Guaranteed acceptance final expense insurance is like a whole life insurance policy, but the difference is a comparatively smaller death benefit, according to an article in The South Florida Reporter titled “Understanding the Guaranteed Acceptance Final Insurance.” It might also be familiar to you as burial insurance, funeral insurance, or modified whole life insurance. A final expense insurance policy is one that’s specially designed for senior citizens. Those between 50 to 80 years can apply.
In addition to the expense of services, flowers, reception, and the mortuary, there’s also an emotional factor, since many people don’t want their family or relatives to be burdened with paying for the burial or cremation.
Interestingly, the death benefit can be used for other purposes in addition to funeral expenses, such as settling property bills and even a vacation. The death benefit or the face value depends on a number of factors, including the type of plan, how long the policy’s been active, and the premium. The death benefit can be between $2000 and $50,000.
Based upon the insurance carrier, there may be a waiting period, of up to two years. If the policyholder passes away due to natural causes in those initial 24 months, the beneficiaries will receive no death benefit. However, some insurance companies will offer the paid premiums plus interest to beneficiaries in those circumstances. On the other hand, if the owner of the policy dies in an accident in that waiting period, the beneficiaries will receive the full amount of the payout.
You shouldn’t buy a policy that has two-year or three-year coverage. For example, if a family member, is fighting with an incurable disease like cancer or they have a permanent disability, the insurance companies may levy a stipulated waiting period for these individuals without asking them any health-related questions.
It’s a guaranteed acceptance term, so whatever your health condition, the policy will be approved for life but only at a higher price. If you’re in good health, your insurance will cost less, but ailing individuals will be required to pay more.
Reference: South Florida Reporter (Nov. 20, 2020) “Understanding the Guaranteed Acceptance Final Insurance”