Simplified Issue Life Insurance Guide
If you want life insurance but don’t want to have a medical exam, your policy options are going to be limited.
You probably already know about guaranteed issue life insurance, but cost of premiums can be a little on the steep side.
If you’re considering guaranteed life, my suggestion would be to try get accepted for simplified issue life insurance first.
In this guide, I’ll explain why you should try, simplified policy details, costs, coverage, and much more.
What It Is
Preparing your family financially for your death can be difficult if you have health problems or are ‘up in years.’
Traditional life insurance policies base your premiums on your riskiness, or how soon they may have to pay out on your death.
Simplified life insurance is a version of final expense insurance and best fits seniors with moderate health issues that don’t qualify for traditional life insurance.
Many insurance companies offer both simplified term and simplified whole life policies.
Simplified life insurance offers up to $100,000 (depending on the company) for final expenses. You only have to complete a medical questionnaire – there’s no medical exam necessary.
If you opt for simplified whole life, though, it typically doesn’t accumulate a cash balance like traditional whole life policies.
How It Works
The name says it all. The process is ‘simplified.’ You don’t undergo a medical exam. Instead, you answer simple medical questions. If you ‘pass’ the exam, you get coverage.
The questionnaire contains an average of 20 ‘yes or no’ questions about your medical history.
The questions are basic enough and inquire about any serious medical issues you’ve had recently, as well as recent hospitalizations, terminal illnesses, and lifestyle habits.
The insurance company verifies your answers with the information from your Medical Information Bureau file (your credit report of your medical history).
Make sure you tell the truth on the questionnaire as insurance companies cross-reference your answers and deny applications with any signs of fraud.
Coverage & Premiums
If you qualify, you’ll receive up to $100,000 in coverage. You pay monthly or annual premiums and your beneficiaries will have a death benefit coming to them when you die.
Read carefully, though, some policies have a 2-year waiting period. If you pass within the first 2-years, the policy may not pay out or may only return the premiums you paid.
Who It’s Suitable For
Simplified life insurance isn’t the ‘best policy’ available today, but it’s a suitable alternative if you:
Need quick cover
If you want life insurance quickly, you can typically get approved for simplified issue life insurance within a matter of days.
After you answer the questions, the insurance company cross-references your answers with the MIB. They don’t have to wait for paramedical exam results or do extensive underwriting.
Are required by the court
If the court requires you to get life insurance immediately and name your children as beneficiaries, this type of insurance will be processed the quickest.
Won’t pass a medical exam
If you know you won’t qualify for traditional life insurance after going through the paramedical exam. But you’re confident you can pass ‘basic medical questions’ about terminal illnesses and hospitalizations.
Simplified issue life insurance is for you.
Don’t require a cash balance
Simplified issue life insurance would also work for you if you don’t need the cash balance that traditional whole life insurance policies offer.
The Benefits & Downsides
As with any insurance policy, simplified issue insurance has its benefits and downsides.
Understanding the big picture helps you decide which product best suits your needs.
No medical exam
If you don’t want to be bothered with an exam or you’re worried about your high cholesterol or high blood pressure making your premiums soar, simplified whole life doesn’t require a medical exam.
Most insurance companies provide simplified issue whole life insurance within a matter of days, unlike traditional whole life insurance with in-depth underwriting requirements that take weeks.
Good coverage for final expenses
If you only need final expense insurance, simplified issue insurance life insurance is a good option. You can choose a lower coverage amount ($10,000 – $20,000) to cover your funeral and burial costs.
Qualify with health issues
If you have health issues (aside from something terminal, or HIV), you may still qualify.
Since insurance companies take a ‘gamble’ by insuring you without a medical exam, they charge higher premiums than traditional policies.
Because insurance companies don’t do their due diligence and determine your ‘riskiness’, they limit the coverage.
Many companies top out at $100,000, but some only offer as much as $20,000 – $40,000.
Limited rider options
Even though riders increase your premium, they offer ‘extra’ coverage that some people need.
Simplified issue life insurance policies have only a few riders available (some companies don’t offer any).
Simplified Vs Guaranteed Issue
Simplified issue and guaranteed issue insurance have one thing in common – you don’t need a medical exam.
Guaranteed issue insurance doesn’t even have the medical questions simplified life insurance requires. You are ‘guaranteed’ coverage, but at a cost, literally.
Guaranteed life insurance has much higher premiums than any other policy because the insurance company knows nothing about your health history or your risk of dying.
Guaranteed life insurance also always has a ‘waiting period’ of 2 years. If you die within the first two years, your beneficiaries may get graded benefits.
This is a return of the premiums you paid plus a percentage – typically 10%.
Costs & Premiums
Cost is a major concern for any life insurance policy because if you don’t pay the premiums, you lose coverage.
Simplified whole life insurance premiums are higher than traditionally underwritten policies but lower than guaranteed whole life (final expense) insurance.
Insurance companies assess your risk with simplified life and base your premiums accordingly. If you are ‘high risk,’ they may not insure you or may charge excessively high premiums.
Simplified term life vs Simplified whole life.
Simplified term life insurance premiums are lower than simplified whole life because the insurance company only insures you for a ‘term.’
For example, if you take a 10-year term and you’re still alive in 10 years, the insurance company doesn’t pay your benefits and your policy expires.
Simplified term life insurance premiums are higher than standard term policy premiums because of the lack of a medical exam, but they’re still affordable.
Most simplified life insurance policies (whole and term), offer limited riders if any. An accidental death rider is the most common rider available but at a higher premium.
This ensures that your beneficiaries receive benefits if you die in an accident, even if it’s within the waiting period.
Can anyone buy a simplified life insurance plan?
Anyone that can answer the questions and ‘pass’ the insurance company’s requirements can buy a simplified life insurance plan.
It is not a guaranteed policy, though, so some applicants don’t get coverage after applying.
Who should avoid simplified issue plans?
If you don’t have a reason to avoid the medical exam, avoid simplified issue life insurance as you’ll pay higher premiums for no reason.
Other reasons to avoid simplified issue plans include:
- You have a limited budget (premiums are high)
- You aren’t in a hurry to get life insurance coverage
- You want to customize your plan (you can’t customize simplified life)
How can you buy a simplified issue policy?
Buying simplified life insurance is easy. Many of the major insurance companies do the entire process online.
You can answer the questions in your own time, and you don’t have to take the paramedical exam or talk to an underwriter in most cases.
Once you complete the questions, the insurance company issues the insurance within a few days (if you qualify).
Is simplified issue insurance worth it?
Simplified issue life insurance can be worth it if you know you won’t pass a paramedical exam. If you’re in a hurry for coverage, it’s also a suitable option.
Just make sure you understand the premiums and how they differ from what you may get with a traditional policy.
If you qualify for a traditional policy and don’t need coverage immediately, look at your traditional life insurance options. They may save you money and/or provide more/better coverage.
Best Simplified Issue Policies
MetLife Simplified Insurance
MetLife Simplified Life Insurance is offered by Brighthouse Financial Company.
This policy offers coverage between $10,000 and $100,000 and for anyone ages 18 to 70.
You can renew the term up to age 90 and you can get approved after answering a few simple questions.
MetLife only offers an Accidental Death Benefit Rider, which increases the payout to double the value of the policy.
Mutual of Omaha- Term Life Express
Mutual of Omaha offers a magnificent simplified issue term life insurance policy called Term Life Express.
After answering questions during a phone interview, you can secure coverage between $25,000 to $300,000 for a specified term.
If you’re alive at the term’s expiration, you can convert the policy to Mutual of Omaha’s guaranteed whole life plan, as long as you are younger than 70-years old.
Like any simplified or guaranteed insurance policy, the premiums are higher on Term Life Express.
Haven Life Simplified Issue
Haven Life offers a Simplified Issue Term Life Insurance policy.
Like all other simplified issue policies, you don’t need to take a medical exam. You answer questions online to determine your eligibility.
Haven Life offers coverage up to $500,000 with guaranteed level premiums (your premiums don’t change for the entire term).
Fidelity Life Insurance- RAPIDecision Life
Fidelity Life offers a whole life final expense insurance policy called RAPIDecision Life.
This whole life policy offers coverage between $5,000 and $35,000 for applicants ages 50 – 85. It offers lifetime coverage and your policy accrues a cash balance.
This policy doesn’t have a waiting period – your coverage begins immediately upon approval.
Alternatives to Simplified Issue
Simplified issue life insurance isn’t your only option.
It’s important to know what options you have available based on your life circumstances, needs, and budget when choosing the right policy for you and your loved ones.
Guaranteed Life Insurance
Guaranteed life insurance is the most similar policy to simplified life insurance. Believe it or not, its premiums are higher than simplified life insurance, because of one major difference.
Guaranteed life insurance has NO questions. You don’t have to pass a screening – anyone within the age range the insurance company determines qualifies.
Best for seniors
Guaranteed issue life insurance is best for seniors ages 50 – 80.
Most policies have a 2-year waiting period and some offer ‘graded benefits’ which means your beneficiaries receive your premiums paid plus a percentage, such as 10%.
Guaranteed life insurance sometimes allows riders, and it has low coverage amounts comparable to simplified life insurance coverage amounts.
Term Life Insurance
Term life insurance, as the name suggests, provides coverage for a specific term.
For example, if you take a 10-year term policy and are alive at the end of 10 years, the policy expires.
Some insurance companies offer renewal or options to convert to a whole life policy.
Term life insurance is the least expensive policy available today, but it requires a full underwriting process including a full paramedical exam.
If you are in good health and relatively young, you’ll see the lowest premiums compared to any other policy.
Even if you have minor health issues or are middle age, you’ll still find the best premiums for term life insurance, but you won’t have coverage for life.
Individuals with a mortgage, a young family, or many liabilities choose this coverage.
Whole Life Insurance
Whole life insurance lasts for your entire life, as long as you pay the premiums.
Insurance companies offer a variety of different whole life insurance options, each of which pertains to how your policy accrues a cash value.
A part of your whole life insurance premium goes toward your cash value, which accumulates over time.
You can withdraw the funds, take a loan, or use the funds to cover your premiums once you accumulate a large enough balance.
Like term life insurance, you’ll undergo an extensive underwriting policy including a paramedical exam.
Whole life insurance premiums are much higher than term life insurance because the insurance company insures you for life, so they will have to pay out at some point, as long as your policy doesn’t lapse.
It’s a suitable option for those that don’t have extensive retirement plans in place or have maxed out their retirement savings and have more to invest.
Should You Choose It?
Consider simplified issue life insurance if you’re in a hurry to get coverage or know you won’t pass a traditional paramedical exam.
Although, if you have time, you’re on a budget, or you can get approved for traditional insurance, you may save money and get better coverage opting for traditional term or whole life insurance.