When you apply for a life insurance policy, most providers require you to complete an in-person medical exam before you can get approved. The physical examination is used to gauge your overall level of health, which has an impact on your life insurance premium, and your eligibility for certain kinds of coverage.
However, life insurance applicants who don’t want to take a medical exam have the option to buy simplified issue life insurance. This type of life insurance can be a good option for people who suffer from pre-existing health conditions that make it more difficult to get coverage. Although simplified issue insurance has many benefits, it also has several drawbacks.
What is simplified issue insurance?
Simplified issue life insurance is a type of life insurance that is not medically underwritten. That means applicants are not required to undergo a traditional medical exam with a physician. Also, simplified issue life insurance makes it easy to get coverage quickly, because there is no lengthy waiting period while your medical exam results are being evaluated.
How does simplified issue insurance work?
To get simplified issue life insurance, applicants must complete a health questionnaire. You may be asked to disclose your age, height, weight, smoker status, pre-existing conditions, alcohol use, medications, and family medical history.
Once the application is complete, an insurance underwriter reviews the responses, determines how much coverage you are eligible to buy, and calculates your estimated rate. Some insurance companies give you an instant decision, while others take several days.
Depending on your life insurance provider, you may be able to purchase simplified issue insurance as a term life policy or a whole life policy. You might also have the option to add riders to your policy for more personalized protection.
Pros and Cons of Simplified Issue Life Insurance
Simplified issue life insurance is a good option for some people. However, it’s not the best option for everyone. Before you decide to purchase simplified issue life insurance, there are a few things you should consider first.
If you have pre-existing conditions that make it difficult to get a medically-underwritten policy, simplified issue life insurance might be a good choice. There’s no medical exam required, and most people can get approved, even if you are not in perfect health.
Another advantage of simplified issue life insurance is that it uses accelerated underwriting. That means you can get coverage without a waiting period. You might even be able to apply and buy a policy on the same day. If you need coverage quickly, a simplified issue policy can be a great solution.
In terms of the downsides, simplified issue life insurance is more expensive than a standard, medically-underwritten life insurance policy. This is because the insurance company views applicants as higher risk when they do not complete a medical exam. So, if you are looking for an affordable policy, simplified issue insurance is not your best option.
In addition, the coverage limits for simplified issue life insurance are lower than traditional life insurance policies. For example, you might only be able to get $100,000 in simplified issue coverage, whereas many life insurance companies provide coverage limits of $1 million or more for standard term and whole life policies.
When to buy a simplified issue policy?
You should consider buying simplified issue insurance if you need life insurance coverage, but want to avoid taking a medical exam. This type of life insurance can also help you get coverage faster, which might be necessary in some situations.
For example, if you have a court-ordered mandate to purchase life insurance as part of a divorce settlement, a simplified issue policy will ensure you get coverage within the required timeframe. It’s also a good solution if you need a life insurance policy to get approved for certain types of loans, such as a business loan.
Alternatives to Simplified Issue Insurance
The main alternative to simplified issue life insurance is guaranteed issue life insurance.
With guaranteed issue policies, a medical exam is never required. You’ll just need to answer a few basic health questions. However, everyone who applies for guaranteed issue life insurance gets approved. Simplified issue policies are not guaranteed, although the underwriting guidelines are less strict compared to medically-underwritten life insurance.
In terms of cost, guaranteed issue policies are more expensive than simplified issue policies. Guaranteed issue life insurance also has much lower coverage limits, so it’s not the best option if you need a large death benefit.
The Bottom Line
Simplified issue life insurance is a good choice for people who don’t want to take a medical exam, or need coverage quickly. However, simplified issue policies are typically more expensive than regular life insurance policies. Plus, the amount of coverage available is limited. Before you get simplified issue insurance, it’s a good idea to apply for a standard life insurance policy first, which will have lower rates and more coverage.