Taking an exam or answering a few medical questions can help you to pay much less. Even if your application is turned down, you can apply for a guaranteed issue policy later so you have nothing to lose by applying for a less expensive plan first.
You can find instant CT life insurance rates as well as instant health insurance rates and information for Connecticut on the author, Alston J. Balkcom's website.
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