How Does Simplified Whole Life Insurance Work?
Simplified whole life insurance has minimal health questions and requires no medical exam as part of the application process. The underwriting is typically very lenient, which means people with prior health conditions can still qualify for a new policy. If you’re approved, there will be no waiting period.
Oftentimes, applications are approved within minutes, but it might take up to 24 hours (varies by company). You can typically buy online or over the phone by speaking with a licensed insurance agent.
These plans typically have a coverage maximum of $50K, $75K, or $100K.
A whole life policy is permanent life insurance coverage that lasts your entire life. In addition, the premiums never increase, and it builds cash value.
Upon death, the insurance company will pay the prescribed death benefit to your beneficiaries. Your loved ones can spend the money on anything, including funeral costs, financial debts, medical bills, or anything else.
The Cost Of A Simplified Whole Life Policy
Life insurance quotes are based on your precise age, gender, health, state of residence, and how much coverage you buy. Below is a whole life insurance rate table showcasing average monthly premiums for $5,000-$100,000 in simplified life coverage.
Pros & Cons Of Simplified Whole Life Insurance
- No medical exam.
- Minimal health questions.
- No ordering of formal records about your medical history.
- Speedy approvals.
- People with a challenging health history are still eligible.
- Lifelong coverage.
- Premiums never increase.
- Builds cash value.
- Death benefit won’t decrease.
- Lower coverage maximums (≤ $100K).
- Higher premiums compared to plans that require a medical exam.
- Some plans can have a two-year waiting period.
- Not the cheapest type of coverage (taking a medical exam lowers your premiums).
- People in good health are forgoing lower prices by skipping the medical exam.
- Includes an exclusion (the contestability clause) that will prevent a death benefit payout in the first 24 months when there are false answers to the health questions.
When Is Simplified Issue Whole Life Insurance A Good Option?
Simplified whole life coverage is an excellent option if you:
- Need coverage to pay for end-of-life expenses.
- Had difficulty qualifying for other types of coverage due to a challenging health history.
- People who would prefer to avoid a medical exam and want coverage quickly.
A simplified issue policy is not worth it for people needing a significant policy (over $100K) or those who want the absolute lowest price (premiums are lower if you take a medical exam).
Simplified Issue Vs. Final Expense Insurance
Final expense insurance is a type of simplified whole life insurance. It’s just a marketing expression that refers to a small whole life insurance policy with ultra-lenient underwriting so applicants with serious health issues can still obtain coverage without having to complete a medical exam.
Final expense life insurance is also commonly called “burial insurance” or “funeral insurance.”
Simplified Issue Vs. Guaranteed Issue Life Insurance
Guaranteed issue life insurance is coverage that has no underwriting process of any kind. You don’t have to undergo a medical exam or complete a health questionnaire.
That is markedly different from a simplified issue policy because, with simplified issue, you must answer health questions.
It’s critical to remember that all guaranteed issue policies will be modified plans with a two-year waiting period. If you die during the waiting period, the insurance provider will only refund your premiums plus approximately 10% interest.
Frequently Asked Questions
Simplified issue whole life insurance is excellent because the lenient underwriting allows people with pre-existing conditions to obtain a new policy. It’s also ideal for people who simply want to secure coverage quickly and would rather skip the medical exam.
The most significant advantage of a simplified issue life insurance policy is that despite prior health issues, you can still qualify for a new policy due to the relaxed underwriting. Also, you don’t have to complete a medical exam to qualify. That means you don’t have to meet with a nurse who would take a blood and urine sample, weigh you, and measure your blood pressure. Lastly, simplified life insurance applications are often approved in less than 24 hours.
Guaranteed issue is a type of insurance that does not require you to take a medical exam or answer health questions. Simplified issue policies also don’t require an exam, but you do have to answer questions about your health to determine your eligibility.
Nearly every life insurance company will offer both simplified issue term life insurance and simplified whole life. In addition, most companies offer simplified issue universal life insurance.
Traditional life insurance options usually require completing a medical exam and buying much more coverage than simplified issue products. They are generally less expensive since the insurer knows the full gambit of your medical history. Also, the maximum amount of coverage you can buy on traditional policies is essentially limitless. Because simplified products require you to provide far less information about your health and lifestyle, the cost (per thousand dollars of coverage) is higher, and the insurer will often only sell you up to $100K in coverage.
