Simplified Issue Life Insurance
Coverage With No Exam Required
Simplified Issue Life Insurance is designed to provide coverage as quickly as possible with no medical examination requirement and minimal health questions. This policy is most often used for the circumstances that include:
- A court mandate requires immediate life insurance with court designated beneficiaries.
- Loan collateral is required by a lending institution and life insurance is acceptable
- To provide coverage when a term insurance policy has matured and you haven’t chosen a replacement policy
- Life insurance is needed quickly but the applicant probably won’t qualify for traditional policies.
- The applicant simply doesn’t want to undergo a medical examination.
A simplified issue life insurance plan can be put in force upon acceptance of an application, providing quick coverage. These plans are available as either term life or permanent life policies. Simplified issue life insurance generally offers a higher maximum than you can have with a guaranteed issue policy.
Quick Issue, Solid Coverage
Simplified issue policies offer almost immediate coverage in small amounts. While approval is not guaranteed, most applicants are accepted. Term policies are usually issued for 10, 15, or 20 years, while permanent policies (whole life, universal life, etc.) provide lifelong protection.
The underwriting process is very simple: applicants are presented with a health questionnaire which typically contains 20 ‘yes’ or ‘no’ questions. For instance, an applicant would be asked if they have been recently hospitalized, if they’re terminally ill or if they’ve been diagnosed with a serious illness, such as diabetes, AIDS, or HIV. Most carriers want detailed information concerning drug, alcohol, and tobacco use. Some will ask standard height and weight questions.
Answers will be cross-referenced with the MIB (Medical Information Bureau), pharmacy records, and the DMV.
This information, as well as current age and sex, will be used to provide an analytic estimation of projected life expectancy. Coverage can be denied due to certain health situations, or issued with higher premiums.
Pros and Cons
- Convenience – No medical exam, quicker policy issue
- Discreet – Since there’s no medical exam, there are no visits to your home or office by health techs
- Accessible – Depending on the provider, these policies are available to people 18 and older with coverage amounts
- Affordable – If your only options are simplified and guaranteed issue life insurance, simplified policies are less expensive
- Few options – These policies don’t offer much in the way of customizable options such as additional insured riders for spouses or children.
- Limited coverage – Caps of $25000-$50000 are fairly standard, with most issued at the lower end of the scale.
- Price – Simplified Issue premiums are traditionally higher than other policies due to the lack of medical knowledge and history.
Guaranteed Issue Life Insurance
This type of policy is sometimes referred to as ‘last resort’ life insurance. When there is a preexisting condition that would keep you from being eligible for other types of insurance, a Guaranteed Issue policy may be an option. This whole life insurance policy comes with a host of regulations. Premiums are considerably higher due to the high risk. Graduated payouts are put in place to address the much higher loss ratios involved with these types of policies.