What Is Simplified Issue Life Insurance And Who Should Buy It?

Life insurance is a vital financial tool that can protect your loved ones from the unexpected. But getting life insurance can be a hassle if you have to go through a lengthy and invasive underwriting process that involves a medical exam, blood tests, urine samples, and dozens of health questions.

Fortunately, there is a type of life insurance that does not require a medical exam and uses a simple form of underwriting. It is called simplified issue life insurance, and it can be a fast and easy way to get life insurance coverage.

But simplified issue life insurance is not for everyone. It has some drawbacks that you should be aware of before you buy it. In this article, we will explain what simplified issue life insurance is, how it works, who should buy it, and how to shop for it.

How Simplified Issue Life Insurance Works

Simplified issue life insurance is a type of life insurance that does not require a medical exam as part of the underwriting process. Underwriting is the process that insurers use to evaluate your risk profile and determine whether to accept or reject your application, and what rate to charge you.

Traditionally, insurers have relied on full medical underwriting, which involves a comprehensive questionnaire with 60 or more questions about your health, lifestyle, occupation, mental health, and family medical history. They also use multiple third-party sources, such as your prescription drug history, driving record, credit report, and criminal background check. And they require you to take a medical exam that includes measurements of your height, weight, blood pressure, pulse rate, and blood and urine samples.

This full medical underwriting process can take 45 to 60 days or more if the insurer wants additional information. And it can be inconvenient and uncomfortable for some applicants who do not like needles or who have privacy concerns.

Simplified issue life insurance simplifies this process by eliminating the medical exam and reducing the number of questions on the questionnaire. Typically, you only have to answer some basic questions about your age, gender, tobacco use, and any major health issues or risky hobbies. Some insurers might follow up with a phone call to gather more information.

The insurer will then use third-party sources to verify your information and make an immediate decision to accept or reject your application. You might even get approved instantly online.

Simplified issue life insurance is different from accelerated underwriting, which is another type of no-exam life insurance that uses advanced algorithms and data analytics to speed up the underwriting process. Accelerated underwriting still uses a detailed questionnaire and third-party sources but does not require a medical exam for most applicants who qualify based on their risk profile.

Simplified issue life insurance also affects the coverage amount, the premium rate, and the policy type that you can get. Because simplified issue life insurance has less information about your health status than full medical underwriting or accelerated underwriting, it poses a higher risk for the insurer. To compensate for this risk, insurers limit the coverage amount that you can get with simplified issue life insurance.

Usually, you can only get up to $500,000 of coverage with simplified issue life insurance. Some insurers might offer higher amounts for younger or healthier applicants but most will cap it at $1 million. If you need more coverage than that, you will have to go through full medical underwriting or accelerated underwriting.

Additionally, insurers charge higher premium rates for simplified issue life insurance than for other types of life insurance that require a medical exam or use accelerated underwriting. This is because they assume that applicants who choose simplified issue life insurance are more likely to have health issues that they do not disclose or are unaware of.

Therefore, you will pay more for less coverage with simplified issue life insurance than with other types of life insurance. The difference in premium rates can vary depending on your age, gender, tobacco use, and health status but it can be significant over time.

Finally, simplified issue life insurance affects the policy type that you can get. Simplified issue life insurance is usually available as term life insurance or whole life insurance. Term life insurance provides coverage for a specific period of time (such as 10, 20 or 30 years) while whole life insurance provides coverage for your entire life as long as you pay the premiums.

Term life insurance is cheaper than whole life insurance but it does not have any cash value or other benefits. Whole life insurance is more expensive than term life insurance but it has a cash value component that grows over time and can be used for loans or withdrawals. Some insurers might also offer simplified issue universal life insurance, which is a type of permanent life insurance that has more flexibility and options than whole life insurance.

Who Should Buy Simplified Issue Life Insurance

Simplified issue life insurance can be a good option for some people who want to get life insurance quickly and easily without a medical exam. But it is not suitable for everyone. Here are some scenarios where simplified issue life insurance might be appropriate:

• You need a small amount of coverage for a specific purpose, such as final expense, mortgage protection, or income replacement. Simplified issue life insurance can provide enough coverage to cover your funeral costs, pay off your mortgage, or replace your income for a few years if you die unexpectedly. But it might not be enough to cover your long-term financial goals or obligations, such as college education, retirement savings, or estate planning.
• You have health conditions that might disqualify you from traditional life insurance or make you pay a higher rate. Simplified issue life insurance can be easier to qualify for than other types of life insurance that require a medical exam or use accelerated underwriting. If you have health issues such as diabetes, high blood pressure, high cholesterol, obesity, or a history of cancer, heart disease, or stroke, you might be able to get simplified issue life insurance at a lower rate than full medical underwriting. But you still have to answer some health questions and disclose any major health problems or risky hobbies.
• You are in your 40s or older and have delayed getting life insurance. Simplified issue life insurance can be a convenient way to get life insurance coverage later in life when you might have more health issues or less time to go through the underwriting process. If you are in your 40s or older and do not have any life insurance or enough life insurance, simplified issue life insurance can help you secure some coverage for your family or beneficiaries. But you should be aware that simplified issue life insurance gets more expensive as you age and might not offer enough coverage for your needs.

Simplified issue life insurance is not the only option for no-exam life insurance. There are other alternatives that you should consider before you buy it. Here are some of them:

• Guaranteed issue life insurance: This is a type of life insurance that does not require any health questions or medical exam. It is the easiest way to get life insurance coverage but it is also the most expensive and the most limited. You can only get up to $25,000 of coverage with guaranteed issue life insurance and it usually has a graded death benefit, which means that it will not pay the full amount if you die within the first two or three years of the policy. Guaranteed issue life insurance is usually only available for people who are 50 years old or older and who cannot qualify for any other type of life insurance due to serious health issues.
• Group life insurance: This is a type of life insurance that is offered by employers, associations, or organizations as part of their benefits package. It usually does not require any health questions or medical exam for the basic coverage amount (usually one or two times your annual salary) but it might require them for additional coverage amounts (usually up to four or five times your annual salary). Group life insurance is usually cheaper than individual life insurance but it has some drawbacks. You might lose your coverage if you leave your employer, association, or organization or if they stop offering it. You might also have less control over the policy type, the coverage amount, and the beneficiary designation.
• No-exam term life insurance: This is a type of term life insurance that does not require a medical exam but uses accelerated underwriting instead of simplified underwriting. It uses a detailed questionnaire and third-party sources to evaluate your risk profile and determine whether to accept or reject your application and what rate to charge you. No-exam term life insurance can offer higher coverage amounts (up to $3 million) and lower premium rates than simplified issue term life insurance but it is harder to qualify for and takes longer to get approved (usually within a few days).

How to Shop for Simplified Issue Life Insurance

If you decide that simplified issue life insurance is right for you, here are some tips on how to shop for it:

• Compare quotes from different insurers: Simplified issue life insurance rates can vary widely depending on the insurer, the policy type, the coverage amount, and your risk profile. You should compare quotes from different insurers online or through an independent agent or broker to find the best deal for your needs and budget.
• Check the financial ratings and customer reviews of the insurers: Simplified issue life insurance is only as good as the insurer that offers it. You should check the financial ratings and customer reviews of the insurers that you are considering to make sure that they are reputable, reliable, and responsive.

• Read the policy details carefully: Simplified issue life insurance policies can have different features, benefits, exclusions, and limitations that you should be aware of before you buy them. You should read the policy details carefully and ask questions if you do not understand something or if you want to make changes to the policy.
• Consult an independent agent or broker if you need help: Simplified issue life insurance can be confusing and overwhelming for some people who are not familiar with life insurance or who have special needs or circumstances. If you need help with choosing a policy, you should consult an independent agent or broker who can offer unbiased advice and guidance and help you compare different options from different insurers.

Conclusion

Simplified issue life insurance is a type of life insurance that does not require a medical exam and uses a simple form of underwriting. It can be a fast and easy way to get life insurance coverage for some people who need a small amount of coverage, who have health conditions that might disqualify them from traditional life insurance, or who are in their 40s or older and have delayed getting life insurance.

But simplified issue life insurance is not for everyone. It has some drawbacks that you should be aware of before you buy it. It offers lower coverage amounts, higher premium rates, and fewer policy options than other types of life insurance that require a medical exam or use accelerated underwriting. It also poses a higher risk for the insurer, which means that they might reject your application or charge you more based on your health and lifestyle.

Therefore, you should weigh your options carefully and compare different types of no-exam life insurance before you decide to buy simplified issue life insurance. You should also shop around for the best simplified issue life insurance policy that meets your needs and budget. And you should consult an independent agent or broker if you need help with choosing a policy.

If you are interested in getting simplified issue life insurance, you can get a free quote online or contact an agent for more information. Simplified issue life insurance can be a convenient way to get life insurance coverage without a medical exam but it is not the only option. You should explore all your options and find the best one for you.