Skip This Life-Insurance Pitch
By Candice Lee Jones, from the August issue of Kiplinger's Personal Finance
You've probably seen commercials for guaranteed life-insurance policies, such as those from ColonialPenn. The key promises: No questions about your health, and no way you'll be turned down.
It's true that as long as you're of a certain age (50 to 85 in most states), companies that offer guaranteed-acceptance policies will not reject you. But that doesn't mean you should sign up.
These plans don't require medical examinations, so insurers have to assume everyone is a health risk and set premiums accordingly, explains R. Jan Pinney, an insurance agent in Roseville, Cal. A ColonialPenn policy that does not guarantee acceptance (and does ask health questions) could provide a healthy 50-year-old male with 75% more coverage for about the same cost.
Guarantees often come with strings attached, such as benefit limits in the early years of a policy. These policies were designed for seniors in declining health who don't qualify for alternatives. Everyone else should get a medical exam for the chance to get a better rate.
Before you apply, though, read Get the Best Rate on Life Insurance to see what criteria insurers use when setting rates and what you can do to improve your chances of getting the best price.