What Is Simplified Issue Life Insurance?

Simplified issue life insurance is a kind of policy you can generally apply for with less detailed health information than on a traditional term life insurance application. As a rule, simplified issue insurance does not require a physical exam, even though it is still partially medically underwritten, which means it takes your health status into consideration when determining if you can receive coverage and at what price.

This kind of policy can be a good fit for people who might have a harder time qualifying for traditional term life insurance due to age or health, but want a moderate level of coverage. Obtaining life insurance can get more difficult as you age—even by the time you’re in your 50s, or if you’re in your 40s with health issues, you might find it surprisingly hard to get a standard term life insurance policy. Because life insurance is based on your mortality risk, it generally becomes more expensive as you age. At a certain point, insurers may not want to cover you at all, especially if you are seeking coverage for a longer term length, like 20 or 30 years.

With a simplified issue policy, you fill out a detailed questionnaire about your health situation instead of going through a typical life insurance medical exam. 

As a result, the main upsides to simplified issue life insurance are:

1. You are more able to gain coverage if your age or health would otherwise stand in your way.

2. You can skip the health exam.

Compared to regular term life insurance, the main downsides of simplified issue life insurance are:

1. Premiums are typically higher than fully underwritten term life insurance. That includes accelerated underwriting options. Policy costs vary, but it’s not uncommon to see a 60 to 70% jump in price for simplified issue compared to term life, especially for higher coverage amounts.

2. Coverage limits. Traditional term life policies can offer up to $1.5 million or even more in coverage. Most simplified issue policies cap out around $300,000. That may not be enough coverage for many families with a mortgage and kids’ future education needs.

3. The healthier you are, the likelier that you’ll pay more compared to term life. That’s because simplified issue providers know less about you and are therefore taking a higher risk by offering coverage. As a result, they raise their premiums accordingly. If you can demonstrate that you’re in good health, you could get a preferred rate with regular term life.

On the other hand, compared to guaranteed issue life insurance, you should still expect to answer at least some basic health questions on the application or in a phone interview. These questions are likely to cover your medical history, family medical history and current health. You might be required to submit your medical or pharmaceutical records.

Who Should Consider Simplified Issue Life Insurance?

This type of insurance may be best for people who prioritize convenience and speed of approval. Specifically, those who want an absolute assurance that they won't face the headache, hassle or delays associated with a medical exam and are willing to pay more for the privilege. Also, those who might have trouble qualifying for more traditional life insurance due to existing health issues.

If you’re not sure whether simplified issue is right for you, here’s how to think about which kind of no-exam life insurance is the best fit.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

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