What is guaranteed issue life insurance?
It is a small whole life policy that skips the health questions. You pick an amount, and if you are in the right age band, the company issues the policy. Nobody looks at your medical history.
Here is one real example. AAA Life (opens in a new tab) accepts ages 45 to 85, offers up to $25,000 of coverage, and says premiums never go up and benefits never go down. Other companies set their own ages and limits.
It is a smaller part of the market. In a LIMRA (opens in a new tab) survey, 15% of final expense policies sold in 2024 were guaranteed issue, with an average of $9,786 in coverage. The other 85% asked health questions and averaged $14,535.
How does the waiting period work?
Insurers call this a graded or modified death benefit. The company takes on everyone who applies, so it limits what it pays in the first years. There are two common designs.
Premiums back plus interest. For a death from natural causes during the first two years, the policy returns what you paid in, plus a set amount of interest. After that, the full amount is paid.
A share of the benefit that grows. The policy pays part of the amount at first and more each year. Western and Southern (opens in a new tab) describes graded plans that often start at 25% to 50% of the amount and reach 100% after three to five years, with waiting periods of two or three years being typical.
| When the death happens | What is paid |
|---|---|
| Accident, any time | The full amount |
| Natural causes, first two years | All premiums paid, plus 30% |
| Any cause, after two years | The full amount |
Is there burial insurance with no waiting period?
Yes, but not for everyone, and not with guaranteed issue. The plans that can pay the full amount from the start are the ones that ask health questions, often called simplified issue or level benefit plans. If your answers qualify you, there is no graded period.
That is why it pays to answer the health questions if you can. A health condition does not always rule you out of every plan. Each company has its own list, and an agent can tell you which plans your answers fit.
Be careful with any ad that promises guaranteed acceptance and full coverage from day one together. Guaranteed issue plans usually limit the benefit in the early years. Ask to see the death benefit terms for the first two years in writing.
Who should consider guaranteed issue?
- People who were turned down for other coverage
- People with health conditions that plans with health questions will not accept
- People who want a small policy and expect to keep it well past two years
If none of these fit you, start with plans that ask health questions. The NAIC (opens in a new tab) notes those usually cost less and give more coverage.
What should I look for in a guaranteed issue policy?
- How long the limited benefit lasts, and exactly what it pays during that time.
- Whether accidental death is paid in full from the start.
- The age range and the most coverage you can buy.
- Whether the premium is level for life.
- Any exclusions listed in the policy.
If you already have a policy, keep it in force until the new one is approved and active. Our final expense guide compares the two main kinds of policy, and the senior life insurance guide covers term and whole life too.