- AIG American General Life Insurance - 06/01/2021
- High Risk Life Insurance - 05/23/2021
- How does Burial Insurance Work? - 05/11/2021
Quite often we have clients who contact us after being declined for traditional life insurance because they are considered “high risk.”
This might be due to a difficult-to-insure medical condition, hazardous hobby, or dangerous occupation; whatever the reason, high risk does not mean you must go without life insurance.
We have alternative life insurance products that can accommodate high-risk cases and we write them all the time.
What is High Risk Life Insurance?
High-risk life insurance is a term used to describe applicants who are considered high risk because of their health history or profession.
These individuals may face discrimination by the traditional market as insurers view them as more likely to need benefits in order for an insurer and customer to break even on these policies.
High-risk life insurance products offer higher premiums than traditional life insurance and typically have a waiting period of one or two years before the company will pay the full death benefit if death is due to natural causes.
Why Should Seniors Consider High Risk Life Insurance?
Seniors who are dealing with severe or multiple health issues are generally declined by a company that offers first-day coverage and the most affordable rates.
However, if having peace of mind knowing that your final expenses like the cost for a funeral and burial will not be left for surviving loved ones to be paid out-of-pocket, a high-risk policy like graded death benefit or guaranteed issue will be the best alternative for having no life insurance at all.
What is Graded Benefit Life Insurance?
Graded Benefit life insurance was designed to allow insurance companies to accept the risk of an applicant who would not otherwise qualify for a standard life insurance policy.
This type of policy is especially beneficial in the senior market and in many cases will be the only option for seniors who are considered high risk by insurance companies.
Since the insurance is agreeing to accept a high medical risk applicant, they typically require a two or three-year waiting period when the death benefit will be paid on a graded basis if death is due to natural causes. For example:
Year One – If the insured dies from natural causes, the insurance company can elect to pay 30% of the full death benefit to the beneficiary.
Year Two – If the insured person dies during the second year, the insurance company will typically pay 70% of the death benefit to the beneficiary.
Year Three and After – If the insured should die from natural causes in the 3rd year or later, the beneficiary would receive 100% of the death benefit.
What is Guaranteed Issue Life Insurance
Guaranteed issue life insurance (guaranteed acceptance) is considered a modified benefit plan since the death benefit is modified during the first two years of coverage for death from natural causes.
For seniors who are tired of answering health questions, having their medical records reviewed for pre-existing conditions and high-risk factors, and then being declined for coverage, then guaranteed acceptance is perfect for you.
Unlike most policies where the company reserves the right to decline coverage or increase premiums based on past ailments or family history information that may be uncovered during an underwriting process a guaranteed issue policy can be purchased without regard to the applicant’s current and former medical history.
Virtually anyone between 40 and 80 can purchase whole life insurance without having to undergo a medical exam or answer any medical questions on the application.
In exchange for accepting a high-risk (unknown medical risk) the insurance company will place a two or three-year waiting period during which if the insured dies from natural causes, the insurance company will pay the beneficiary 110% of all premiums paid to the company. 5
In the third year and after, the insurance policy will pay the full death benefit to the beneficiary.
Like the graded-death benefit policy, the waiting period does not apply if the insured’s death is the result of an accident.
The Cost of a Graded Benefit Policy vs Guaranteed Issue Policy
The pricing difference is fairly substantial when you consider the premium for a graded-benefit plan versus a guaranteed issue plan. Knowing this, it would be wise for every applicant to compare the rates to find the most affordable coverage:
Here is our price chart that compares the premiums for a Graded Benefit Final Expense Policy with a Guaranteed Issue Final Expense Policy with a $10,000 face amount:
Age | Male Graded | Male Guaranteed | Female Graded | Female Guaranteed |
50 | $46.88 | $55.99 | $31.03 | $38.58 |
55 | $55.65 | $61.37 | $38.12 | $46.60 |
60 | $68.13 | $68.14 | $46.62 | $53.93 |
65 | $87.56 | $90.83 | $54.62 | $66.42 |
70 | $116.32 | $106.00 | $70.21 | $80.41 |
75 | $159.43 | $149.66 | $96.30 | $115.73 |
80 | $228.16 | $206.32 | $120.89 | $189.53 |
85 | $277.51 | NA | $190.66 | NA |
Find the Best Companies for Final Expense and Burial Insurance
(920) 399-8134, or you can contact us through our website at your convenience.