Simplified Issue Life Insurance is a simple solution for applicants who might not medically qualify for traditional life insurance. It’s also a solution for applicants who need a policy issued quickly and who prefer not to undergo a medical exam.
What is Simplified Issue Life Insurance?
Simplified Issue Life Insurance is designed to accommodate individuals who need a life insurance policy issued quickly.
In most cases, the underwriting process includes minimal health questions on the application, and there is no medical exam requirement.
Most simplified issue policies have a limit on the death benefit and are restricted to individuals who are in a particular age group. Generally, the premiums are higher than traditional fully-underwritten life insurance because the company is accepting a higher risk.
Most policies are issued within a few days of the application rather than weeks or months since the underwriting guidelines are more liberal and the underwriting process is much shorter.
If your circumstances demand that you provide life insurance quickly, simplified issue life insurance is the solution.
Simplified vs. Guaranteed Issue Life Insurance
While simplified issue life insurance is partially medically underwritten, your risk to the insurance company is less than if you apply for guaranteed issue life insurance with no medical underwriting.
If your health issues are considered moderate, you will pay a higher rate with a simplified issue policy, and there is no waiting period or modified death benefit requirement.
If you have severe or multiple health issues and cannot medically qualify for a simplified issue plan, then a guaranteed issue policy would be the better solution. Guaranteed issue policies do not consider any medical issues, and there are typically no health questions on the application.
Since the risk is higher to the insurer, the company will require a 2-year waiting period before paying the full death benefit for deaths due to natural causes. Deaths resulting from an accident will be covered on the first day.
How does Simplified Issue Life Insurance Work?
A simplified issue life insurance policy is generally term life insurance or whole life insurance.
It works by removing some of the underwriting processes that traditional life insurance policies have, like the insurance medical exam and requiring attending physician statements for your doctors.
Simply removing the requirement for a medical exam and doctors’ reports dramatically speeds up the process of issuing the policy. Since the insurer is accepting a higher-than-normal risk, they will have a considerable amount of health questions on the insurance application.
In addition to the insurance application, the insurer generally orders a Medical Information Bureau report as well as a Prescription Drug report. Some companies will also order a Motor Vehicle Report to verify if you’ve gotten any violations like DUI or DWI.
The insurance company will have a reduced face amount compared to traditional life insurance policies but, if your simplified issue policy is whole life insurance, you are entitled to the same features and benefits of traditional whole life insurance.
- Your company cannot cancel your policy as long as the premiums are paid.
- Your company cannot increase your periodic premium because of age or illness after the policy is issued.
- Your policy will build cash value over time that you can access via policy loans or withdrawals.
And, whether your policy is term or whole life, most insurance companies will have additional riders that you can add to customize your policy to better meet your needs,
When Should You Buy a Simplified Issue Life Insurance Policy?
A Simplified Issue Life Insurance policy is not for everyone. It’s designed to accommodate those individuals who prefer not to have a medical exam or need a policy issued in days rather than weeks or months.
Here are some real-life examples for when a simplified issue policy will likely be the best solution:
- When you must satisfy a life insurance requirement in a divorce decree.
- If a lender requires life insurance to cover or collateralize your loan.
- When you are not confident that you’d qualify for a traditional and fully underwritten life insurance policy.
- You have a term policy near expiration, and you want a backup policy while deciding to convert or renew it.
- You are adamant about not undergoing a life insurance medical exam.
If you are unsure if simplified issue insurance is the best solution for your circumstances, contact an experienced insurance agent who will help you determine which type of policy will work best for you.
Average Cost of Simplified Issue Life Insurance
If you are considering simplified issue life insurance, you’ll likely want to know how much the average cost is compared to traditional life insurance.
Although your insurance rates will depend on certain underwriting aspects such as age, health, face amount, and type of policy you prefer, you can get a clear picture of the difference in rates using the illustration below:
$500,000 20-year Term – Male Non-smoker – Preferred Rate Class
Age of Applicant Rates with Exam No Exam Rates
25 24.58 $26.05
30 $25.19 $26.87
35 $26.57 $28.31
40 $36.55 $39.69
45 $56.50 $60.62
50 $85.21 $102.25
55 $138.37 $167.56
60 $227.39 $291.81
Please Note: All rates listed above are rate indications and subject to further underwriting
$500,000 20-Year Term – Female Non-Smoker – Preferred Rate Class
Age of Applicant Rates with Exam No Exam Rates
25 $19.11 $20.47
30 $19.95 $20.48
35 $22.50 $23.19
40 $30.41 $32.04
45 $43.56 $45.21
50 $64.18 $69.09
55 $97.32 $113.74
60 $159.65 $187.64
Please Note: All rates listed above are rate indications and subject to further underwriting.
Pros and Cons of Simplified Issue Life Insurance
As with any life insurance product, there are advantages and disadvantages with each product depending on your need for life insurance in the first place. What life insurance works best for you will likely differ from others because your need for life insurance is different.
- No life insurance medical exam – Many individuals are opposed to medical exams because they consider them intrusive, inconvenient, and they just hate the thought of a blood draw.
- Quick policy issue – Once you eliminate the medical exam and doctors’ reports, your life insurance policy can be issued in a matter of days rather than weeks.
- Less Costly than a Guaranteed Issue policy – even though a guaranteed issue policy can be purchased by virtually any living person, the rates are much higher than simplified issue life insurance, and a waiting period is always required.
- Higher rates than fully underwritten policies – When you remove the medical exam requirement, the insurer is accepting higher risk and will offset the additional risk with higher rates.
- Coverage limitations – Once again, since the insurance company is accepting a higher risk with simplified issue life insurance, they will mitigate the risk by placing a cap on the amount of death benefit you can purchase.
Common Questions on a Simplified Issue Policy Application
While many insurance carriers ask common health-related questions on the application, generally, the difference is in the “look-back” period.
While some carriers might ask about the last 12 months, others might ask about the previous 24 months, 36 months, or even use the term “have you ever.”
Here are the most common health questions on a simplified issue life insurance application:
- Proposed insured’s Height and Weight.
- Has any Proposed Insured used cigarettes, cigars, pipes, chewing tobacco, nicotine patches, snuff, nicotine chewing gum, or other products containing nicotine within the last 12 months?
- Within the past seven years, has any Proposed Insured been treated for or been advised or diagnosed by a medical professional to seek treatment for, or reduce or discontinue the intake of alcohol?
- Within the past seven years, has any Proposed Insured been treated for or been advised or diagnosed by a medical professional to seek treatment for the intake of prescription drugs?
- Within the past seven years, has any Proposed Insured used: heroin, morphine, other narcotics, ecstasy, opium derivatives, marijuana, cocaine and cocaine derivatives, crack, barbiturates, amphetamines, methamphetamines, or hallucinogens or any other illegal, restricted, or controlled substances?
- Within the past seven years, has any Proposed Insured been diagnosed with or been advised to have or had treatment for: a. high blood pressure, heart disease or disorder, heart surgery including bypass, angioplasty or stent placement, chest pain, stroke, circulatory, blood vessel or blood disorders? B. lung or respiratory disorder, COPD, emphysema, current use of oxygen, shortness of breath, or sleep apnea? C. cancer, leukemia, melanoma, or any other internal cancer? D. diabetes? E. digestive disorder, kidney or liver disease to include hepatitis, Crohn’s disease or ulcerative colitis, gastrointestinal bleeding, or unexplained weight loss? F. Alzheimer’s disease, dementia, nervous system disorder, emotional or psychiatric disorder, paralysis, sexually transmitted disease, chronic fatigue syndrome, lupus, or any blood disorders or birth defects? G. rheumatoid arthritis, disease, or disorder of the bones or muscles? H. any disease or disorder not mentioned above?
- Within the past seven years, has any Proposed Insured consulted a physician, had tests performed such as an EKG, echocardiogram, X-ray, blood tests, or been hospitalized for any reason?
- Has any Proposed Insured ever been diagnosed as having, or been told by a medical professional that you have, or been treated by a medical professional for, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related Complex (ARC) or any immune deficiency Related disorder or tested positive for antibodies to the Human Immunodeficiency Virus (HIV)?
- Do any of the Proposed Insured(s): A. currently use prescription medicines? If Yes, list each medication and describe the reason for its use. B. currently have a personal physician?
These health questions were taken from the Application for Simplified Issue Term Life Insurance – Americo Life Insurance Company.
Disqualifiers for Simplified Issue Life Insurance
Although Simplified Issue Life Insurance is a quick and easier way to purchase life insurance, not everyone will qualify for coverage.
All insurance companies that offer simplified issue life insurance have certain questions that are considered “knock-out” questions. This simply means if you answer yes, your application will be declined.
It probably goes without saying that if you answer in the affirmative to any health question concerning a life-threatening illness, your application will be declined, and your independent agent will recommend an alternative product like guaranteed issue (guaranteed acceptance) life insurance.
Moreover, it’s important to know that not all disqualifiers are health questions. Many companies take issue with applicants who demonstrate dangerous lifestyles, occupations, or hobbies.
Best Companies for Simplified Issue Life Insurance Policies
Over the years, the independent insurance brokers at LifeInsure have developed a list of insurance carriers that have demonstrated a willingness to support applicants who are looking for quick and easy life insurance coverage with competitive rates and outstanding customer service.
We consider the following insurance carriers to be our go-to companies for simplified issue life insurance policies.
- Foresters – Your Term – Non-Med
- Sagicor – Sage Term 20 – Non-Med
- American Amicable – Term Made Simple – Non-Med
Is a Simplified Issue Life Insurance Policy Right for You?
As we mentioned early on, simplified issue life insurance is not for everybody. To find out if simplified issue is right for you, you can start by using our quote buttons on the right side of the page, or you can call a LifeInsure.com insurance professional at (866) 868-0099 and get answers to questions concerning your circumstances as well as a free and confidential quote.