Purchasing a whole life insurance policy is one of the best ways to help ensure that your loved ones are protected even in the worst-case scenario.
Precisely, life insurance provides vital financial protection for your family and helps cover end-of-life expenses when you die.
Whilst knowing the importance of life insurance, there is one barrier that many people face when applying for policies: having health conditions perceived as too risky.
As such, if you have reached the geriatric stage and have certain health conditions, you might find it hard to qualify for traditional life insurance. That’s when simplified issue life insurance becomes handy as one of the ultimate solutions.
Essentially, a simplified issue life insurance is a type of no medical exam life insurance that you can be approved for after answering minimal health questions.
It is an ideal option for individuals who cannot qualify for other policies due to medical reasons or just want to skip a medical exam.
If you have been contemplating how you can defray your final expenses, simplified issue life insurance might be an ideal option for you.
In this definitive review, you will find everything you need to know about simplified issue life insurance so you can make an informed decision.
Table of Contents
What is simplified issue life insurance?
As the name suggests, simplified issue life insurance, also known as simplified whole life insurance, is a policy that fast-tracks you through the life insurance process. It is a type of whole life insurance that requires no medical exam.
Instead, it requires that you answer a handful of questions relating to your health and lifestyle. As a result, applying and getting approval is easy, fast, and painless.
When you apply for a simplified issue life insurance policy, you get to skip the medical exam in favor of a few health questions. Your chosen simplified issue life insurance provider will assume an automatic standard level of risk and offer the coverage policy you applied for.
All in all, if your answers to the health and lifestyle questions reveal that you are too risky to be insured, you may be disqualified. In such a case, a guaranteed issue life insurance might be your only resort.
That said, if you are new to life insurance policies, it is worth noting that simplified issue life insurance falls under the umbrella of final expense insurance.
Unlike most life insurance policies, it offers bare-bones coverage and is best suited for seniors with health conditions that might impede them from purchasing traditional whole life insurance policies.
How does simplified issue insurance work?
Simplified issue life insurance is one of the simplest types of life insurance you can purchase. With this type of permanent life insurance, there is no in-person medical exam involved.
All you need is to complete a health questionnaire that helps your insurer determine how much of a risk they are to ensure when they offer you coverage. As such, your answer can potentially result in higher premiums or, worse, prevent you from qualifying.
In most cases, depending on the terms and conditions of the provider, you should be able to complete the application online, over the phone, or by visiting an agent in person. As the name hints, the entire application is simplified. After all, there is not much to take up your time.
Applying for simplified issue life insurance involves answering simple questions relating to your overall health, tobacco and alcohol usage, and family medical history.
Although questions may differ from one carrier to another, once you are approved, you will be able to secure a coverage amount of up to about $40,000, which is payable to your beneficiaries when you die.
As for you, your job is to pay the premiums. Your simplified issue life insurance policy should stay active as long as you keep paying the premiums.
Of significance, some providers of simplified issue life insurance require you to hold a policy for at least two years before they can pay the policy’s death benefits in full. If you pass during the grading period, your insurer will pay (to the beneficiaries) the amount you paid as premiums.
Unlike traditional life insurance policies, many simplified issue life insurance policies do not build cash value, and the few with the savings component usually accumulate cash value at a much slower rate.
When you purchase a simplified issue life insurance, you may or may not be allowed to add riders to your policy to expand coverage or death benefits.
Who is simplified issue life insurance for?
The ease of getting a simplified issue life insurance policy makes it an appealing option for many individuals who want to defray their final expenses.
From application to coverage amounts, simplified issue life insurance is best suited for people who do not qualify for traditional life insurance policies.
Because applying is painless and approval is relatively faster, it is an ideal option for individuals who need to obtain a whole life insurance policy right away.
Simplified issue life insurance can be deemed right for people who, for whatever reasons, don’t wish to submit to a medical exam or are perfectly OK with small coverage amounts, including those who can qualify for traditional life insurance policies.
How does simplified issue life insurance differ from other types of life insurance?
Simplified issue life insurance lies somewhere in between other types of life insurance. Here is a rundown of key differences between simplified issue life insurance and other options.
- Simplified issue life insurance vs. Guaranteed issue life insurance.
While both simplified and guaranteed issue life insurance are no medical exam policies under the final expense insurance umbrella, they are not the same.
Applying for simplified issue medical issue life insurance involves an underwriting process where applicants must complete a health and lifestyle questionnaire. Definitely, this means answering “yes” to one or more questions can make the policy expensive or disqualify you.
On the other hand, a guaranteed issue life insurance is a type of whole insurance that doesn’t require a medical exam or medical questions. As the name suggests, you are guaranteed to receive a policy. However, the additional unknown risks make it expensive.
In terms of coverage amounts, if you qualify for a simplified issue life insurance policy, you can obtain a larger coverage amount of up to about $40,000 for a lower premium.
This is almost twice the coverage amount you can secure with a guaranteed issue life insurance policy, usually capped at $25,000.
- Simplified issue life insurance vs. fully underwritten life insurance.
Normally, life insurance providers use a process called underwriting to gather information about applicants. Full medical underwriting involves completing lengthy questionnaires relating to the applicant’s health, lifestyle, occupation, hobbies, mental health, and family medical history.
When applying for a fully underwritten life insurance policy, you will also need to undergo a physical and medical exam to verify the information you provided in the questionnaires.
Although lengthy, the underwriting process helps insurers determine how much risk they are to insure and calculate the rate to charge individual applicants depending on risk levels.
In comparison, simplified issue life insurance involves a relatively short, uncomplicated process. With simplified issue policies, the medical exam and questions associated with fully underwritten policies are substituted for a standard risk, usually determined by the insurer.
In exchange for a lengthy application process, fully underwritten life insurance policies offer a higher death benefit, typically up to $500,000. Depending on your long-term priorities, you can select a term that suits you best, typically between 10 and 30 years.
No matter the term you choose, it will almost certainly be cheaper than simplified issue life insurance policies.
Notably, if your fully underwritten life insurance term comes to an end but you can’t renew because of your medical condition, you might qualify for a simplified issue life insurance policy. With a simplified issue policy, you will still provide vital financial protection for your family and defray your end-of-life expenses.
Qualifying for Simplified issue life insurance
From the definition, it is clear that you don’t need to take a medical exam to get approval for a simplified issue life insurance. But does this mean that virtually anybody can qualify for a policy?
To be approved for simplified issue life insurance, you should meet the minimum criteria used by most insurers.
Most simplified issue life insurance providers offer coverage to individuals ages 45 to 85 who do not have certain medical conditions considered too risky.
Some carriers may require you not to be an active smoker. All in all, many insurers will still offer coverage to smokers, but you will have to pay higher premiums for potentially lower death benefits.
What conditions disqualify you from getting simplified issue life insurance?
Simplified issue life insurance providers assume an automatic standard risk when offering coverage. However, considering that applicants must complete a health and lifestyle questionnaire, it definitely means that there are disqualifying factors.
That said, your application for simplified issue insurance may be denied if:
- You are bedridden, live in a nursing home or long-term care facility at the time of application.
- You have a terminal medical condition.
- You have been diagnosed with or treated for chronic health conditions, including Congestive Heart Failure, Dementia, Alzheimer’s Disease, diabetic coma, and an organ or bone marrow transplant.
- You have been diagnosed with cancer within the past two years before the time of application.
- You have been advised to have a surgical operation or diagnostic testing that is not routine.
- You have been diagnosed with heart disease or had heart surgery in the past year from the time of application.
- You need oxygen equipment or an electric scooter.
- You have a disability that requires a wheelchair.
While you are typically approved for simplified issue life insurance with no medical exam, you stand a higher chance of not getting a simplified issue life insurance policy if you check off some or all of the boxes. Whatever is your case, you should be able to qualify for guaranteed issue life insurance policies.
How much does simplified issue life insurance cost?
While simplified issue life insurance typically costs a bit more than traditional term life insurance policies, it gives your reasonable coverage at a relatively lower price point compared to other types of final expense insurance plans, like guaranteed issue life insurance policies.
The exact cost largely depends on your age, health class, face amount, and preferred policy. As such, the younger and healthier you are, the more you are likely to receive better rates. Even so, premiums for smokers can run significantly high, even when the smoker is young.
Generally, the average cost of simplified issue life insurance policies is about 2-3 times that of fully underwritten. The costs may vary significantly from one insurer to another and from one state to another.
Life insurance riders
Most simplified issue life insurance providers have additional riders that you can add to your simplified issue policy so that the policy better meets your needs.
Essentially, life insurance riders are additional benefits that you can add to your life insurance policy for extra protection, but, of course, in exchange for a small fee.
Like traditional life insurance policies, you can customize your simplified issue life insurance with add-on features. Here are some life insurance riders you may consider:
- Accelerated death benefit rider:
If you have a terminal illness, accelerated death benefit rider allows you to use your death benefit payout early to cover necessary medical expenses. However, to be eligible for payout, your doctor must diagnose you and confirm that you are terminally ill and have 6 to 12 months to live.
- Long-term care rider:
As the name suggests, this is an add-on to your simplified issue life insurance that covers the cost of long-term care that your insurer will most likely not pay for.
Long-term care riders can cater to the nursing home or at-home care. This can be a very handy rider if you live in a nursing home at the time of application.
- Disability waiver of premium:
While the qualifications of disability to trigger this rider will vary according to the insurer, a waiver of premium rider offers the option for you to skip premiums until you fully recover from disability or loss stemming from disability.
Considering a disability requiring a wheelchair can disqualify you for a simplified issue life insurance policy, it is imperative that you talk with your insurer about this rider when applying. Disability waiver of premium can also be limited by age.
- Family insurance riders:
These are add-ons that offer coverage for your family members, like your spouse or children. Spousal and children insurance riders can be costly, but they are still worth it if the family members do not qualify for traditional life insurance policies.
- If you have a riskier life or travel often, you might want to consider accidental death and dismemberment insurance riders. This can go a long way towards relieving your loved ones of the stress and confusion they may experience when you pass while in a place far from your home city.
Whilst knowing that riders offer extra protection, sometimes in worst-case scenarios, it is worth noting that not all life insurance riders are created equal. In fact, some are not worth the extra cost.
Depending on your individual situation, some riders can be a vital supplement to your simplified issue life insurance policy. That said, you can talk to a reputable life insurance agent or broker to help secure the only rider that will help in the long term.
Importantly, the rider you add to your simplified issue life insurance can quickly increase the cost of your premium, so only pick what is important.
The pros and cons of simplified issue life insurance
If you need a life insurance policy but don’t want to have a medical exam, a simplified issue life insurance policy might be the solution. Although it is a pricey option, the convenience and ability to qualify with some health issues outweigh costs.
Here are potential benefits and limitations to help you determine if a simplified issue life insurance is an ideal solution for your needs.
- No paramedical exam and only a limited number of questions:
With simplified issue life insurance, you don’t have to worry about completing a medical exam, which saves you the time of having to get results processed.
- Convenient process and fast coverage:
Simplified issue policies are designed to be simple and promise fast coverage. In most cases, you should be able to complete your application online or via phone. Although approval is not instant, if you qualify, you are likely to be covered within days.
- Cheaper than guaranteed issue policies:
Foregoing a medical exam and health/lifestyle questionnaire makes it impossible for guaranteed issue life insurance providers to factor in the risk they are insuring.
Since the risk is considered higher, the premiums are relatively higher. This makes it more pricey than simplified whole life insurance, which assesses the health and lifestyle of applicants.
Even better, simplified issue life insurance offers higher coverage amounts than guaranteed issue life insurance.
- Some simplified life insurance policies have a savings component.
- As long as you don’t have chronic medical issues, simplified issue life insurance promises higher odds of approval.
- Higher premiums:
Relative to traditional life insurance policies, simplified issue life insurance policies are costlier. Because there is an assumed risk, insurers charge higher to compensate for the additional risk.
Depending on your age, health, and where you live, a simplified issue life insurance policy can be up to 3 times the cost of standard life insurance.
- Limited coverage:
With a simplified issue life insurance policy, the coverage amount is usually capped at $40,000. While some providers may offer a higher death benefit amount, you will barely find one.
- May have a graded death benefit:
Many simplified issue policies include a waiting period, usually two years. This means that you are not actually covered until the end of the waiting period. When you die within this period, the insurer will repay the amount you paid as premiums.
- Simplified issue policies have limited rider options:
Simplified issue life insurance policies are not as customizable as traditional life insurance policies. Although the number of riders you can access immensely depends on your insurer, the options will remain fewer than what you can access with other plans.
- Limited availability:
One of the biggest trade-offs for simplified issue life insurance is the limited availability. There are only a handful of life insurance companies that offer simplified life insurance policies. What’s more, despite the policies falling under the permanent life insurance umbrella, many providers still.
The advantages and disadvantages of purchasing simplified issue life insurance policies seem to balance. That said, to ensure that you are getting the best offer, it is always advisable that you explore all your options before making the big decision.
An insurance agent or licensed insurance broker can help you determine whether a simplified issue life policy is right for you.
A general rule of thumb is that a simplified issue life insurance policy should be your last resort alternative because the premiums are considerably high and the coverage availability is low.
Who needs a simplified issue life insurance policy?
Simplified issue life insurance is a form of final expense insurance. As such, it eases the burden on your loved ones and keeps them from experiencing unneeded stress and confusion when you pass away.
If you have pre-existing medical conditions that hinder you from qualifying for a traditional life insurance policy, you need to try a simplified issue life insurance policy.
Simplified issue life insurance policies make perfect sense for people who can’t get a more affordable policy, either due to age or health conditions. That said, you may need a simplified issue life insurance policy if:
- You don’t qualify for other affordable options
- You have a medical condition that makes traditional life insurance policies super expensive for you.
- You are 45 to 85 years old.
- You want a relatively affordable policy but don’t want to take a medical exam.
- You need immediate coverage.
If you are a senior planning to purchase a simple life insurance policy that will cater to your final expenses, simplified issue life insurance may make perfect sense. Even so, you should not be lured by the fast coverage and no medical exam aspect to give in when you can qualify for affordable options.
Is simplified issue life insurance right for you?
While simplified issue life insurance is the last resort alternative for people who can find affordable policies, it can be the right option for you under the right conditions. Typically simplified issue life insurance makes sense when you have a condition that prevents you from qualifying for a more affordable permanent life insurance policy.
Since it promises relatively fast coverage, it can be your best bet if you are looking to get coverage quickly. In this case, it will give the best of both worlds because it is not the most expensive life insurance option and offers reasonable face amounts.
When to buy a simplified issue policy
If the Covid-19 outbreak has prompted you to be more prepared for the unexpected, you might be thinking about buying a permanent life insurance policy. Well, while simplified issue life insurance is essentially final expense insurance, there are some circumstances when purchasing a simplified issue policy makes a lot of sense.
Here are some instances when you may want to buy a simplified issue life insurance policy:
- When you have been court-ordered to get a life insurance policy immediately with your children named as beneficiaries
- When you need life insurance but are not sure of qualifying for a traditional life insurance policy
- When you need a permanent life insurance policy but don’t want to undergo a medical exam
- When your term life insurance has matured, but you don’t want to lose the life insurance or simply want to retain your life insurance while deciding what to do next.
No matter your situation, purchasing a simplified issue policy is a great way to defray your final expenses and provide financial security for your loved one.
Although it is not the cheapest policy you can buy, it is worth the investment, particularly when you just want something convenient.
How can simplified issue life insurance benefits be used?
While simplified issue life insurance is final expense insurance whose payouts are intended to cover final expenses, the truth is that death benefits can cover a whole lot of expenses. Death benefits more or less help replace your income.
With that in mind, here are some common uses of simplified issue life insurance benefits:
- Paying final costs:
Despite the fact that payouts of simplified issue policies come with no strings attached, beneficiaries commonly use the funds to cover the cost of funeral arrangements.
As such, your beneficiaries may use your policy’s death benefits to pay for cremation, embalming, casket or urn, and other funeral expenses like purchasing a plot.
- Paying medical bills:
It is not uncommon for people to die with massive medical bills. If you saw a spike in medical bills just before passing, death benefits can help cover the bills.
- Paying off debt and other unpaid obligations:
Simplified issue life insurance benefits can potentially replace your incomes when you die.
Precisely, your beneficiaries can use the payout from your insurer to consolidate your debts and other obligations, including mortgage, college tuition for your children, credit card bills, and outstanding car loans.
Settling all your debts can go a long way towards protecting the value of your estate.
- Paying estate taxes:
After closing your estate, your survivors may be required to pay an estate tax after receiving an inheritance. In this case, simplified issue life insurance benefits can be used to partially or fully offset this cost.
- Daily expenses:
Coping with the loss of a family is often challenging, and sometimes the survivors can run short of income. In such a case, death benefits can be used to cover the daily expenses of your loved ones before they can adapt to living without you.
- Charitable contributions:
If you are a real philanthropist, naming your favorite charity as the beneficiary to your simplified issue life insurance policy is an excellent way to accomplish your philanthropic goals.
Your beneficiaries can also elect to give the payout from your policy to charity, either one you stated in your final arrangements or of their choice. Either way, the funds will have been used to accomplish works of charity.
Simplified issue life insurance benefits can be a sensitive topic. Importantly, death benefits from your insurer to your beneficiaries come with no strings attached.
While simplified issue life insurance benefits are literally intended to cover final expenses, your beneficiaries can use the payouts to cover just about anything.
As such, if the funeral and expenses are taken care of through funding from a different source, your survivors may use the fund for any purpose, including paying school or college tuition, buying a new car, covering wedding costs, or making a down payment for another home.
This is not further from the truth, considering that there are no actual limits to how beneficiaries of simplified issue life insurance benefits can use payouts.
Even a better option would be beneficiaries keeping the money in a savings account as an emergency fund.
How much coverage is available through simplified issue life insurance
Simplified issue life insurance is designed for higher-risk individuals. For this reason, its policies typically offer less coverage compared to traditional life insurance policies.
Many simplified issue life insurance providers allow you to obtain coverage of up to about $40,000.
However, considering that many providers have started offering simplified issue policies on a term basis, typically between 10 to 30 years, it is possible to get coverage of as much as $500,000.
The coverage you can obtain will depend on a number of factors, including your age and health class.
Best simplified issue life insurance providers
If you need to get an insurance company that you can trust, you need to get just the best in the market. Many companies offer simplified issue life insurance, but they have different reputations.
If you need to get a simplified issue life insurance policy, you should sign up with a company whose reputation allows you to get back the value of your money.
Here is a list of some reputable companies that offer simplified issue life insurance. Read on
AAA company simplified life insurance policy covers people ages 20 to 80 years and gives a maximum benefit coverage of $25,000. You must not necessarily be a member of AAA company to get insured. As a policyholder, you can get other advantageous discounts on other policies.
- Haven life
Haven Life’s simplified issue life insurance is offered by CM life insurance company, a subsidiary of mass mutual. It is offered to individuals in middle age, that is 20 up to 55 years. Haven Life makes it possible for you to apply for a simplified issue life insurance policy digitally.
There is no medical exam offered, and the amount of coverage is from $25,000- $500,000. Even better, the payouts are tax-free with paperless processing.
Haven Life’s simplified issue policies can be obtained for time frames of 5, 10, 15, and 20 years.
TruStage avails its simplified issue of life insurance to individuals aged 25 to 80 years. The policies are issued by CMFG life insurance company but supplied through the LLC TruStage insurance agency. The terms premiums increase after every five years.
Acceptance and approval are based on the answers you give during application and information from other sources. The insurance is not a deposit, neither is it guaranteed by a credit union. With TruStage, you can obtain coverage amount of up to $100,000.
- American Family insurance company
This company offers simplified issue term insurance policies with a full-time coverage of $50,000 to $150,000 and has terms of 10, 15, 20, and 30 years. There are no medical exams; therefore, getting an insurance cover is made simpler and easy.
It’s a good policy for different stages of life, including younger individuals who already have dependents and financial obligations. It also has temporary coverage, which is relatively cheaper than full-time coverage.
- Ethos life
Applying for simplified issue insurance with Ethos Life Insurance is simpler because of the short online procedures and nearly instant approvals. You get to know if you qualify or not once you have filled the application form.
The simplified issue insurance is offered to individuals aged 20 to 70 years. The terms range from 10 to 30 years. Depending on age, the coverage changes as follows:
- 20 – 45 years: $50,000 to $500,000
- 46 – 70 years: $50000 to $350,000
The policy is guaranteed renewable and has good-priced coverage compared to other companies.
How to choose a simplified issue life insurance company
Before deciding on what life insurance company to insure your life with, there are several factors to consider to ensure that you are getting the best possible offer and also be guaranteed that your survivor will receive the death benefits.
That said, here are factors you need to consider before purchasing a simplified issue life insurance from a particular.
- Company reputation
A company’s reputation will help you decide whether to allow them to cover you or not. In most cases, people want to associate with ‘big names’ that they can easily trust.
When picking your insurer, the idea is to pick a reputable company with a reasonable amount of positive reviews.
- Legal accreditation.
A life insurance company should be certified by government institutions, so ensure that your chosen insurer is accredited by the necessary federal and state bodies. Certified companies are more inclined to adhere to the set laws and serve you rightly.
When dealing with an accredited life insurance company, you are quite promised that your beneficiaries will receive your policy’s death benefits.
Some companies are licensed to operate in specific states. Buying life insurance products online may be risky, especially if you don’t know the company’s physical address. For this reason, do your due diligence to ensure that you are buying your simplified issue life insurance policy from a company licensed to operate in your region.
- The financial position of the company
Before buying a simplified issue policy, you want to make sure that the company is financially stable and has been paying claims all through. Without confirming the financial state of your company, you may end up purchasing a policy from which your beneficiaries will not get benefits.
- Payment of claims
Consider choosing a company that has minimum paperwork for making claims and a short wiring period. If you choose an insurer that has not been paying client claims due to either bankruptcy or other reasons, there is a higher chance that the insurer won’t pay the death benefits to your beneficiaries.
When buying a life insurance policy, you always want to make sure that you are getting the best offer. That’s cheaper premiums for the highest possible coverage. In this regard, you should request quotes from different carriers and compare them to ensure you can choose a suitable option.
That idea is to choose a company that offers a reasonable price for a sizable coverage.
- Customer service
This sounds obvious. The kind of hospitality and customer service offered by a life insurance company will attract your desire to buy a simplified issue policy from it or not.
Whole life insurance is a tricky subject. There are a lot of factors that come into play when deciding between different types and the coverage you want.
Simplified issue life insurance is a type of permanent life insurance that best suits people with pre-existing medical issues that disqualify them for traditional life insurance policies.
If you are planning to purchase a simplified issue life insurance policy, hopefully, this post helps you understand this type of whole life insurance and make an informed decision.
Importantly, although it allows you to skip the medical exam, simplified issue life insurance should be your last resort alternative if you can qualify for affordable traditional life insurance policies.