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Life Insurance Glossary: Terms To Know

Guaranteed Issue

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Guaranteed issue means that when you apply for a life insurance policy:

  • The company guarantees to issue the policy -- no matter your health history or current health condition.
  • There is no medical exam.

With guaranteed issue individual policies, the insurer generally requires that you answer a few questions, such as your age and whether you have been hospitalized in the past 6 months.

In order to protect the life insurance company against people purchasing a policy on their death bed, guaranteed issue policies generally have provisions which say that if the insured dies within the first two years:

  • Instead of the full death benefit, the beneficiary will only receive a return of premiums paid plus a healthy rate of interest or
  • The death benefit starts low and does not grow to the maximum amount until the end of two years form the date of issue.

In a sense, group policies are "guaranteed issue" policies because no health questions are asked when you sign up. There may be a waiting period during which a pre-existing condition is not covered for a period of time, such as for 12 months.

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