What's This about Guaranteed Acceptance Life Insurance?

by Shane Flait⁽¹⁾
EasyRetirementKnowHow

It's hard to miss all the TV Ads that offer it to you. They're clearly targeting older retirees. What's it all about? If it's not a scam, how can an insurance copy offer it and not get ripped off itself? Guaranteed acceptance life insurance means what it says: you apply for it and as long as you can pay for it, you get it with no medical exam and no medical questions! Here's the deal....

You guessed it! It's far more expensive than a traditional 'underwriting' policy - you know, the one's that include a medical exam and your medical history.

But that's the very reason why someone would want to buy such guaranteed acceptance policies. They're uninsurable due to health complications under traditional underwritten policies. But they still feel they need life insurance coverage to pay help pay expenses their death will bring to their loved ones.

And because of that companies that issue such policies build costs and restrictions into them to protect themselves. Here's how it typically works...

• Typical Guaranteed Acceptance Policy Limitations:

First of all, insurance companies don't allow very high face amount - i.e. death benefit - in the policy. You probably can't get more than a $25,000 policy. But, then again, you can own as many policies as you can afford. So if you wanted $60,000 worth of guaranteed acceptance life insurance, you can buy 3 different $20,000 policies!

Another limitation is that some policies only pay out the death benefit on a graduated scale if you die in the first few years of the policy. Remember, most people are quite old when they buy these. So, if you die in the second year, your beneficiary may get only a small fraction of policy's face amount. Your policy may need to be in force for several years before the full face amount is available. This cuts down the financial liability of the company to you.

Sometimes companies specify minimum and maximum age requirements to apply. But companies vary on this.

Insurance is regulated by the state the company is in. Not every state's insurance board allows guaranteed life insurance. One reason is that the guaranteed life insurance policy could potentially cost you more in premiums than it pays out, depending on when you die. That's part of its restrictive payouts as mentioned above.

• Not everybody needs life insurance:

Recognize that you might not really need such policies; their costs may not be worth their benefit to you - or to your loved ones. If you've enough assets for your final expenses - and that's what you're worried about - then you're "self-insured" and don't need life insurance.

In fact, even if you don't have much of anything, you're loved ones would rather help you pay for those final expenses rather than have you squander what little income or assets you have trying to pay it.

Nevertheless, if you do consider all your alternatives, you have a serious medical condition, and you're over the age of 50, guaranteed life insurance may be your best option for getting the coverage you feel you need - if you can afford it.

Shane Flait helps you with your financial legal, tax, and retirement goals.

Get his FREE report on Managing Your Retirement:

http://www.easyretirementknowhow.com/FreeReportandSignUp.htm

Read his ebook: 'Wise Way to Financial Independence':

http://www.easyretirementknowhow.com/WiseWayGate.htm

Article submitted Sunday, February 12, 2012 & read 1 times.

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