Is Final Expense Life Insurance (Guaranteed Issue) Worth The Money?

Final expense life insurance, sometimes called burial insurance, is a small policy used (usually) to cover funeral expenses. Ranging from as little as $1,000 to $30,000 in whole life insurance, it is usually a last resort insurance policy for people whom for some reason or another did not secure a permanent policy earlier in their lives. In this category of life insurance, out of the many available to the public, there are usually two options. The first of the two options is simple: a small whole life policy that is issued to people of normal or fair health. If the client can satisfy the underwriting guidelines of the life insurance company, he or she will be issued a policy rated as standard. If the client is of subpar health, then the he or she will either have an increased premium option, or rated as guaranteed issue.

A Guaranteed issue policy, is a life insurance policy that will take anyone regardless of their health. So much so, the proposed client doesn’t have to answer any question nor take a medical exam. What’s the catch? Guaranteed issue life insurance policies are more expensive than a normal policy, and normally come with a graded death benefit. I can hear you know; “What is a graded death benefit?” Simply stated, a graded death benefit is a death benefit that increases to the policy amount over the course of 24 to 36 months based on the insurance company. I should add that accidental deaths, and delayed deaths resulting initially from an accident, are covered prior to meeting the 24 or 36 month requirement.

To paint a clearer picture let’s do a case study using one of my favorite guaranteed issue companies, Gerber Life Insurance. At the time of this writing, $10,000 of coverage on a 50 year female cancer patient cost $34.47 per month. If this woman were to pass away within the first two years, her family would receive all the premiums paid plus an additional ten percent. However if she were to expire twenty four months plus one day after the policy’s issue date, her family would receive the entire $10,000. Clearly we can see the policy is worth the money since, at a minimum, her family will receive every cent she paid into the policy.

In closing I would like to remind you that not all life insurance companies, nor life insurance policies are the same. There is more to purchasing life insurance coverage than the price. There are companies with different criteria for the amount of time for full benefit payments versus the percentage paid at a specific time. The most important thing I would like you to take away from this is that, the longer you wait to buy life insurance (especially guaranteed issue), the more it’s going to cost you. It the case of Guaranteed Issue, it delays the inevitable count down towards receiving a full death benefit.

Steve Isidor
Personal Insurance Advisor
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