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Simplified Versus Guaranteed Life Insurance for Seniors

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Simplified Versus Guaranteed Life Insurance for Seniors

You may have seen a lot of advertisements for simplified versus guaranteed issue policies for senior citizens on TV, but you might want to compare your choices before you make a decision. The right answer really depends upon the health of the person you want to insure.

Compare simplified and guaranteed life insurance for your loved one:

  • If they can answer the health questions without issue, a simplified issue policy will be cheaper and offer an immediate death benefit.
  • If they have a serious medical condition, a guaranteed policy might still be a very good deal.

An experienced senior life agent can explain different policies and help you make the best decision.

Should You Buy Simplified or Guaranteed Issue Senior Life Insurance?

Simplified Issue Insurance

Simplified issue policies are usually cheaper than guaranteed issue policies but they do ask a few health questions on the application. The questions are designed to filter out people who are likely to have terminal health issues but are not meant to exclude older people with normal age related health issues.

For example, people with high cholesterol or even controlled diabetes may still qualify for simplified issue policies. Typically, simplified issue policies also provide an immediate death benefit. This means that the full death benefit will be available to the beneficiary the moment the policy is active. Activation usually happens shortly after the first premium payment gets made.

Guaranteed Issue Policies

Guaranteed issue policies do not ask any health questions or require any type of medical exam, meaning that these policies are available to almost anybody who applies. This also means that they cost a bit more, and they usually do not have an immediate death benefit.

Instead of using health underwriting as a way to qualify applicants, insurers will impose a waiting period. Typically, this waiting period varies from two to three years. After this period is over, the full death benefit will be paid if the insured person dies. If the insured person passes away before the waiting period is up, the benefit may be graduated. This means that a certain percentage might be paid during the first year, a higher percentage the second year, and so on.

For example, some guaranteed issue life insurance policies refund premiums or pay out a quarter of the death benefit if the insured person passes away within the first year. They might pay out half the death benefit if the insured person passes away during the second year. After the waiting period ends, they revert to paying out the entire face value of the policy like any other life insurance.