Guaranteed issue life insurance is fairly indistinct product. Designed to be a bare bones life insurance policy that pretty much anyone can qualify for, a plan by one provider is going to be functionally similar if not identical to a plan offered by its closest competitor.
BMO Insurance has put something of an interesting spin on the guaranteed model with their Guaranteed Life Plus. Rather than focus on the traditional model of providing options and pricing you, they’ve done the opposite and provided probably the only guaranteed insurance product that you can buy for $20 a month when you’re 70.
So How Exactly Does Guaranteed Life Plus Work?
Like all guaranteed insurance plans, BMO Insurance’s Guaranteed Life Plus works on a very simple model, at least on the consumer side. By eliminating the need for medical exams or health questions, there’s little that an insurer can do to properly assess risk under a guaranteed life policy (after all, the applicant could be terminally ill or perfectly healthy.)
While that tends to resolve in insurers tacking on huge price tags for guaranteed life products, BMO Insurance has taken buying insurance in the other direction. To them, the problem has been an affordability problem at the start. After all, if you’re 70 and looking to cover final expenses – is it reasonable to pay $100 per month when you can realistically only afford half that?
So let’s go over the meat and bones of the Guaranteed Life Plus plan:
- It’s available to ages 40 to 75 inclusive.
- There’s no medical exam and no health questions. The only questioned asked about lifestyle is “Do you smoke?”
- There’s a two-year deferral period on this plan, meaning it’s available if you’ve been declined on an insurance application in the past.
- Premiums start at $20 per month, and is available in packages up to $120 per month.
So rather than choosing your coverage and then feeling that knot of dread in your throat when you’re told how much it will cost, you choose what you’re willing to pay and BMO Insurance provides coverage available at that level.
The benefit is pretty clear from the onset: BMO Insurance’s Guaranteed Life Plus is, by design, the cheapest guaranteed issue product on the market. Few insurers can beat $20 per month for anyone over 40. But with the cheapest plan, there has to be a catch right?
What’s the Downside of This Plan?
There’s actually two disadvantages to this pricing scheme that become readily clear. However not all prospective buyers are likely to feel the effects evenly and, indeed, they can be managed if you recognize them.
- You can’t choose the coverage. You can only choose the “approximate” coverage you need. So if you need $3500 and the $20 plan offers less and the $30 plan offers more – it’s not exactly easy nor convenient to pick one plan over the other.
- Your coverage options actually decline as you age, if you’re male, or if you smoke. Unlike other plans where those factors would push the price up, this plan pushes the coverage down. For some people who need a certain amount and cost isn’t the issue – this plan may be lacking in providing solutions.
So can those problems be managed if you’re considering this particular product? To an extent, they can be. What Guaranteed Life Plus offers is a considerably more budget-friendly solution that, on the other hand, compromises on the flexibility.
To that end, this plan has a particularly useful niche as a supplementary life insurance policy. For costs like funeral expenses where the cost isn’t quite fixed, BMO Insurance’s Guaranteed Life Plus can accommodate some of the costs while leaving you to manage the difference.
Who is Guaranteed Life Plus Best For?
Like all guaranteed life products, you should always seek a traditional or simplified option before you consider buying, as the lower coverage amounts and deferral period can be a roadblock in a concrete policy. Thus it’s best for people who have been declined insurance before.
Furthermore, the unique pricing policy that BMO Insurance has put forth may require that you adjust or even downscale your funeral options to accommodate the more rigid coverage. Because of this, it is less than ideal for those covering debts (which are unavoidable amounts), and better for those primarily focused on covering funeral expenses (which can be flexible.)
Finally, as it offers one of the lowest possible premiums of a guaranteed issue product, it’s fairly easy to budget for, meaning that this plan may be well suited for seniors operating on a reduced budget, or family members strapped for cash to insured a loved one.
Above all, like any insurance plan, BMO Insurance’s Guaranteed Life Plus is just another option, albeit one that diverges enough from its competition to be noteworthy in what it does.