When I talk to families about life insurance, one question I hear constantly is: “What if I can’t qualify for regular life insurance because of my health?” That’s where guaranteed issue final expense insurance comes in—it’s designed specifically for people who need coverage but may not be able to pass traditional medical underwriting.
For a complete overview, see final expense insurance explained.
Let me walk you through everything you need to know about this type of coverage, including how it works, what it costs, and whether it might be right for your situation.
What Is Guaranteed Issue Final Expense Insurance?
Guaranteed issue final expense insurance is a type of whole life insurance that accepts everyone who applies within the eligible age range (typically 50-85), regardless of their health condition. There are no medical questions, no medical exams, and no health requirements whatsoever.
The coverage is specifically designed to help cover final expenses like funeral costs, burial expenses, and outstanding debts. Most policies offer coverage amounts between $5,000 and $25,000, though some carriers go up to $50,000.
Here’s the key trade-off: In exchange for guaranteed acceptance, these policies come with what’s called a “graded death benefit” or waiting period.
How the Graded Death Benefit Works
This is the most important part to understand. With guaranteed issue final expense insurance, if the insured person dies from natural causes within the first two or three years (depending on the carrier), the policy doesn’t pay the full death benefit.
Instead, it typically works like this:
Years 1-2 (or 1-3): If death occurs from natural causes, the policy returns all premiums paid plus interest (usually 10% annually).
Year 3 and beyond: The full death benefit is paid, regardless of the cause of death.
Accidental death: Most policies pay the full death benefit immediately, even during the waiting period, if death results from an accident.
The waiting period exists because the insurance company is taking on significant risk by not asking any health questions. They need this protection to prevent adverse selection—people who know they’re terminally ill from immediately purchasing coverage.
Who Should Consider Guaranteed Issue Coverage?
In my experience, guaranteed issue final expense insurance makes sense for people in these situations:
You’ve Been Declined for Other Coverage
If you’ve applied for simplified issue or fully underwritten life insurance and been turned down due to health conditions, guaranteed issue might be your only option for immediate coverage.
You Have Serious Health Conditions
Conditions that typically disqualify you from other types of coverage include:
- Being on oxygen therapy
- Having cancer with active treatment
- Being on dialysis
- Living in a nursing home or assisted living facility
- Having severe heart disease or recent heart attacks
- Advanced diabetes with complications
You Need Coverage Quickly
Unlike fully underwritten policies that can take weeks or months, guaranteed issue policies are typically approved within days. If you’re concerned about your health and want coverage in place quickly, this can provide peace of mind.
You Want to Avoid Medical Exams
Some people are uncomfortable with medical exams or blood draws. Guaranteed issue eliminates all of that.
The Cost Reality
I’ll be honest with you—guaranteed issue final expense insurance is expensive compared to other types of life insurance. Because the insurance company can’t screen for health conditions, they’re taking on higher risk, and that gets reflected in the premiums.
Here’s a rough comparison for a 65-year-old wanting $10,000 in coverage:
- Guaranteed Issue: $40-70 per month
- Simplified Issue: $25-45 per month
- Fully Underwritten: $15-30 per month
The healthier you are, the more you’re overpaying for guaranteed issue coverage. That’s why I always recommend trying simplified issue first if you think there’s any chance you might qualify.
Alternatives to Consider First
Before jumping into guaranteed issue, let’s look at other options that might work for you:
Simplified Issue Final Expense
This type of coverage asks 8-15 basic health questions but requires no medical exam. Many people think they won’t qualify, but the questions are often more forgiving than expected.
Common simplified issue questions include things like:
- Have you used oxygen in the past 2 years?
- Have you been diagnosed with cancer in the past 2 years?
- Are you currently receiving treatment for heart disease?
Notice these ask about recent timeframes. If your health issues were several years ago and are now stable, you might qualify for simplified issue at much better rates.
Graded Benefit Simplified Issue
Some carriers offer a hybrid approach—simplified issue applications with graded benefits. This can offer better rates than guaranteed issue while still being accessible to people with health conditions.
Group Coverage Through Work
If you’re still working or recently retired, check whether your employer offers group life insurance that you can continue. This is often guaranteed issue through the group plan.
How to Evaluate Guaranteed Issue Policies
If guaranteed issue is your best option, here’s what to compare:
Length of Waiting Period
- 2-year graded benefit: Better for the insured
- 3-year graded benefit: More common but less favorable
Premium Return During Waiting Period
Most policies return premiums plus 10% interest if death occurs during the graded period, but verify this with each carrier.
Coverage Amounts Available
While most companies offer $5,000-$25,000, some go higher. Make sure the coverage amount meets your needs.
Rate Stability
Look for policies with level premiums that won’t increase over time. Some policies have premiums that increase with age.
Company Financial Strength
Since you’ll potentially be paying premiums for many years, choose a company with strong financial ratings (A- or better from A.M. Best).
Common Misconceptions
Let me clear up some confusion I often see:
“The waiting period means it’s not real insurance.” Not true. During the waiting period, you still get coverage for accidental death, and your premiums are returned with interest for natural death. After the waiting period, it’s full coverage.
“I should wait until I’m sicker to apply.” Bad strategy. Premiums increase with age, and your health could decline to the point where you can’t afford or manage the premiums.
“All guaranteed issue policies are the same.” Definitely not. Rates, waiting periods, and policy features vary significantly between carriers.
The Application Process
The application process for guaranteed issue is refreshingly simple:
- Complete the application (usually 1-2 pages)
- Answer basic demographic questions (age, address, beneficiary)
- Choose your coverage amount
- Set up premium payments
- Receive approval (typically within 24-48 hours)
There are truly no health questions asked. The only way to be declined is if you’re outside the eligible age range or live in a state where the carrier isn’t licensed.
Making the Decision
Guaranteed issue final expense insurance isn’t the cheapest life insurance you can buy, but it serves an important purpose. For people who can’t qualify for other coverage, it provides guaranteed acceptance and peace of mind that final expenses will be covered.
The key is being realistic about what you’re getting. This isn’t a wealth-building tool or a way to leave a large inheritance. It’s specifically designed to cover end-of-life expenses and provide dignity in death planning.
If you’re considering this type of coverage, I always recommend getting quotes from multiple carriers, as rates can vary significantly. Also, don’t assume you can’t qualify for simplified issue without trying—you might be surprised.
Getting the Right Coverage for Your Situation
Every family’s situation is different, which is why I don’t believe in one-size-fits-all solutions. Whether guaranteed issue is right for you depends on your health, budget, and coverage needs. As an independent agent, I work with multiple carriers and can help you explore all your options—from simplified issue to guaranteed issue to hybrid approaches.
Sometimes the best strategy is a combination of coverage types. Other times, waiting a few months for health conditions to stabilize can open up better options.
Let’s find the right solution for your family. Schedule a free consultation and I’ll personally review your situation and shop multiple carriers to find coverage that fits your needs and budget.
- Consider guaranteed issue final expense insurance if you’ve been declined for traditional life insurance due to health conditions, as it accepts everyone aged 50-85 without medical questions or exams.
- Understand the graded death benefit structure where natural deaths in the first 2-3 years only return premiums plus interest, while accidental deaths receive full benefits immediately.
- Expect coverage amounts between $5,000-$25,000 specifically designed to handle funeral costs and final expenses rather than replace income.
- Evaluate this option if you have serious health conditions like being on oxygen therapy, active cancer treatment, dialysis, or living in assisted care facilities that disqualify you elsewhere.
- Apply quickly when you need immediate coverage since guaranteed issue policies typically approve within days compared to weeks or months for traditional underwritten policies.
