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What happens if you cannot qualify for traditional life insurance because of health issues?

Have you tried and failed multiple times to get life insurance that would pay for final expenses like funeral costs, medical bills, or nursing home expenses?

The good news is that there is a life insurance policy known as guaranteed issue or guaranteed acceptance that was built for applicants who cannot get life insurance through tradition channels. There is, however, some give and take that must take place between the applicant and the insurer.

Here, we’ll get you the inside information you’ll need to get guaranteed issue life insurance so you’ll have peace of mind knowing your final expenses will be covered.


Why Does Life Insurance get Declined in the First Place?


Since life insurance rates are established primarily on the applicant’s age and health, there is a group of consumers out there that will likely not qualify for coverage. Not necessarily because of their age because many companies will issue a policy of up to 80 years old, but because of severe or multiple health issues.

For example, let’s say you are a 60-year-old male trying to buy affordable term life insurance and had to have a medical exam to get the best rates. You are already dealing with blood pressure issues but the agent feels like she can get a policy issued if the medical exam doesn’t reveal any additional issues.

You have the medical exam that included a blood and urine test and low and behold, the test reveals you have Hepatitis C and the underwriter immediately sends you a letter saying “thanks but no thanks.” From that point, everything proceeds to fall apart. Now what?

Unfortunately, most seniors are dealing with some type of health condition or even multiple health conditions and life insurance companies are reluctant to offer coverage unless they feel like they can make a profit. In fact, it’s not unusual for seniors to have one or more of the following:

  • Heart Disease – Heart disease is the number one health condition that kills seniors in the U.S. In fact, over 600,000 Americans die from heart disease every year.
  • Cancer – Cancer ranks number two on the “cause of death list” because 26% of American women and 37% of American men who are 65 or older are living with cancer right now.
  • Alzheimer’s – Alzheimer’s comes in at number three because 1 in 3 seniors die as a result of Alzheimer’s or some other form of dementia each year.

Certainly, there are more health issues that seniors deal with but if seniors are dealing with any of the top three, getting approved for traditional life insurance (level benefit with first-day coverage) is highly unlikely.


Guaranteed Issue Life Insurance is an Alternative


Fortunately, there is a handful of life insurance companies who offer guaranteed issue life insurance for seniors who cannot medically qualify for traditional life insurance coverage. These policies do not require a medical exam and they do not typically have health questions on their application. The insurance companies are able to make a profit on these policies because of certain policy restrictions and because of higher rates charged to the policyholder. Here is what an applicant must accept in order to purchase guaranteed issue life insurance:

  1. A Waiting Period – Most insurance companies will have a two or three year waiting period when if the insured dies from natural causes a smaller death benefit will be paid to the beneficiary. Typically, if the insured dies during the waiting period, the insurance company will pay 110% of all premiums paid into the policy up to the time of death. In most cases, however, the company will pay the full death benefit if death is a result of an accident from the first day of coverage.
  1. Lower Death Benefit – Since the insurance company agrees to accept an unknown health risk, the maximum death benefit will be lower depending on the age of the applicant. In most cases, the maximum death benefit will be capped at $20,000 to $25,000.
  2. Higher Premiums – In additional to the waiting period and lower death benefit, the insurance company will charge higher premiums compared to traditional life insurance because they have not considered the applicant’s health so virtually every living person can buy a life insurance policy.


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How Much Higher are the Premiums?


Life insurance companies are in business to make a profit; they are not non-profit organizations and as such, they are going to charge more for guaranteed issue life insurance. Life insurance rates are based on age and health and if the insurer does not know about your health, you are a higher risk which translates to higher rates.

 Here is a rate comparison between Guaranteed Issue Final Expense life insurance and Traditional Final Expense life insurance for a male non-smoker with $15,000 in coverage: 

Age of the Applicant

Traditional Life Insurance

Guaranteed Issue Life Insurance


























As you can see from this rate chart, it costs considerably more for guaranteed issue life insurance compared to traditional life insurance and you have to deal with a two or three-year waiting period before your policy will pay the full death benefit of $15,000 used in this example.


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The #1 Question – Is it Worth It?


Whether the hefty rate increase and the waiting period is worth it or not depends on how important it is for you to pay for final expenses rather than your surviving loved ones. It’s also important to note that you could get by with less life insurance if you choose cremation.

 Here’s how the math works out: 


 80-year-old male with $15,000 death benefit and a two-year waiting period dies from natural causes during the 25th month of coverage: 


Premiums Paid:

$340.42 X 25 = $8,510.50

Death Benefit = $15,000

Savings versus Cash = $6,489.50


The Bottom Line


Although policyholders will pay much higher rates for guaranteed issue life insurance, it is still a better deal than having your surviving loved ones pay for your funeral and burial which typically costs between $10,000 and $12,000 for a moderately priced funeral. Yes, your estate can be liquidated to pay these funeral expenses but this could take months and your surviving loved ones would have to pay out-of-pocket before a funeral home would agree to provide services.


We're Here To Help
For more information about Guaranteed Issue Life Insurance and to get a free and confidential quote, call the insurance experts at BurialPolicy360 at (800) 712-8519 during normal business hours, or contact us through our website at your earliest convenience.

Doug Mitchell Ogletree FinancialDoug 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.