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Guaranteed Issue Life Insurance: No Medical Exam Required

In exchange for skipping the exam, be prepared for high premiums and a low death benefit, or payout.
May 8, 2020
Insurance, Life Insurance
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Guaranteed issue life insurance, often referred to as no medical exam life insurance, is a permanent life insurance policy with no medical underwriting. Simply put, you’re not required to answer questions about your health or complete a medical exam to qualify for coverage.

What’s the catch? “Final expense” or “guaranteed acceptance” life insurance, as it’s also sometimes known, comes with higher premiums and lower coverage. Benefits are also subject to a waiting period and won’t be paid out if you die of certain causes within the first few years.

That’s not to say these policies are without merit. As the name suggests, your application is guaranteed to be accepted regardless of your medical history. If you’re over a certain age and have a typically uninsurable health condition, a life insurance policy that guarantees coverage can open the door to an otherwise unobtainable safety net.

Key features of a guaranteed issue policy

Guaranteed issue life insurance policies come in many different shapes and sizes, with varying age restrictions and death benefits. But there are a few features that apply to almost all guaranteed issue products:

  • Your premiums stay the same for the length of the policy. Failure to pay your premiums may result in cancellation, rate increases or changes to your policy.
  • The death benefit won’t decrease over time. However, failure to pay your premium — or any loans taken out against the cash value — may reduce your benefit.
  • A waiting period is enforced at the start of the policy, typically spanning the first two years and restricting access to the full benefit if you die of natural causes.
  • There are no medical exams or questionnaires regarding your health to qualify for coverage.
  • Policies are valid for your entire life.

Guaranteed issue policies are almost exclusively a type of whole life insurance, which is permanent coverage. Guaranteed issue term life insurance policies, which last for a set number of years before expiring, are extremely rare. As a general rule, policies that don’t require any information on your health to calculate rates or confirm eligibility are considered “guaranteed issue.”

You may see this type of coverage referred to as “no medical exam life insurance,” but the exam is only one part of the medical underwriting process. Therefore, if a whole life insurance policy skips the exam but asks you to complete a quick health questionnaire, it’s not a true guaranteed issue policy.

Who is eligible for guaranteed issue life insurance?

Although your medical history isn’t used to determine eligibility, your age is. In general, guaranteed issue products are only available to applicants between the ages of 40 and 85. Age restrictions vary among insurers and can be a lot narrower, with some accepting applicants only between 50 and 80 years old.

Your age can also impact the cost of your premiums. As with all life insurance policies, rates are influenced by risk. The older you get, the riskier you are to insure, resulting in higher premiums.

The good news? Aside from meeting this one qualifying factor, everyone who applies for a guaranteed issue policy is eligible. However, not all insurers offer guaranteed issue products, and availability varies among states.

How much coverage can you get?

On average, death benefits for guaranteed issue life insurance policies range from $1,000 to $25,000. For the most part, these policies are used to cover final expenses, such as burial costs. In fact, covering funeral costs is one of the top reasons why Americans purchase life insurance today.

The median cost of a burial is over $7,000, according to the National Funeral Directors Association. The cost will be different for everyone, so defining your own priorities and setting a budget can help you calculate coverage amounts.

TIP: When estimating your future expenses, take into account your age, health and the cost of the policy. If you stick around for another 20 years, you may end up paying more for a guaranteed issue policy than it pays out.

How much does guaranteed issue life insurance cost?

For the price you pay, guaranteed issue policies don’t offer much coverage. For example, a $250,000, 20-year term life insurance policy for a woman in her 60s costs, on average, $908 per year. In comparison, a guaranteed issue policy for $25,000 costs $919 per year. While the prices are relatively similar, the guaranteed issue policy offers a tenth of the coverage.

Age at purchasePolicy amountAverage rate (men)Average rate (women)
Source for all rates: Quotacy. Average rates from top three carriers.
50$10,000

$15,000

$25,000
$361

$522

$844
$292

$419

$673
60$10,000

$15,000

$25,000
$508

$743

$1,213
$390

$566

$919
70$10,000

$15,000

$25,000
$841

$1,243

$2,047
$609

$894

$1,465

Who can benefit from a guaranteed issue policy?

Severe health conditions can result in high premiums, lower benefits and even render you “uninsurable.” If this is the case for you, a life insurance policy with no medical underwriting can make you insurable. However, don’t assume your health will prevent you from getting a competitively priced term or whole life insurance policy with medical underwriting.

Applying for life insurance with a pre-existing condition might not be as fruitless as you think. Shop around, compare quotes and see what coverage you qualify for before purchasing a guaranteed issue life insurance policy.

If you just want to avoid the exam but don’t mind answering a few questions about your health,  a simplified issue policy might be the better option. Providing any information about your health — no matter how minor — may help you qualify for a cheaper policy with larger death benefits than a guaranteed issue policy.

» MORE: 3 Good Reasons to Buy No-Exam Life Insurance

Why would you need guaranteed issue life insurance?

Although small, the death benefit can be used for any purpose. This makes it a flexible solution for anyone looking to leave their beneficiaries a lump sum. Here are some common scenarios that might call for a guaranteed issue life insurance policy:

  • You want to help your beneficiaries cover final expenses, such as burial costs.
  • Your term life insurance has lapsed and you still need coverage, but your current health or medical history prevents you from purchasing a standard policy.
  • You want to purchase a policy quickly, without waiting for medical exams or questionnaires to be verified, and are willing to pay more for it.

What are uninsurable conditions?

The following health conditions are generally considered high risk for standard life insurance policies with medical underwriting and may restrict your coverage options. In comparison, guaranteed issue life insurance ensures acceptance, regardless of whether you have an uninsurable condition.

  • Autoimmune conditions, such as lupus or rheumatoid arthritis.
  • Blood disorders, such as sickle cell anemia.
  • Cancers, such as breast cancer.
  • Diabetes.
  • Heart conditions including transplants.
  • HIV/AIDS.
  • Liver and kidney diseases.
  • Mental health conditions, such as PTSD and schizophrenia.
  • Neurological conditions, such as multiple sclerosis and epilepsy.
  • Respiratory conditions, such as emphysema or asthma.

» MORE: NerdWallet’s Life Insurance Reviews 2020 

What is the guaranteed issue waiting period?

Guaranteed issue life insurance typically comes with a “graded death benefit,” often referred to as a waiting period, which spans the first few years of the policy.

In general, if you die of natural causes within this time frame, the benefit is not paid out. Instead, your beneficiaries receive a portion of what you’ve already put into the policy, such as 110% of your paid premiums.

Here comes the loophole: If you die of accidental causes during the waiting period, such as a car accident, the benefit is paid in full.

After the waiting period has lapsed, the benefit is paid out regardless of the cause of death.

In short, you’re only covered for certain causes of death during the waiting period and, depending on your policy, the costs associated with chronic or terminal illnesses, often referred to as “living benefits.”

Without collecting information on your health, insurers don’t know if an underlying medical condition will result in a claim as soon as you purchase the policy. The waiting period is imposed to help balance this risk and ranges from one to three years, depending on the policy. Waiting periods, premium payouts and accidental death definitions vary among companies.

NOTE: During the waiting period, claims may take longer to process while the cause of death is determined.

Recap: Pros and cons of guaranteed issue life insurance

Insurance companies aren’t the only ones calculating risks; after all, you’re the one purchasing the policy. Your budget, long-term priorities and expected costs play an important role in deciding which type of life insurance to buy.

Policies that guarantee coverage no matter what sound enticing, but the overall costs might outweigh the benefits. Here are a few pros and cons to help you balance your priorities and better understand the risks:

ProsCons

  • No medical exams or health questionnaires are required to qualify.

  • Death benefits can be used for any purpose, as opposed to funeral insurance, which requires funds to be spent on specific products and services.

  • Policies accumulate "cash value" that can be withdrawn or borrowed against.

  • Benefits may be doubled if you die in an accident for an extra cost, subject to the terms of your policy.

  • Depending on the policy, your premiums may be stopped at a set age, such as 100, while your coverage remains intact.


  • Coverage amounts are lower than standard policies, typically ranging from $1,000 to $25,000.

  • Policies are more expensive than those with medical underwriting for the coverage.

  • The waiting period prevents your beneficiaries from receiving the funds if you die of ineligible causes within the first 1-3 years.

  • The accumulation of cash value is often slower than other policies, due to the low face value amount.

  • You may end up paying more into the policy than the policy is worth. For example, if you buy a $10,000 policy at 70 years old for $609, when you reach 87 years old, you will have paid $10,353 for a $10,000 policy.

  • You can apply for a guaranteed issue policy only if you are within the eligible age range — typically between 40 and 85 years old.

No medical exam life insurance policy alternatives

Simplified issue is a type of permanent life insurance that lets you skip the exam by answering a few questions about your health. Similar to guaranteed issue, other life insurance policies with no medical exams have smaller death benefits compared to products with full medical underwriting.

Accelerated underwriting relies on “big data” to calculate risk and eligibility. Required information may include your age, gender or smoking habits. This data is then compared to life expectancy patterns within similar groups of people to determine rates. As a result, applicants can often avoid the exam and still qualify for coverage.

Group life insurance policies obtained through employers don’t typically include an exam. Medical questionnaires may be required and certain health conditions might not be covered. They typically offer higher benefits than standard guaranteed issue products. What’s more, eligible applicants can convert their group policies to individual plans without re-examination.

Accidental death and dismemberment policies don’t typically require an exam or health questionnaire. However, these types of policies cover only eligible accidents with restrictions rather than natural deaths.

» MORE: Options For Buying Life Insurance With No Medical Exam

Your surviving spouse or child may be eligible for a $255 death benefit through the Social Security Administration. All eligibility requirements must be met to qualify for this program.

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