What Is Guaranteed Life Insurance, and How Does It Work?
Guaranteed life insurance offers lifetime coverage without requiring a medical exam.
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Written byBen Luthi
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Ben Luthi
Ben Luthi has been writing about personal finance for over a decade with the intent to help people improve their finances and lifestyle. He’s covered just about every personal finance topic under the sun for a variety of publications, including the Wall Street Journal, Fortune Recommends, Yahoo Finance, Experian, Credit Karma, NerdWallet, and many more. Ben lives near Salt Lake City with his two kids and two cats.
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Edited byChris Schafer
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15+ years in content creation
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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Table of contents
Guaranteed life insurance is a type of permanent insurance policy that offers basic coverage for end-of-life expenses. However, unlike many forms of life insurance, you don’t have to answer health questions or undergo a medical exam to get approved.[1]
Guaranteed acceptance life insurance can be a good fit for older people who have medical conditions that preclude eligibility for a standard life insurance policy. Understanding how it works and the benefits and drawbacks can help you determine whether guaranteed life is right for you or if you should consider some alternatives.
Quick Facts
Guaranteed-issue life insurance often offers coverage ranging from $5,000 to $25,000, though some insurers may offer different levels.[2]
Depending on the insurer, you may qualify if you’re between the ages of 45 and 85.
In addition to a death benefit guarantee, policyholders also get a cash value component.
Guaranteed life insurance explained
As its name suggests, this type of life insurance guarantees approval without the need for a health questionnaire or medical exam. Guaranteed life insurance is designed for older people and people with pre-existing health conditions that may make it difficult to qualify for other types of coverage.
Here are some of the main features of guaranteed life and how they differ from other types of life insurance:
No medical exam: You don’t have to worry about getting declined due to a medical condition.
Lower coverage limits: The death benefit for a guaranteed-issue insurance policy typically maxes out at $25,000, though some insurers may go a little higher than that.
Higher premiums: Because the lack of a medical exam makes a guaranteed life policy riskier for an insurance company, you can expect to pay a higher monthly premium compared to a standard whole life policy.
Lifetime coverage: As a form of permanent insurance, guaranteed life insurance doesn’t expire as long as you pay your premiums. This is in contrast to term life, which covers you for only a set period of time.
Cash value: A portion of your premiums goes into your cash value account, which grows over time. Once you build up enough funds, you may be able to borrow from the policy.
Good to Know
Guaranteed-issue life insurance is different from guaranteed universal life, which offers a guaranteed death benefit with much higher coverage levels. But there’s minimal to no cash value, and a medical exam may be required.
How guaranteed life insurance works
You’ll typically provide some personal information when applying for guaranteed life insurance. While there are no health requirements, you’ll typically see an age requirement, which can range from 45 to 85 years, depending on the insurer.
Once you’re approved, your premiums will be fixed based on your age, gender, and coverage amount, and you’ll build cash value over time. But the death benefit is typically graded, meaning that there’s a waiting period before you’re eligible for the full coverage amount.
This period typically lasts two or three years, and if you pass away during that time, your beneficiary may receive a reduced death benefit or simply a refund of the premiums you paid. As a result, this policy may not be a good fit for someone with a terminal illness who expects to pass away within that time frame.
Pros and cons of guaranteed life insurance
While guaranteed life insurance offers some clear benefits, it has some disadvantages to consider before buying a policy. Here’s what to keep in mind.
Pros
Provides a death benefit guarantee without a medical exam
Offers lifetime coverage as long as you pay your premiums
Builds cash value, which you can borrow from as needed
Monthly premiums are fixed
Cons
Doesn’t provide the full death benefit for the first two or three years
Coverage amounts are relatively low
Monthly premiums are higher compared to standard whole life coverage
Has age requirements for eligibility
Who should consider guaranteed life insurance?
Guaranteed-acceptance life insurance can be worthwhile if your situation makes a standard life insurance policy out of your reach. In particular, here are some scenarios where you might consider applying:
You have pre-existing medical issues.
You only need coverage for basic end-of-life expenses, such as a funeral and medical bills.
You’re a senior with limited other options.
You want lifetime coverage instead of term coverage.
Your employer doesn’t offer group life insurance coverage.
You don’t have sufficient assets to self-insure.
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Cost of guaranteed life insurance
The cost of a guaranteed-issue life insurance policy depends on a few factors, including your age, your gender, the amount of coverage you choose, and the insurance company.[3]
For comparison, here’s what you might pay at age 55 for a $25,000 guaranteed life insurance policy and how that stacks up against the average monthly premium for a standard 30-year term and a whole life policy with $250,000 in coverage:
 | 55-Year-Old Woman | 55-Year-Old Man |
|---|---|---|
| Guaranteed issue: $25,000 | $93 | $121 |
| Term life: $250,000 | $91 | $118 |
| Whole life: $250,000 | $178 | $209 |
Alternatives to guaranteed life insurance
Even if your situation makes you a good candidate for guaranteed life insurance, it may not be the right fit for you and your loved ones. As a result, it’s important to research and compare several options to determine the best fit for you.
Here are some others to consider.
Similar to guaranteed life insurance, simplified-issue life insurance allows you to skip the medical exam to speed up approval. It may also offer higher coverage amounts. But you’ll still need to answer some health questions, so it might be a good choice only if your health issues are relatively minor.
With pre-need funeral insurance, you make arrangements with a specific funeral home, which is the policy’s beneficiary. The funeral home prices out the arrangements based on your preferences, and then you’ll pay a one-time premium or ongoing premiums over time. But it may not be beneficial if you want to provide a death benefit to your loved ones.
Your employer may offer basic life insurance based on your salary with the option to purchase voluntary coverage beyond that amount. In many cases, group life insurance doesn’t require a medical exam. But you may lose coverage when you leave your employer.
This type of coverage offers a death benefit in the event that you die as a result of an accident. It may also cover non-death injuries, such as the loss of a limb, hearing, or eyesight. It’s relatively inexpensive, but with less coverage, it may be a good fit only if you can’t afford anything else.
If you have sufficient assets to cover the cost of a funeral and other end-of-life expenses, you may not need life insurance at all. That said, if you’re relatively healthy and also want coverage for other needs, such as income replacement, a standard term or whole life policy may be worth a look.
Guaranteed life insurance FAQs
As you consider guaranteed life insurance and its alternatives, here are some common questions you may have and their answers.
Can you get life insurance without a medical exam?
Some types of life insurance policies don’t require an exam to get approved. In fact, even some smaller term and whole life policies may not require a medical exam for lower coverage amounts, though you may still need to answer some health questions.
Can you buy life insurance with a pre-existing condition?
It’s possible to buy some types of life insurance, including guaranteed issue life, even if you have a pre-existing medical condition.
What is the best type of life insurance for people older than 50?
No single type of life insurance is best for a certain group of people. Ultimately, the right one for you will depend on your health, budget, needs, and preferences.
What type of life insurance has no waiting periods?
Most forms of life insurance policies have no waiting period before your coverage is valid. Guaranteed life insurance typically has a waiting period, primarily due to the risk of pre-existing medical conditions.
Sources
- Progressive. "What is guaranteed life insurance?."
- Aflac. "Guaranteed Issue Life Insurance."
- Fidelity Life. "What is guaranteed issue life insurance?."
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Ben Luthi
Ben Luthi has been writing about personal finance for over a decade with the intent to help people improve their finances and lifestyle. He’s covered just about every personal finance topic under the sun for a variety of publications, including the Wall Street Journal, Fortune Recommends, Yahoo Finance, Experian, Credit Karma, NerdWallet, and many more. Ben lives near Salt Lake City with his two kids and two cats.
15+ years in content creation
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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