How Does Simplified Issue Life Insurance Work?
Simplified issue life insurance is a type of no medical exam life insurance that allows you to obtain coverage quickly, given that you only have to answer health questions to qualify, rather than taking a medical exam.
In addition to the health questions, the insurance companies will also conduct electronic research about you that will reveal your driving record, medication history, and identity. This information, combined with your answers to the health questions, is how insurers determine whether you’re eligible without requiring a medical exam.
Simplified issue policies can be approved instantly or within ten days. Often, policies aren’t approved instantly because your health history contains ambiguous information that requires further clarification.
In those cases, insurers will often request a telephone interview to ask you for deeper insight into the specific issues that prevented them from approving your application on the spot.
Types Of Simplified Issue Life Policies
Most insurers offer at least one type of simplified issue life insurance. Furthermore, nearly all of them offer simplified underwriting for whole life, term life, universal life, and burial insurance policies.
While it varies by insurer, simplified policies can be available up to age 85 with coverage generally capping out at around $500,000.
How Much Does Simplified Issue Life Insurance Cost?
The cost of simplified issue life insurance policies is based on the following factors:
- Type of policy (whole, term, or universal life)
- Gender
- Health history
- Coverage amount
- Tobacco, drug, alcohol habits (if any)
Simplified issue 10-year term life insurance rates
Simplified issue 20-year term life insurance rates
Simplified issue 30-year term life insurance rates
Simplified issue whole life insurance rates
Simplified issue universal life insurance rates
Simplified issue final expense insurance rates
Simplified Issue Vs Life Insurance Policies With No Health Questions
Life insurance policies with no health questions guarantee your approval regardless of your health history. Simplified issue policies, in contrast, require you to answer health questions, which, in large part, determine if you’re approved or declined.
The most notable difference, aside from the much higher cost, between these two types of policies is that guaranteed acceptance policies always have a two-year waiting period. If you die during the 24-month waiting period, the insurance company will only refund your premiums.
Conversely, a simplified issue life insurance policy does not automatically include a two-year waiting period. Some of them do, but most of them do not.
Simplified Issue Life Insurance Vs Life Insurance Policies With A Medical Exam
Life insurance policies that do require a medical exam differ from simplified issue policies in the following ways:
- A medical exam is required. You’ll meet with a nurse who will collect blood and urine samples and record your current height and weight.
- All your medical records will be subpoenaed. The insurance company will formally request all your medical files from every physician or medical facility you’ve interacted with in the last 10 years.
The approval time for fully underwritten policies usually takes 4-6 weeks. The primary upside is that the cost can be (and usually is) much lower than simplified issue life policies. Also, the coverage limits are considerably higher.
If you’re okay with taking the exam and waiting for approval, opting for a fully underwritten life insurance policy is advisable.
Pros And Cons Of Simplified Life Insurance
- No needles, lab work, exams, or meetings with any medical professional.
- Very fast approvals.
- No need for the insurer to obtain all your medical records.
- Can usually be bought online or by telephone.
- Fully underwritten policies are generally less expensive.
- Those with high-risk health issues will find it difficult to qualify for simplified issue products.
- The coverage maximums are often around $500,000, which is not suitable for most working families.
Alternatives To Simplified Issue Life Insurance
Perhaps you applied and were declined for a simplified issue policy. Or maybe you need a high amount of coverage. There are many reasons why simplified issue life insurance may not be the right fit. If so, here are some alternatives to consider:
- Guaranteed acceptance: With guaranteed issue life insurance, there is no underwriting at all. You don’t have to do an exam or answer health questions. The drawback is that you can typically only buy $25,000 in coverage, and there is a two-year waiting period before you’re insured for natural causes of death.
- Full underwriting: These require a medical exam and all your medical records. The exam may be a hassle, and the application takes longer to be approved. However, the cost is lower, and the maximum coverage is much higher.
- Group life insurance: If your employer offers group term life insurance, there is likely no qualification. In most cases, group coverage does not require you to personally qualify. Instead, the risk is spread across the whole group, which is why your personal details aren’t relevant.
Frequently Asked Questions
Simplified issue coverage is ideal for those who need coverage quickly and don’t mind paying slightly higher premiums. It’s also perfect for people who have an aversion to needles. However, if you’re okay with the exam, it’s recommended to opt for a full underwriting policy, as you’ll pay much lower premiums.
While it depends on the exact nature of your conditions, simplified policies do accept folks with pre-existing health issues (even moderate to high-risk ones). What’s certain is that very high-risk conditions, such as CHF or COPD, will likely lead to an outright decline in simplified products. It’s best to speak with a licensed agent who can analyze your background and give you a clear set of expectations.
Simplified issue term life and universal life policies will always have no waiting period (if you’re approved). However, some simplified issue whole life policies may have a waiting period. Basically, if you say yes to certain health questions, the insurer will still “approve” the application but issue it with a modified benefit (which means there is a two-year waiting period).
HIPAA laws make it illegal for any entity to access your protected health and personal information without proper prior authorization. When you sign a life insurance application, one of the authorizations you’re agreeing to is to allow the insurer to access your protected information. If you were to refuse this authorization, they would not even consider your application. With the authorization in hand, the insurer will gather medical information about you from Milliman IntelliScript and MIB. They will gather identity and background information from LexisNexis and your state’s DMV.
- Nationally licensed life insurance agent with over 16 years of experience.
- Personal annual production that puts him in the top .001% out of all life insurance agents in the nation.
Anthony Martin is a nationally licensed insurance expert with over 16 years of experience and has personally served over 10,000 clients with their life insurance needs. He frequently authors entrepreneurial and life insurance content for Forbes, Inc.com, Newsweek, Kiplinger, and Entreprenuer.com. Anthony has been consulted as an expert life insurance source for dozens of high-profile websites such as Forbes, Bankrate, Reuters, Fox Business, CNBC, Investopedia, Insurance.com, Yahoo Finance, and many more.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 15,000 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest Youtube channels to help aspiring insurance agents serve their clients better.
- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 15,000 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest Youtube channels to help aspiring insurance agents serve their clients better.
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Milliman IntelliScript. https://www.rxhistories.com/
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MIB. https://www.rxhistories.com/
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LexisNexis. https://risk.lexisnexis.com/our-technology