How To Use Guaranteed Term Life Insurance
Guaranteed term life insurance is an excellent way for high risk or normally uninsurable individuals to get a small portion of life insurance protection that they are normally denied. This type of no-medical insurance is an excellent alternative to those that normally don't qualify for insurance. The high risk individuals are now able to get insurance that allows them to protect their families from the unknown after they pass.
The unfortunate truth of the current insurance system is that it is generally too costly for the insurance companies to provide insurance protection to individuals with a higher likelihood of passing away before the premiums meet the death benefit. Granted, the insurance company doesn't depend on you paying in what they pay out, but the more they get out of you’re the better their chance of succeeding the business.
The insurance company functions on a pooled funds system. They then take those pooled funds and invest a portion into safe but profitable places. The reason that they can offer decent death benefits is that they are able to use the premium payments of their member to invest in profitable ventures. This is all very regulated by the individual state insurance departments.
For most insurance companies, the way that the system works is by qualifying the members based on their anticipated life expectancy. The longer you live, the more time you have to pay premiums. For this reason, the longer your life expectancy, the better the rates and insurance benefits you can expect.
The flip side of this problem has come in the form of those individuals with relatively short anticipated life expectancies. Whether it is from participation in high risk activities or careers, or if you health is insufficient to pass the rigorous insurance tests, many individuals are simply denied coverage. The reason for denying coverage is not because they are money-grubbing thieves (usually), but because it is not a viable business model if you are continually paying out more than you are bringing in.
The good news in all of this is that the insurance companies have put together a couple of different solutions to help alleviate some of the pain of denial. Guaranteed issue term life insurance is one of these high risk life insurance options.
Guaranteed acceptance term life insurance does almost exactly as it states, it guarantees acceptance into the insurance policy. Regardless of your risk factor or life expectancy, you will be provided with some form of guaranteed term life insurance.
This has come as a great relief for a number of previously uninsurable individuals. Though the general death benefit is significantly less than traditional term life insurance, it still provides insurance where insurance was not previously available. The fear on not being able to provide for your loved ones after you pass is lessened by the availability of this insurance type.
The important thing to keep in mind with guaranteed acceptance life insurance is that you can expect the price structure to be different than other insurance types. The insurance company must be able to justify issuing these high risk policies, and as such will compensate in areas other than longevity of premiums. Oftentimes you can expect higher premiums and small death benefits. If you need more insurance than the one policy provides, consider purchasing multiple policies.
Remember that it is always important to get a number of different quotes for term life insurance. Guaranteed term life insurance is not different. Each insurance company will have a different combination of premium costs, death benefit provided, additional addendums, and other company specific features.
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