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Terminally ill? But you may still get life insurance!

Becoming terminally ill isn’t the end of your insurability for the insurers anymore, at least the situation has improved over the time. New medicines have ensured longer life for many critically ill people and the insurance companies too have receognised this fact by extending life coverage to them.

But, what would you qualify for?

Though there is a change in the situation, but you might not still qualify for the standard life insurance policies. What most people with chronic health condition would qualify for is a guaranteed issue policy.

What is guaranteed issue policy?

The guaranteed issue policies are basically no medical underwriting policy, i.e. you neither have to reply to the health related questions nor have to undergo medical tests to qualify for the coverage.
Often guaranteed issue plans are rated higher than the standard life insurance plans but it is a good alternative for people with health issues and seniors who otherwise won’t qualify for life insurance.

These policies, however, have lower death benefits. One may get only upto $50,000 coverage with the guaranteed issue plan. Therefore, it often doesn’t make a good bargain for standard lives.

It might have occurred to you that insurance companies would lose a lot of money by insuring terminally ill people but the situation is little different. The guaranteed issue plans have several restrictions imposed upon it to prevent the insurers from losing money.

Longer waiting period
It has longer waiting period, may be 2 to 3 years, i.e. if the insured die within the first two years of the policy then only the premium paid would be refunded instead of death benefit. Therefore, if you are in good heath you may consider getting policies which would offer immediate death benefit.

Very high premium rate
The premium rate is very high. A policy of $25,000 death benefit then perhaps would cost $2400 in terms of premium each year. So, apparently at the end of the 10th year the premium paid would become equal to the death benefit.