Guaranteed term life insurance plans are term plans that do not ask for your medical condition, medical examination reports, lifestyle, or medical history. They are ideal for individuals in the middle or senior age bracket with existing or possible health issues.
Mr Narayan, a 45-year-old college professor, wanted to buy a life insurance policy for himself to ensure the financial independence of his family even in his absence. However, due to his history of medical ailments, he was not able to procure the benefits of term insurance, as routine term insurance policies required him to undergo medical check-ups and submit detailed medical records.
When he shared his concerns with Mr Rajan, a close friend, he came to know about guaranteed* term life insurance plans. To his relief, he could get guaranteed term life insurance coverage for himself and put his worries to rest.
Guaranteed term insurance plans are a boon for people with existing health issues. Let us find out in detail about this unique term life insurance product.
What is Guaranteed Term Life Insurance?
A guaranteed term life insurance plan is a category of whole life insurance plan. But unlike life insurance, guaranteed term life insurance does not require the insured to undergo medical examinations or answer health questions when buying the policy.
If you are buying guaranteed term insurance, the insurance company will not ask for your medical and prescription records to decide your guaranteed term life insurance rates.
A guaranteed term life insurance policy continues to provide you coverage till you pay the policy premiums regularly. Additionally, the premium rates for this policy do not change even if the insurer changes their fees during the policy tenure.
Who is Eligible for Guaranteed Term Insurance?
The most essential feature of a guaranteed term insurance policy is its flexible eligibility criteria. Since the medical history and present medical condition are not criteria for rejection for this policy, anyone can apply for it. People suffering from various health issues like heart ailments, diabetes, cancer, etc., can buy a guaranteed term life insurance plan.
With that said, it is advised to consult the insurance company of your choice to understand the exact eligibility criteria for guaranteed term insurance. Usually, people who fall in the age bracket of 50 to 80 years are eligible for it.
Pros and Cons of Guaranteed Level Term Life Insurance
Here is a list of the pros and cons of a guaranteed level term life insurance plan:
Do not require a medical examination or past medical records.
No health questions are asked by the insurance provider.
Excellent choice for people who cannot buy regular term insurance plans due to their health issues.
Helps people with health issues get some amount of financial security for their family.
The coverage amount is lower than regular term insurance plans.
They are usually more expensive than regular-term insurance plans due to the inherent risk.
There is an initial waiting period. The beneficiary will not receive the death benefit if the policyholder dies during the waiting period.
How Does Guaranteed Term Life Insurance Work?
Usually, a guaranteed term insurance plan has a waiting period of 2 to 3 years. It means if the policyholder dies during this waiting period, the plan beneficiaries do not get the death benefit. This clause is essential because the medical condition of the policyholder is not considered when rolling out this policy.
However, insurance providers ensure that the policyholder's family is not left without any financial support at all in the event of the policyholder’s death during the waiting period. If such a situation arises, the insurance provider returns the entire premium amount paid by the policyholder during the waiting period to the nominee, along with some interest.
You can apply for a guaranteed term insurance plan with an insurance provider and fill out the application form. With most insurers, you will have to pay a fixed monthly premium against this policy. Your nominee will receive the death benefit, subject to the policy terms they can use to meet their immediate financial responsibilities, like debts and medical bills.
Who Should Buy Guaranteed Renewable Term Life Insurance?
Since the death benefit of a guaranteed term life insurance plan is relatively low for a higher premium amount, it is not suitable for everyone.
Here are some situations where a guaranteed term life insurance plan would be suitable for you:
If you have been recently diagnosed with a health condition, you can opt for a guaranteed term insurance plan, even in your younger years.
If you have a long-standing existing medical condition or past medical history which may make it difficult for you to get a regular term insurance plan.
If you are in your middle age or later life stage and are prone to health issues in the coming years.
Guaranteed term life insurance plans are pure protection plans that do not require you to undergo any medical examination to get the insurance policy. Additionally, you need not submit medical records or answer health or lifestyle-related questions to get guaranteed term insurance.
However, these plans have a waiting period, and the coverage amount is relatively lower than regular term insurance plans. Therefore, it is advisable to assess your medical condition and insurance needs before purchasing these plans.