Guaranteed Life Insurance

Guaranteed life insurance is simply an insurance policy for which coverage is guaranteed. If you apply for a guaranteed policy, you can rest easy knowing that you'll qualify and that you'll never be turned away due to your medical history. However, guaranteed life insurance policies (sometimes called guaranteed issue life insurance) have low coverage limits—the maximum amount payable to your beneficiaries when you die is typically $25,000 or less.

Individual guaranteed life insurance policies are usually permanent life insurance policies like whole life insurance or universal life insurance. As long as your premiums are paid, and you meet the other requirements of your policy, your beneficiary will receive the death benefit.

Group life insurance policies, like those offered through an employer, are also considered to be a type of guaranteed life insurance. These policies may offer permanent or term life, depending on what the employer chooses.

No. When buying guaranteed life insurance coverage, you'll never need to take a medical exam or answer any health-related questions. Coverage is guaranteed regardless of these factors.

While a guaranteed life insurance policy can be a great option if your health is a concern, someone who's in good health can typically qualify for less expensive coverage when opting for a policy that does require a medical exam.

Northwestern Mutual's individual life insurance policies (including term life, whole life, universal life, and variable universal life) all require medical review, so they do not include guaranteed life insurance.

However, Northwestern Mutual group life insurance policies do include guaranteed life insurance. This means that if an employer offers Northwestern Mutual group life insurance, there are options the employer can choose to offer a life insurance option that doesn't require a medical exam.

Guaranteed life insurance is often a viable way for individuals who have been denied coverage in the past—due to their medical history or pre-existing conditions—to get coverage. However, if you're in good health, a life insurance policy that requires a health exam is typically less expensive than a guaranteed policy.

As with all other forms of life insurance, the cost of premiums on a guaranteed life insurance policy will depend on a number of factors—including your age, where you live, and the amount of death benefit you choose. Because guaranteed life insurance doesn't require a medical exam, the trade-off is that it will usually cost more than what you'd pay for a similar individual permanent life insurance policy.

Guaranteed life insurance gets its name from the guarantee that a policy will be issued regardless of an applicant's health history. That's why it's also called guaranteed issue life insurance.

Term life insurance, on the other hand, is any life insurance policy that provides a certain amount of coverage for a specific span of time (i.e., the term).

Guaranteed life insurance is usually a type of permanent life insurance, which never expires and will pay a benefit when you die (as long as you pay the required premiums). However, some guaranteed issue policies can be term life (as is the case with many group life insurance policies offered through work).

As is the case with most life insurance, the death benefit offered by a guaranteed life insurance policy is payable only after you have passed away and a death claim has been filed.

But most guaranteed life insurance policies have what is known as a graded period. If you pass away during the graded period, your beneficiaries won't receive the full death benefit; however, they will, at a minimum, typically be reimbursed the full cost of premiums paid into the policy. This period usually covers the first few years your policy is in effect.

A graded period can be thought of as a waiting period on your life insurance policy. If you pass away during the graded period, your policy will pay a lower death benefit to your beneficiaries. The graded period tends to cover the first few years your policy is in place.