We will continue in our series of reviewing insurance companies that offer final expense and burial insurance by having a look at AIG Guaranteed Issue Final Expense insurance.
This article should be particularly interesting for consumers who have had issues qualifying for traditional life insurance or level benefit final expense insurance.
Life insurance rates are always primarily based on the applicant’s age and health and in many cases, some applicants are denied coverage because of severe or multiple health issues.
There is good news is, however, AIG guaranteed issue final expense insurance was designed especially for those consumers who are unable to medically qualify for traditional life insurance. They are able to do this because they do not ask health questions and there is no requirement for a medical exam.
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Who Is AIG?
American International Group, commonly known as AIG, is a gigantic insurance company that many types of insurance products worldwide. The company is currently serving more than 90 million customers spread out over 100 countries.
AIG operates several subsidiaries to market their insurance products so many agents and policyholders may not even know that the company behind the company is American International Group.
Many U.S. consumers may have heard about taxpayers providing a bailout for this insurance conglomerate over 10 years ago resulting from the market crash in 2008. AIG went to work restructuring the company and managed to pay U.S. taxpayers back with interest and are now operating more conservatively.
AIG has managed to earn back their very high insurance ratings and their financial outlook is as strong as ever:
Standard & Poor’s
Moody’s Investor Services
Even though most insurance consumers focus on their cost of insurance, unless they select a financially stable insurance provider, they simply cannot be certain that the company will be able to provide financial protection for a lifetime.
What is Guaranteed Issue Life Insurance?
Although Americans are living longer because of medical innovations, many seniors find themselves with health issues that can be related to lifestyle and putting one’s career before one’s health.
Because so many seniors find it difficult to even purchase life insurance in their 60s, 70s, and 80s, the life insurance industry has responded with guaranteed issue life insurance.
Guaranteed issue life insurance is a whole life insurance policy that is issued without taking the applicant’s health status (medical underwriting) into consideration. In fact, as long as the applicant falls within the eligible age group set by the insurance carrier, a life insurance policy will be issued.
Only a select group of life insurance companies offer guaranteed issue insurance and AIG is typically the leader of the pack.
How does AIG Guaranteed Issue Life Insurance Work?
The guaranteed issue life insurance product offered by AIG is similar to guaranteed issue products offered by Colonial Penn, Globe Life, and Lincoln Heritage Funeral Advantage. There are, however, two primary differences:
- Policies offered by Colonial Penn and Globe Life are sold directly to the consumer and therefore bypassing the independent licensed agent. Lincoln Heritage policies are sold using captive agents who are not allowed to represent any other insurance companies.
- AIG guaranteed issue life insurance is sold through independent agents and the rates are typically lower than other insurance carriers even though the agent earns a commission for the work they do on behalf of the applicant.
AIG guaranteed issue life insurance is whole life insurance and comes with the guarantees that traditional whole life policies have.
The policy lasts for a lifetime and cannot be canceled by the insurance company for any reason other than non-payment of premiums.
The policy premiums remain level for the life of the insured and cannot be increased by the insurance company for any reason.
The insurance policy builds cash value over time that can be accessed by the insured via policy loans, cash withdrawals, or surrendering the policy for cash.
The essential differences between traditional whole life insurance and guaranteed issue life insurance are as follows:
- Since the insurance company is accepting an unknown health risk, the premiums for guaranteed issue life insurance are higher than traditional life insurance.
- Most insurance companies have a two or three-year waiting period. During this waiting period, if the insured dies as a result of natural causes, the death benefit paid to the beneficiary will be the sum of all premiums paid plus an additional 10%. Once the waiting period has exhausted, the insurance carrier will pay the full death benefit upon the death of the insured.
- The death benefit is usually capped by the insurance company depending on the age of the applicant.
The Fine Print for AIG Guaranteed Issue Whole Life
Even though practically anyone can purchase guaranteed issue life insurance, there are some underwriting guidelines that must be met when purchasing insurance coverage:
- Issue age requirement is 50 to 85-years-old
- Available face amounts (death benefit) $5,000 to $25,000
- Length of coverage is for the lifetime of the insured
- The named insured must be the policy owner
- The premium Payor can be different than the insured
- All applicants must provide a valid social security number
How do the Rates Compare with Traditional Insurance?
First, it’s important to understand that guaranteed issue life insurance should be considered life insurance of last resort. In fact, this is one of the drawbacks for seniors who automatically buy final expense insurance from the “as seen on TV” insurance companies. In many cases, the applicant is not aware that they could qualify for level benefit life insurance at a much lower rate.
Here are the actual rate comparisons for $10,000 Final Expense insurance for a male non-smoker:
As you can see, the rates for a $10,000 guaranteed issue policy are much higher than a $10,000 level benefit policy. Certainly, it makes good financial sense to try and qualify for a level benefit policy before agreeing to purchase a guaranteed issue final expense insurance policy.
It’s also important to know that although most insurance companies have similar final expense insurance products, the underwriting guidelines vary from company to company. This is all the more reason why consumers should contact an independent agency like BurialPolicy360.
Doing so will allow you to shop your insurance business with multiple highly-rated companies at one time and it gives your insurance professional the ability to find an insurance carrier with a “sweet spot” for your health circumstances.
The Bottom Line
BurialPolicy360 insurance professionals are pleased to represent AIG life insurance company and have found them to be our go-to insurance company for applicants who cannot medically qualify for traditional level benefit insurance coverage.
AIG offers very competitive rates compared to the direct writers that you’ll see on TV and they have consistently delivered exceptional customer and claims service to the policyholder.
Doug Mitchell, President of Ogletree Financial, holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent over 20 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance, and home and auto insurance. For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life, he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a life insurance marketing organization with over 1000 life insurance agents. Today, Doug’s main focus is servicing 1000s of policyholders and growing his agency through the reach of several insurance-related websites.