Guaranteed Life Insurance For Hard To Insure Individuals
Guaranteed life insurance is the insurance companies answer to discriminating against individuals they feel are uninsurable. This type of life insurance is also often referred to as guaranteed acceptance life insurance. The principle behind this type of insurance is quite simple. For a price, most people will be able to get insurance.
How Does Guaranteed Life Insurance Work?
With guaranteed acceptance life insurance no health questions are asked. Whether or not you have health concerns that would otherwise leave you uninsurable, you can still apply and receive life insurance for your family. Not needing a medical exam for life insurance allows those that would normally be instantly rejected the opportunity to apply for some protection on their life.
This type of insurance is possible because the insurance company transfers the risk they are taking on in the form of increased premiums and/or decreased death benefits. By reducing what the insurance company has to pay out, the insurance company is able to make up the difference in their risk factor.
The main price of guaranteed life insurance is that the death benefit will be significantly less than traditional life insurance. The insurance company is simply not willing to pay a large death benefit when the odds of them not making back their money in premiums is so high.
One way or another, the guaranteed life insurance company treats this as business. They need to be able to make up the money they are providing by having favorable returns on their investment. For this reason, many guaranteed policies will also have higher premiums. And while the insurance company does not expect to make up the death benefit in premiums on every policyholder, they need to find a balance between those that end up paying more and those that pay less. Insurance is based on pooled funds and averages.
Because the insurance company is able to average out the cost of offering guaranteed issue life insurance, those high risk individuals or otherwise uninsurable are able to purchase at least a small portion of life insurance to assist their families after they pass.
Although guaranteed whole life insurance is not unheard of, the majority of these types of no medical life insurance policies are term life insurance. Guaranteed term life insurance tends to be sufficient for most individuals in this category, as their health is generally such that they have a high likelihood of passing away earlier than others.
It should be noted that a guaranteed life insurance policy is not necessarily only for those with serious medical problems. High risk occupations and other risk-taking individuals may also require this type of insurance. It is primarily intended to protect those high risk (for the insurance company) individuals and their families.
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