The Truth About Guaranteed Life Insurance

If you watch TV at all then you no doubt have seen the commercials that say that you already qualify for guaranteed life insurance without exceptions and without nasty little things like medical exams and prior medical conditions getting in the way.

Sounds enticing, no doubt about it, but how practical is guaranteed life insurance?

Well first off, yes, this type of life insurance does exist. There are however, surprise, surprise, some caveats. The coverage is usually capped at $50,000 and in many cases is substantially lower.

There are plans that will offer coverage greater than this but it almost always comes in the form of accidental insurance coverage, which just as the name implies, pays out the higher amount only if the insured should die accidentally.

That sounds all well and good but the problem lies in the fact that the vast majority of insurance claims are not paid out because of accidental death but rather by illness or natural causes. And the odds of someone dying by accident diminishes as they grow older. Which leads us to the cost for increased coverage.

The premiums for guaranteed life insurance policies are substantially higher (Up to 300% higher) than they are for traditional life insurance policies. The guaranteed plans pretty much lump everyone into the same category. People with good to excellent health will be paying the same as those with poor health and pre-existing illnesses.

Put another way, the people that can qualify for a traditional life insurance policy will be paying much more for guaranteed life insurance and getting less coverage.

The death benefits for a guaranteed policy are usually a return of premium paid plus nominal interest in the first few years of the policy unless the insured dies by accident, which as we discussed earlier is highly unlikely.

And a final reason to be leery of advertisements for guaranteed life insurance is the fact that they aren’t all truly guaranteed. Basic health questions still need to be answered to the satisfaction of the insurance company before the policy will be written.

If an insurance company finds that the applicant has a serious and life threatening pre-existing condition then they are not going to write the policy.

Remember, insurance companies are in business to make money, not give it away. They are not going to take on the liability that comes with insurance for high risk individuals.

Now if you are seeking a guaranteed life insurance policy this article may seem like it’s all gloom and doom but actually in some cases they can make perfect sense. But that all depends on the individual case. It is advised that you seek out a reputable independent insurance broker and discuss your situation with him or her.

Ask them if there are any traditional life insurance policies that you would be accepted for and short of that inquire to see if they can find a guaranteed policy that has lower premiums but still offers substantial payout coverage.

The key here is consulting an independent agent who has access to policies from many different insurance companies and are not just obligated to sell the life insurance offered by any single company that they work for.