Simplified issue life insurance, also known as “simplified life insurance,” is a blanket term for insurance that requires no medical exam. Simplified issue life insurance applicants are only required to complete a short health questionnaire and a modified risk assessment will be used to estimate premiums and death benefits. Because there is no medical exam, coverage can begin within days of the insurance carrier’s approval of the policy.
That’s the “simple” definition, but there’s more to know about simplified issue life insurance if you’re considering it as a life insurance option. In this article, we’ll discuss premiums, death benefits, risks, and factors that may make you ineligible for this type of life insurance.
Reasons to Apply for Simplified Life Insurance
In short, simplified life insurance is a good option because it is affordable life insurance that requires no medical exam and no waiting period.
No Medical Exam
Just because it’s simple doesn’t mean it’s cheap. Applying for simplified issue life insurance is not a decision people make for financial reasons. The premiums are high, and the death benefits are low. Therefore, opting for simplified insurance is more a matter of timing and health concerns. If you are someone who has a chronic health condition, applying for traditional health insurance will send you through loops of medical exams only for you to be denied coverage in the end. Instead, opting for simplified issue insurance requires no medical exam and almost always guarantees coverage, despite whatever health issues you may face.
The Approval Process Is Simple
The approval process for simplified insurance is far less complex than what you’ll see with traditional life insurance policies – skipping the medical exam makes a big difference. Rather than waiting four to eight weeks for results to be analyzed, the insurance company approves or denies you based on your health questionnaire. It’s important to note that you can be denied simplified life insurance for any of the following reasons:
- You’re in a wheelchair
- You have a disability
- You’ve been diagnosed with a serious or terminal disease (ie. Cancer, uncontrolled diabetes, etc.)
These are known as “pre-existing conditions.” In this case, other forms of insurance, such as guaranteed issue life insurance, might be available for a higher premium.
Pros and Cons of Simplified Issue Life Insurance
With a simplified issue life insurance policy, you are usually presented with two options.
Obtaining term or whole life insurance without a medical exam is one of the main attractions of simplified issue life insurance. Higher premiums and low death benefits are two of the drawbacks. As you analyze the decision of whether to invest in a simplified issue policy or not, you’ll have to consider other pros and cons as well.
Simplified Issue Pros
- Fast approval
- No medical exam
- Available for people with health issues
- Increased company-sponsored plans
Simplified Issue Cons
- Higher premiums
- Limited insurance riders
- Smaller death benefits
- Places your information in an insurance database
We’ve already covered the fast approval process and the lack of a medical exam requirement. That means people with health issues can obtain simplified life insurance, provided none of the applicants have serious, life-threatening medical issues. This “loophole” is even attracting more companies to offer simplified plans for their employees.
On the downside, premiums are higher for simplified life insurance. Insurance companies waive the medical exam, but they put you in a higher risk category because you didn’t take one. That also excludes certain riders available with traditional policies, like accelerated death benefits (ADB) and chronic illness riders. The death benefits themselves are also smaller.
The final “con” in the table above is one you should contemplate carefully before applying for any type of life or health insurance. Your information will be placed in an insurance database that is used by carriers and underwriters to measure risk. Think of it as your “permanent record” for insurance coverage. Once you submit information, it’s there for life, which could affect your eligibility when applying for other insurance policies.
Simplified Issue Life Insurance vs Traditional Life Insurance
For medical exams, many insurance carriers employ a medical technician whose job is to come to your home and perform a medical exam. In that medical exam, the doctor will:
- Take your height and weight
- Measure your BMI (body mass index)
- Collect information on your medical history
- Take blood and urine samples
- And so forth
However, that is for traditional life insurance policies. Thankfully, none of that is necessary with simplified issue life insurance, as there is no medical exam required.
Simplified Life Insurance Premiums and Benefits
Premiums and death benefits are other distinguishing factors. Premiums for younger people buying simplified term life are roughly $3.00/month higher than what they’d pay with a traditional policy. While premiums are higher, death benefits tend to be lower, ranging from $5,000 to $100,000. As opposed to traditional life insurance policies, you likely won’t see million-dollar policies with simplified life insurance. As for availability, you can buy simplified term life policies from the carrier, through your local bank, or at big box stores like Walmart.
Lastly, simplified whole life insurance policies are more difficult to find than traditional whole life policies. Insurance companies are reluctant to offer a policy that extends until your death without first doing a thorough medical exam. There’s just no way to assess their risk without it. That doesn’t mean simplified whole life doesn’t exist – it’s just hard to find. On the other hand, simplified term life policies are everywhere.
The Bottom Line: Simplified Life Insurance Isn’t for Everyone
Traditional life insurance policies offer larger death benefits, and lower premiums, and can build cash value if you choose whole life. Simplified life insurance is for those who have medical issues and can’t afford to wait for coverage to kick in. So, in other words, it’s not for everyone. However, if you need life insurance, and you need it now, contact our brokers at Principled Life. There’s a plan for every budget and every condition, and you can get insured in as little as 30 minutes. Call us today and get peace of mind knowing your family is protected.
