WHAT IS GUARANTEED LIFE INSURANCE POLICY AND WHAT ARE THE BENEFITS OF VARIOUS OTHER POLICIES?
Guaranteed Issue Life Insurance policies are guaranteed to be issued, no matter what, just as the name implies. That is because they are not subject to medical underwriting, which includes both healthy and unhealthy people. You never have to take a medical exam or answer any medical questions. Better yet, you cannot be declined, regardless of your health. However, Guaranteed Issue Life Insurance generally offers lower than normal death benefits with higher costs than normal premiums.
Generally speaking, people who want Guaranteed Issue Life Insurance are not in good health and may have been declined coverage previously. Due to the fact that there is no medical underwriting, you will pay higher than usual rates. Also, there is usually a limit with Guaranteed Issue policies as to the amount of insurance offered, which is often $50,000 or possibly $100,000.
When Does My Coverage Begin?
Another drawback to a Guaranteed Issue Life Insurance policy is that your beneficiary will not receive a full death benefit until you have satisfied the policy’s probation period. That is roughly between one and two years after you take out the policy. If you die before that period, the policy would only pay your beneficiary a refund of your premiums paid, not the full death benefit. This is called Graded Benefits.
Is It a Level Policy?
A Level Policy means whether the coverage (the death benefit paid out) and the total cost (premium payments) will remain the same at the end of the policy. There are various types of Level Policies – Level Term, Level Whole Life, Final Expense and Level Accidental Policies.
When Does My Policy Expire?
Whole Life Policies last your entire life. Term Life Policies expire at the end of the term. So, if you opt for a Term Life Policy, make sure to ask whether you will get your money back at the end of the term.
Are there any Living Benefits?
Living Benefits seems contradictory since, technically, life insurance is for when you die. But there are Living Benefits available in situations where you get a chronic illness, you are in critical condition or you are suffering from a terminal condition. If your policy has Living Benefits, you may get some or even all of your money back for your treatment. If it’s a larger policy such as a $200,000 or $300,00 policy, it will make a great difference. So, you will want to ask, does your policy include Living Benefits or just a Death Benefit? Accidental policies usually come with Death Benefits only. Sometimes there’s Disability added to them as well. Term policies can go either way. They can be purely Death Benefit based or they can have Living Benefits attached to them as well. This is the same case with Whole Life Policies.
Does My Policy Accrue at a Cash Value?
Make sure to also ask whether your policy accrues at a cash value. Whole Life and Universal Life Policies are cash-value policies. They accrue cash reserves through excess premiums plus earnings. Deposits are placed in a cash-accumulation account within the policy. You can make withdrawals, policy loans, or partial or full surrender of these types of policies. In times of financial stress and you need to withdraw funds right away, you may discover undesirable withdrawal fees depending on how you access your funds.
To help you better decide what policy is best for you click on the link below: