What is guaranteed issue life insurance?

Answer:

Guaranteed Issue Life Insurance

is also often called Graded Benefit Life Insurance. It’s a type of coverage generally offered to those between the ages of 40 and 80 that have…

significant health problems. There are many health related issues that could cause you to be without options for life insurance. Cancer, the one-two punch of heart disease and insulin dependent diabetes, severe Lupus… to name a few that cause insurers to bristle at the thought of providing coverage. Fortunately—Guaranteed Issue/Graded Benefit Life Insurance provides a way for everyone to have coverage despite the state of their health.

The coverage comes at a cost though… both in premium expense and what you have to give up getting it. It’s expensive and it’s limited, for a period of time at least, in terms of what it will do for you. This is where the name “Graded Benefit” comes in. Graded is what they call a plan that provides some but not all of the benefit for a period of time. So… for the first 2 or 3 years that you have the coverage in force… you will not be eligible for the full face amount of the plan that you’ve purchased. You would be eligible to receive the full benefit if you were to die in an accident—but death as a result of your poor health would only allow your beneficiaries to receive premiums paid plus some interest. So—at least in the short term—it only acts like an aggressive savings plan.
It’s good that Guaranteed Issue/Graded Benefit Life Insurance is there if you need it… but it’s certainly not the ideal. Most agents only pull it out of their tool bag when all other options have been explored and shot down by the most liberal carriers they know. In the grand scheme of things… it’s always better to have something rather than nothing at all.