Simplified Issue Life Insurance: Is It Worth It?

When you’re buying a life insurance policy, you may need coverage that begins right away, but full underwriting can take weeks to complete. Simplified issue life insurance is an option for people who need immediate coverage.

However, that convenience comes at a cost. You’ll often pay higher premiums and receive a lower death benefit than you’d get through a standard life insurance policy.

» MORE: What is a life insurance death benefit?

A traditional life insurance policy requires a medical exam and may take four to eight weeks to be placed in force. Simplified issue life insurance is a type of life insurance that bypasses the typical underwriting process. This abbreviated application process allows you to buy a policy quickly.

With simplified issue life insurance, you’ll skip the life insurance medical exam and lab tests. Instead, you’ll provide some basic information including your age, address, occupation, height and weight. You’ll also usually have to answer a health questionnaire.

You can apply online, by phone or in person through a life insurance agent or broker. Usually, you’ll find out immediately whether your application has been approved or denied. If approved, you can typically have your policy in force that same day.

Types of simplified life insurance

Simplified issue underwriting is available for most types of life insurance. This includes term life, whole life and even some types of universal life insurance.

» MORE: Types of life insurance

When you apply for a simplified issue policy, the insurance company will base its decision on the information you’ve provided. But carriers also use third-party reports to determine your eligibility, such as:

Answering “yes” to a question that indicates a health condition doesn’t necessarily disqualify you. But if your answers are inconsistent with third-party information collected, your life insurance application might get flagged for further review.

For example, say you have no history of heart disease. However, if your prescription records show you take medication for a heart condition, the insurer might ask you to take a medical exam.

Simplified issue life insurance is available to people up to age 85, although age restrictions vary by carrier. You’ll often qualify for a higher death benefit if you’re in the range of 16 to 60 years old.

Unlike with guaranteed life insurance, however, you can be rejected for simplified issue insurance. If you have a serious health condition or a dangerous profession or hobby, your application could be denied or referred to an underwriter.

» MORE: How does life insurance underwriting work?

When you apply for a simplified issue policy, your insurer has less information about your health and risk factors than if you took a medical exam. That makes you riskier to insure from an insurer’s perspective. As a result, simplified issue policies generally have lower death benefits than traditional policies.

Though some insurers offer as much as $500,000 in coverage, most simplified issue term policies offer coverage ranging from $100,000 to $250,000. Customers older than 55 are frequently limited to $100,000.

Simplified issue permanent life insurance for older adults is often designed for final expenses. For this reason, it offers lower death benefits. Many simplified issue whole life insurance policies have maximum death benefits between $25,000 and $50,000.

Simplified issue life insurance tends to be on the pricey side because it’s sold to older people and typically doesn’t require a medical exam. This means insurers don’t have a complete picture of the person they’re covering.

The rates go up with age, so try to buy simplified issue life insurance as soon as you know you need it. Below are sample rates for simplified issue policies at various coverage amounts.

Average monthly premiums for simplified issue policies - male

Average monthly premiums for simplified issue policies - female

Advantages of simplified issue life insurance

• Simplified issue life policies don’t require a medical exam or bloodwork.

• If your application is approved, coverage can begin the same day.

• You can typically buy more coverage than you’d get through a guaranteed issue policy.

Disadvantages of simplified issue life insurance

• You may qualify for lower premiums and more coverage through a traditional policy.

• Your application may be rejected if you have preexisting health conditions, a dangerous job or high-risk hobbies.

A simplified issue policy may be worth it if you’re in relatively good health and you need your policy to be in force right away. For example, if you’re a new parent seeking coverage, you may not want to wait several weeks for coverage to begin. Or if you’ve been ordered by a court to obtain life insurance as part of a child support agreement, you may need your policy to be in force immediately.

If you need coverage fast, you could buy a temporary policy while you wait for a traditional life insurance application to be approved. But if you have dependents and you can't take the time for a medical exam, buying simplified issue life insurance can be worth it.

Simplified issue life insurance is worth exploring when you have an immediate life insurance need, but it’s not the only option. Here are some alternatives to consider.

• Buy temporary life insurance to avoid a coverage gap. The applications for temporary coverage and simplified issue life insurance are similar. You’ll only need to complete a basic questionnaire. But once you obtain temporary life insurance, you’ll typically have around 90 days to complete a medical exam for your permanent policy. Insurers often limit your temporary coverage to the amount you’ve applied for up to $1 million.

• Undergo full underwriting. Going through the standard underwriting process takes time, and the medical exam can be intimidating. But it could save you money on premiums, especially if you’re young and in good health.

• Get  group life insurance through your employer. If your employer offers group term life insurance, you can usually obtain coverage at little to no cost, without a medical exam or answering health questions. The death benefit is usually capped at one or two times your salary. You may have the option to purchase additional coverage, although you might need to provide health information or undergo an exam.