Simplified issue life insurance

If you’re older or have certain health conditions, you might find it hard to qualify for a traditional term or whole life insurance policy.  But if you have dependents who rely on your income or outstanding debts, life insurance can provide vital financial protection for your family and cover end-of-life expenses like funeral or burial costs.

Simplified whole life insurance, also called simplified issue life insurance, might be the solution if you haven’t had luck finding a term or whole life policy. Simplified issue life insurance falls under the final expense insurance umbrella. The two types of final expense insurance are simplified whole life insurance and guaranteed whole life insurance. Both are a form of no-medical exam life insurance and can be the best life insurance option for seniors or people with certain pre-existing conditions.

Simplified issue life insurance is a last resort alternative form of insurance because the premiums are high and the coverage availability is low. We only recommend getting a simplified issue life insurance policy if you absolutely have to.

What is simplified whole life insurance?

Simplified whole life insurance is a type of whole life insurance, meaning it lasts your entire life. But unlike most whole life insurance policies, it offers more bare-bones coverage and is reserved for individuals 45 and older with health conditions that might make them ineligible from purchasing a traditional whole life insurance policy.

If you apply for simplified life insurance, you'll forgo the medical exam and instead answer a few questions about your health on an application and over the phone. The shorter process gets you almost immediate coverage, but because the health evaluation isn’t as thorough, insurers set a higher premium for a lower coverage amount.

Without a thorough evaluation of your medical history, an underwriter assumes an automatic standard level of risk when offering you coverage. But there are still disqualifying conditions for simplified issue policies, which can prevent you from getting coverage. In that case, a guaranteed issue whole life insurance policy may be your only option. If your age and health warrant a better health classification, and thus better premiums, final expense life insurance is probably not the policy type for you.

How simplified whole life insurance works

• A medical exam isn't required for a simplified whole life policy, but a detailed medical questionnaire is.

• If approved, according to Policygenius quoting data, you’ll be able to secure up to $50,000 of coverage which will be paid to your beneficiaries at the end of your life to settle any debts.

• You’ll pay monthly or annual premiums to keep the policy in force, and it will stay active until the end of your life as long as you keep paying the premiums.

• Some simplified life insurance requires you to hold the policy for at least two years before it will pay the death benefit. If you should pass before then, your beneficiaries will be refunded the amount you’ve paid in premiums.

Unlike traditional whole life insurance, most simplified whole life insurance policies don’t have a savings component called a cash value that builds over time. This is another way in which it’s “simpler” than buying a regular whole life policy. Rather than calculating savings and the interest you’re accruing with them, you’ll simply pay a monthly premium to secure the eventual fixed payout amount or death benefit to your family.

Qualifying for simplified issue life insurance

While simplified whole life insurance doesn’t involve a medical exam, you have to fall into a certain age requirement (between 45 to 85) and not have certain medical conditions to purchase the policy and your death benefit may be lower as it’s only intended to cover final expenses.

What disqualifies you from getting simplified issue life insurance?

If you answer yes to any of the following questions, you might not qualify for simplified issue whole life insurance:

• Are you currently bedridden, in a long-term care facility, or nursing home?

• Do you require a wheelchair, electric scooter, or oxygen equipment?

• Have you ever been diagnosed with or treated for Alzheimer’s Disease or Dementia, Congestive Heart Failure, diabetic coma, an organ or bone marrow transplant?

• Do you have a terminal medical condition?

• In the past 12 months, have you been diagnosed with heart disease or had heart surgery?

• Have you been advised to have a surgical operation or diagnostic testing that isn’t routine?

• In the past 2 years, have you been diagnosed with any form of cancer?

Keep in mind: even if you answer yes to the above, you’d still qualify for guaranteed issue whole life insurance and likely be able to get insured if you need it. Talk to a licensed agent or broker to find out what type of life insurance will work for you. 

Here are the simplified life insurance offerings from Policygenius' partner life insurance company, Mutual of Omaha, as of February 2021:

Simplified issue whole life insurance policy comparison

The first policy offers a “standard” or “level” death benefit, which means that they will only pay out the death benefit if you die after owning the policy for two years. If you’re purchasing life insurance as a security blanket due to the coronavirus outbreak, your loved ones won’t be financially protected if something happens to you within the two-year term.

Life insurance riders

Riders are bells and whistles you can add to a policy for extra protection in certain areas. They cost a little extra on top of the regular premium and might not always be worth it, but they do allow some level of customization to your policy. 

Like all life insurance policies, simplified issue life insurance can be customized to meet a policyholder’s needs with add-on features called riders. Riders add extra coverage and will increase the cost of monthly or annual premiums. Here are some popular riders:

• Accelerated Death Benefit Rider: Allows policyholders to use the death benefit payment early in the case of terminal illness to cover necessary medical costs.

• Long-Term Care Rider: If the policyholder requires long-term care that his or her health insurer won’t pay for, such as nursing home or at-home care, a long-term care rider will cover the cost.

• Disability Waiver of Premium: If a policyholder becomes unable to pay monthly premiums because of loss of income stemming from a disability, a disability waiver rider allows the premiums to be skipped without the policy being canceled until the policyholder recovers. This may be limited by age, so be sure to ask your insurer for details.

→ Check out our full guide on life insurance riders

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Average cost of simplified whole life insurance

Simplified whole life insurance gives you more coverage at a lower price point than other types of final expense insurance like guaranteed whole life, since it covers applicants who are considered moderately risky to insure. 

To get a sense of how much a $40,000 simplified whole life insurance policy might cost you, check out the graph below. All quotes are based on policies offered by Policygenius as of February 2021. Keep in mind that simplified whole life insurance policies often have age minimums to qualify.

Simplified issue life insurance price comparison

Methodology: Sample premiums are for 45-year-old male non-smokers with a Standard health rating based in Ohio; Life insurance rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 2/19/2021.

Pros and cons of simplified issue life insurance

What's good about simplified issue whole life insurance?

No paramedical exam

This will save you the time of having to get the results processed, and you won’t have to worry about scheduling the appointment. It can also work out for you if you think your current health will work against you in terms of premium costs.

Fast coverage

Because you’re getting rid of those pesky lab results, you can get coverage more quickly with a simplified issue plan. Typically you’ll be covered within days, as opposed to the weeks (or longer) with a standard insurance plan.

Cheaper than guaranteed-issue whole life

If you’re dead set on not taking a paramedical exam and your only alternative is a guaranteed plan – you remember, the plan that also doesn’t require a paramedical exam – the cheaper option is almost always going to be a simplified issue plan.

What's bad about simplified issue life insurance?

Costlier than a standard life insurance plan

With a standard plan, the insurer is doing their due diligence and getting a comprehensive look at your medical status and history. They have a pretty good idea of how risky you are to insure and can provide a more accurate premium quote. With the limited information they get from a standard issue plan, insurers err on the side of caution and charge a little more.

Limited coverage

Again, the insurer knows relatively little about you, and they don’t want to cover you with a million-dollar policy. According to Policygenius quoting data in 2021, the highest coverage amount you can get is $40,000.

Not as customizable

If you go with a simplified issue plan, you may find that your rider options are more limited than with other plans.

How is simplified whole life insurance different from guaranteed life insurance?

• Simplified whole life insurance: This is ideal for seniors or those who can’t qualify for a more traditional life insurance policy, but who are only at moderate health risk. A detailed medical questionnaire is required.

• Guaranteed life insurance: This is the right choice for those who can’t qualify for simplified whole life. No medical questions are asked and almost no one is turned down.

If you can qualify for a simplified whole life policy, you’ll be able to secure a larger coverage amount (up to about $40,000) for a lower monthly premium than you would with guaranteed life insurance—so it’s well worth it to fill out that medical questionnaire.

→ Learn more about guaranteed life insurance here

Simplified whole life insurance and coronavirus

If you’re trying to obtain life insurance without taking the medical exam during the COVID-19 outbreak, simplified whole life insurance might be available as one of your options, though this should only be as a last resort.

While it’s always better to have some life insurance coverage in place as opposed to none at all, you should only buy a simplified whole life policy if there are no other policy options available to you. If a no-medical exam life insurance policy or application expediency is of the essence during the pandemic, consider opting for one of the following:

• Temporary coverage

• No-medical exam life insurance

• Accelerated underwriting life insurance

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Is simplified issue life insurance right for you?

Simplified issue life insurance could be right for you…under the right circumstances.

If you’re looking to get coverage quickly, don’t want to take the paramedical exam, or otherwise can’t qualify for a more traditional policy, simplified issue insurance is your best bet.  But if you have the choice, you should probably take a pass on simplified insurance to get the most out of your life insurance. 

Who needs simplified issue life insurance?

If you have a pre-existing medical condition that isn’t listed above and have an urgent life insurance need, simplified issue life insurance ensures your loved ones have some financial protection. The death benefit can be used to cover mortgage payments or end-of-life expenses, like the cost of a funeral or cremation. Simplified issue life insurance policies, like all final expense life insurance policies, are a last resort — and they're best for people who can't get a more affordable policy or simply just need immediate coverage. You may need simplified issue life insurance if:

• You're between the ages of 45 and 85

• You have a condition, like type 1 diabetes, that makes traditional life insurance more expensive 

• You don't qualify for other types of life insurance

• You have an immediate need for life insurance coverage

If you're able to wait a few days or weeks to get life insurance coverage and qualify for a different type of policy, you'll pay less with traditional life insurance coverage. And if you're in good health, you can get cheaper coverage within the same timeline from an instant decision life insurance policy.

Consider term life insurance instead

Term life insurance is a type of life insurance meant for younger, healthy adults, usually with dependents. Term life offers coverage for a set period of time and then expires, and pays a death benefit to beneficiaries if the policyholder dies while the policy is in effect. Because the risk of insuring these individuals is lower, term life offers a much higher death benefit payment at a much more affordable monthly premium.