What Is Guaranteed Acceptance Life Insurance?
As the name implies, guaranteed life insurance is life insurance that is guaranteed no matter how old you are, what bad habits (smoking) you have or what medical history you have… everyone is accepted in to the plan.
Guaranteed life coverage is intriguing for someone who is older or for those who are in a high risk group such as those with a pre-existing health condition like cancer or diabetes, those who smoke or have some other health condition that would prevent them from getting affordable life insurance coverage.
Cons of Guaranteed Acceptance Life Insurance
As you might expect, there are a few downsides to guaranteed life insurance coverage. This is to be expected because accepting everyone in to the plans significantly increases the risk that the company is taking on and therefore they need to make up for this risk somewhere else.
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Because of this risk, many companies will only let you buy so much insurance at a time… usually around $20,000 but it varies depending on the company. Many people are looking for more coverage than this so buying policies from a few different companies is an option here.
Another potential issue with guaranteed insurance coverage is that there are usually limitations that may not be worth the premium you are paying. Since many of the potential customers who buy this type of policy are in poor health or are close to death, there are usually restrictions to prevent someone who doesn’t have long to live to cash in quickly. Many companies will not guarantee full payouts until a set number of years have passed, paying out only part of the policy should the insured pass away quickly.
Possibly the biggest downside is that the terms and conditions of the insurance plans can be very confusing. I recently read a Marketwatch article that reviewed Colonial Penn life insurance policy and in it they revealed that instead of dollars the insurance was sold in “units” without much clarification of what a “unit” is. Since many of the potential customers are older and could be confused by “units” this struck me as intentionally shady… at least in my opinion.
Is It Worth The Money?
Is guaranteed life insurance worth the money? Yes and no. I would highly recommend shopping for regular life insurance coverage, with standard terms before resorting to guaranteed coverage. Much like guaranteed credit cards take advantage of people with bad credit, guaranteed life insurance doesn’t give normal insurance value to its customers because they are in a tough spot in terms of age and/or health. If you have applied to other companies and have been rejected then yes, guaranteed acceptance life insurance coverage is better than no coverage at all.