Guaranteed issue life insurance: How it works & when it makes sense to buy

By waiving the medical underwriting process, guaranteed issue life insurance provides a path to coverage for individuals who may not qualify for any other type of life insurance.

Very few things in life are guaranteed, so you might be a bit suspicious to hear that a life insurance company will guarantee you coverage without a medical exam, regardless of your health history. But, it’s true.

In this article, we’ll look at what guaranteed issue life insurance is, how much coverage you can get, its pros and cons, and much more. Guaranteed issue life insurance isn’t for everyone, but it can be the best policy for someone under the right circumstances. Let’s take a look.

What is guaranteed issue life insurance?

Guaranteed issue life insurance (GIL) is a type of permanent insurance policy that doesn't require medical underwriting by the life insurance company. Because it requires no medical exam and needs no answers to medical questions to qualify, a policy can be issued in a short amount of time, compared to a traditional, fully underwritten permanent life insurance policy.

GIL, sometimes known as “final expense life insurance” or “guaranteed acceptance life insurance,” has higher premiums than a fully underwritten whole life or universal life policy, and the coverage limits are lower. The policy’s death benefit for your beneficiary won’t be paid out in full over the first few years, with one exception we’ll see later.

Though it has some limitations, GIL policies have some benefits. As the name suggests, you are guaranteed to be issued a policy regardless of your medical history and without a medical exam. It can be the perfect policy for someone that can’t qualify for a traditional policy and is within the acceptable age range, such as 45-85 years of age.

How does guaranteed issue life insurance work?

Guaranteed issue life insurance policies can vary from life insurer to life insurer, but there are some features that apply to almost every company’s GIL policies:

  • Level premiums. Your premiums are based on your current age and gender and will remain the same for the length of the policy.
  • No decrease in death benefit. Your death benefit won’t decrease over time, but any loans taken from the policy’s cash value may reduce the death benefit paid to your beneficiary.
  • An initial waiting period. There is a waiting period from when the policy is issued until the full death benefit is payable. The length of the waiting period usually is two years if you die of natural causes.
  • No medical exams or health questions. The only personal questions asked on the application are not health-related, only things like your name, address, date of birth, etc. You also won’t need to have a doctor examine you or have a paramedic come to your home or office to draw blood.
  • Lifetime coverage. Just like whole life insurance, GIL will cover you for your entire life.

Almost all GIL policies are whole life insurance, which is a permanent type of life insurance. Guaranteed issue term life insurance, which is in force for a set term of years, is rarely offered.

Who is eligible for guaranteed issue life insurance?

Even though your medical history isn’t a factor in your eligibility for GIL, your age is. Guaranteed issue products are generally only available to people age 40-85, but some life insurance companies restrict that to age 50-80. Your age when the policy is issued will determine the premium amount of your policy.

Besides the age requirement, everyone who applies for a GIL policy will be accepted. The availability of GIL varies among states, and not all companies include GIL in their product line.

Coverage amounts for guaranteed issue life insurance

The amount of coverage available for GIL is lower than that of traditional policies, with death benefits typically ranging from $1,000 to $25,000. The primary purpose of GIL is to pay for funeral and burial costs, which is why it’s often referred to as final expense insurance. According to the National Funeral Directors Association (NFDA), final expense costs averaged $7,640 in 2020 and are rising every year, making policies with small face amounts like this desirable to some people.

How much does guaranteed issue life insurance cost?

Considering the amount of coverage you get compared to traditional life insurance, GIL is expensive. For example, a $250,000 20 year term life policy could cost a man in his 60s $1,200 per year, and for that same man, a $25,000 GIL policy would cost about the same. Though there’s not a big difference in the annual premium, there’s a significant difference in the amount of coverage.

When do guaranteed issue life insurance benefits start?

Guaranteed issue life comes with a “graded death benefit” for most policies during the first few years of a policy, which is why it’s often referred to as a waiting period.

If you die during this waiting period, the death benefit isn’t paid out. Your beneficiaries will receive a portion of the premiums you had paid for the policy, such as 110% of premiums paid.

There is an exception during the waiting period — if you die from accidental causes during the waiting period, such as drowning or a car accident, the death benefit will be paid in full.

Once the waiting period has expired, your beneficiary will receive the full death benefit regardless of the cause of death.

Why buy guaranteed issue life insurance?

Although the death benefit amount available for GIL is limited, your beneficiary receives it in a lump sum and can use it however they see fit. People frequently buy GIL to:

  • Pay for final expenses.
  • Replace a term policy that’s expiring, and they can’t apply for a new term or permanent policy because their health or medical history has changed.
  • Get a life insurance policy issued quickly without waiting for medical exams or doctor’s records, even though GIL will cost them more than other types of life insurance.

Pros & cons of guaranteed issue life insurance

Like any life insurance product, guaranteed issue life insurance has its pluses and minuses. Here are some pros and cons to help you decide if GIL would benefit you.

Pros of GIL

  • No medical exam or medical history is required.
  • The death benefit can be used for any purpose by the beneficiary; they aren’t required to use it for funeral expenses.
  • Cash value accumulates in the policy, which can be borrowed or withdrawn.
  • By adding a rider to the policy, benefits may be doubled if you die in an accident.
  • With some policies, when you turn 100 years old, your premiums will be stopped while your coverage continues.

Cons of GIL

  • Lower coverage amounts, typically ranging from $1,000 to $25,000.
  • Premiums are higher than traditional policies that require underwriting, and over time the premiums paid can exceed the policy’s death benefit.
  • The waiting period prevents your beneficiary from receiving the full death benefit during the policy’s first few years.
  • Cash value accumulation is slower with GIL.
  • Age range restrictions, usually between 40 and 85 years old.

The bottom line

The words “guaranteed issue” can be enticing, but guaranteed issue life is not always the best choice. If you’re healthy and can qualify for permanent or term life insurance, your premiums will probably be much lower than GIL’s. Everyone’s situation is different, and their life insurance needs vary. Consulting with a professional life insurance agent may be helpful.


Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

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