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 what’s 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.

We can all see the benefit of making life simpler. Is simplified life insurance a good fit for you? Consider factors like your health, why you’re seeking life insurance and which other types of life insurance you may qualify for to help you choose an option that feels right for you.

What Is a Simplified Life Insurance Policy?

Simplified life insurance uses a streamlined underwriting process to help process policies quickly and consider applications without requiring a physical medical exam. Simplified issue policies may offer a more limited amount of coverage than term life insurance options.

This kind of policy can be an option to consider 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, it can become more challenging to find 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, some insurers may decline your application, especially if you are seeking coverage for a longer term length, like 20 years.

With a simplified issue policy, you typically fill out a detailed questionnaire about your health situation to help the insurer review your application.

Simplified Issue Life Insurance Pros and Cons

Some of the main upsides to simplified issue life insurance are:

• You may be able to gain coverage even if your age or health would otherwise stand in your way for a traditional term life policy.

• You can skip the health exam.

• Simplified issue policies often involve a fairly straightforward application process and quick turnaround.

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

• 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.

• Coverage limits.

  Traditional term life policies can offer up to $1.5 million or even more in coverage. Many simplified issue policies cap out around $300,000. Depending on your financial debts and goals, that may not be enough coverage for all of your plans.

• The healthier you are, the likelier that you’ll pay more compared to term life.

  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.

Simplified life insurance typically has a more pared-down application process than many term life options. On the other hand, compared to guaranteed issue life insurance (which usually doesn’t ask health questions at all), 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 also be required to submit your medical or pharmaceutical records.

Who Should Consider Simplified Issue Life Insurance?

This type of insurance may be a potential fit 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 potential delays associated with a medical exam and are willing to pay more for the privilege. Simplified issue insurance is also an option for people who might have trouble qualifying for more traditional life insurance due to existing health issues.

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Information provided is general and educational in nature, is not financial advice, and all products or services discussed may not be offered by Fabric by Gerber Life  (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. The views and opinions of third-party content providers are solely those of the author and not Fabric by Gerber Life.