Shopping for insurance can be a daunting experience, especially if deal breakers, like a medical exam, are a part of it. Although there are certain insurers that offer guaranteed life insurance without medical underwriting, they may not be suitable for everyone. Naturally, there are a lot of things that need to be scrutinized before settling on a guaranteed life insurance plan.
Some of the key pros and cons are:
Initially, this life insurance was known as burial insurance as it was often bought by the elderly to pay for their funeral costs. Guaranteed life insurance is apt for seniors or critically ill individuals who want to ensure that their funeral expenses are taken care of.
The biggest advantage of guaranteed life insurance is that it requires no exam. So one can quickly get it without any hassle of multiple health tests. This is an amazing opportunity for people who are suffering from health conditions that wouldn’t qualify for conventional coverage programs that involve medical underwriting. The premiums for guaranteed life insurance are generally expensive, but if one can afford them, it is a great option.
While dodging the bullet of medical underwriting sounds like a catch, there are a lot of consequences to be considered when shopping for guaranteed life insurance. Firstly, the premiums for this insurance are significantly pricier than other insurance in the market. So, if one wants to get a death benefit sufficient enough to cover funeral expenses, they will likely have to shell out approximately $200 or above per month. Additionally, there are financial products like funeral insurance that are designed to manage costs related to burial or cremation, which are considerably cheaper than guaranteed life insurances.
Guaranteed life insurance typically applies the graded benefit feature. This basically means that if the insured person passed away within the first two years of the policy, they wouldn’t receive the full death benefit. The insurance company will instead refund the premiums paid. This coverage may stop individuals who suffer from serious health issues from landing a full benefit.
Is guaranteed life insurance worth it?
One should only consider guaranteed life insurance as their last resort, especially if they are under the age of 65. It is additionally beneficial if one is healthy enough to survive beyond the 2-year long graded benefit period. If one wants a product to help their family pay off the funeral expenses or have a small inheritance, they should check out alternatives like term life, simplified life, or funeral insurance. Moreover, there is something known as pre-need funeral home contracts where a certain amount has to be paid monthly to the funeral home for the services chosen. However, if one passes away before paying for the services in full, their family or estate will be made liable for the remaining amount.