Understanding Guaranteed Life Insurance
If you're considering buying a life insurance policy, you already know why it's beneficial to your family. They can use the money to pay your unpaid debts, medical and funeral costs, or simply to supplement a portion of lost income. The main questions most people have are what kind of policy to buy and how much that will cost. Guaranteed life insurance makes sense for many people, for a number of reasons.
What Is Guaranteed Life Insurance?
The "guaranteed" part sounds great, but what exactly are you buying? Well, guaranteed life insurance is essentially the same thing as whole life insurance. The entire amount will be paid out when you die, and the premiums are guaranteed to stay the same. Your premiums will pay for the insurance and accrue the cash value of the policy, which usually takes about two years. It's also guaranteed to everyone, with just a few exceptions. For someone who's having trouble getting an affordable life insurance policy (or any policy at all), guaranteed life insurance is a great option.
The Advantages of Guaranteed Life Insurance
There are several reasons this type of life insurance policy is advantageous:
- No medical exam: You won't be subject to an exam, or have to share medical history. For someone with a history of illness or a chronic condition, this is a huge benefit.
- Set premiums: Once you enact your policy, your premium will stay the same, regardless of inflation or a new medical condition.
- Full payout: As long as you pay your premium, the full amount will be paid out when you die.
- Ability to borrow: While the exact logistics might differ according to insurance provider, you can generally borrow money from the cash value for emergency expenses.
Some Finer Points
Since it does take about two years for value to accrue, guaranteed life insurance has something called graded benefits. This means the payout is related to the amount of time it takes for value to build. If you have a serious condition that will likely cause you to die in a matter of months, then a guaranteed life insurance policy is highly unlikely to pay full benefits that quickly. And while this is generally a very inclusive type of policy, there are likely age limitations--age 70 and over--from most providers. Finally, in order to guarantee payment, insurers usually set a maximum amount for your benefits. You can probably get up to $50,000 in coverage, but usually not more than that.
How Does the Cost Work?
In order to guarantee payment, insurers generally set premiums higher than term life insurance. You'll know exactly how much you have to pay as long as you live, but that amount might be high. However, a number of insurers offer guaranteed life insurance, which means you can search online for providers and easily compare their quotes. If you use a free service such as NetQuote.com, you can find dozens of offers in no time and compare their premiums side by side. And that's guaranteed, too.