Investing in a life insurance policy is one of the best decisions you’ll make for yourself and your family. Life insurance intends to grant financial protection to the insured’s family in case of sudden death.
Many insurance service providers sell attractive schemes like guaranteed acceptance insurance with no lock-in period. However, experts like Gary P. Cubeta of Insurance for Final Expense advises investors to be diligent when choosing insurers for life insurance no medical exam no waiting period.
What Is Guaranteed Acceptance Insurance?
Guaranteed acceptance insurance, also called guaranteed life insurance, is a life insurance policy where acceptance is guaranteed even without a medical examination. The insurance provider does not conduct a medical examination or ask any questions about your health conditions.
There is also no waiting period. It may seem like this insurance scheme is risk-free, simple, and effortless. However, there are crucial mistakes you may want to avoid when choosing guaranteed acceptance insurance.
What You Need to Know About Guaranteed Acceptance Insurance
Guaranteed acceptance may seem like the obvious choice for many reasons. However, there are some things you must be clear about before deciding to choose guaranteed acceptance insurance with no waiting period.
Most Insurance Companies Have an Age Limit.
Most guaranteed acceptance insurance providers insist that the applicant must have a minimum age between 40 and 50 and don’t accept applications from people who are over 80 years of age.
Insurance experts like Gary.P. Cubeta of Insurance for Final Expense assert that while life insurance with no medical exam, no waiting period sounds attractive and convenient, it does not offer the same coverage as other reliable life insurance schemes. The coverage caps are usually low and range anywhere between $10000 and $25000. This sum is usually just enough to cover final expenses like funeral expenses and legal expenses.
Guaranteed acceptance schemes are expensive. Since there is no medical examination and no waiting period, the insurer usually charges a higher premium. People who don’t have health conditions that may disqualify them from regular life insurance policies don’t usually opt for this scheme.
Life insurance policies that are approved post medical examinations have lower premiums. Further, the rates of guaranteed acceptance premium may also vary based on age and gender.
Graded Death Benefits
Providers of guaranteed acceptance life insurance don’t have the medical data of the insured. It would be easy for a person with a terminal illness to get accepted. So the provider imposes graded death benefits.
Suppose the insured passes away within two years since the policy’s commencement on account of any reason other than an accident; the beneficiary may only get a refund of the premiums paid plus an interest of 10%-30%. If the insured passes because of an accident, the beneficiary will get the full coverage even if the policy was recent.
Some policies come with a built-in cash value which the insured can use for a policy loan. If the loan is not paid back in full before the insured’s death, the amount available to the beneficiary would be reduced by the amount owed.
It Cannot Be Considered an Investment.
Guaranteed acceptance insurance policies don’t yield high returns and come at high premiums, unlike whole life insurance policies. Whole life insurance schemes also double as an investment avenue because they guarantee returns that are at least equivalent to the prevailing bank rate. Life insurance is also a long-term saving opportunity to lock funds for a period.
Guaranteed Acceptance Insurance vs. Whole Life Insurance
Life insurance is also seen as a long-term savings scheme because the premium covered is eventually recovered in full along with interest at the end of the term period. As stated above, guaranteed acceptance insurance does not serve this purpose. Investing in whole life insurance can also lead to tax benefits. This option may not be available in the case of guaranteed acceptance insurance policies.
Who Should Go for Guaranteed Acceptance Insurance?
GI life insurance is perfect for people with terminal health conditions that may make them ineligible for whole life policies. If you only want to set aside money for final expenses, this insurance type may work for you. People with limited budgets can also consider opting for guaranteed acceptance insurance.
Is Guaranteed Acceptance Insurance Right for You?
GI life insurance has its pros and cons. Working with an insurance expert will help you understand what type of insurance is best for you, based on your circumstances, age, and gender. Your insurance expert/agent will help you compare and analyze different policies before choosing the one that is best suited for you.