Simplified whole life insurance

Life insurance that’s more lenient, with rates you can afford

Colin Lalley 1600Nupur Gambhir

Colin Lalley & Nupur Gambhir

Published March 18, 2020

What Is Simplified Whole Life Insurance?

Life insurance for seniors and those with health problems can be tricky. If you’re older and you’ve procrastinated on buying life insurance, you might find it hard to qualify for a traditional term or whole life insurance policy. Or if you’re as young as 45-50 but you have some health issues, you might have the same problem. Yet you may still want to protect your family from any outstanding debts and make sure you’ll have enough money left over for end-of-life expenses like funeral or burial costs.

If this sounds like you, simplified whole life insurance (also called simplified issue life insurance) might be the solution. Simplified life insurance belongs to a category of gloomily titled life insurance called final expense insurance. The two types of final expense insurance are simplified whole and guaranteed whole life insurance. Both involve no medical exam, and can be the best life insurance for seniors.

What’s the difference?
Simplified whole life insurance:

  • For seniors or people who can’t qualify for a more traditional life insurance policy, but who are only at moderate health risk. Detailed medical questionnaire is required.

Guaranteed life insurance:

  • For those who can’t qualify for simplified whole life. No medical questions are asked and almost no one is turned down.
    → For our full page on guaranteed life insurance, go here

If you can qualify for a simplified whole life policy, you’ll be able to secure a larger coverage amount (up to about $50,000) for a lower monthly premium than you would with guaranteed life insurance—so it’s well worth it to fill out that medical questionnaire.

How Simplified Whole Life Insurance Works

  • No medical exam is required for a simplified whole life policy, but a detailed medical questionnaire is.
  • If approved, you’ll be able to secure up to about $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 into the policy.

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

Average Cost

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 moderate risk people. If you’re on the older side and can’t qualify for a traditional life insurance policy, but you’re relatively healthy, simplified whole life may be your best bet.

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

Here are the simplified life insurance offerings from the best life insurance companies:

LIFE INSURANCE COMPANYAGES OFFEREDHEALTH CLASSIFICATIONCOVERAGE OFFERED
Mutual of Omaha45-85Standard$2,000 - $40,000 (in WA, $5,000 - $40,000)
45-80Graded$2,000 - $20,000 (in WA, $5,000 - $20,000)
AIG50-85Graded$5,000 - $25,000

Two out of the three policies only offer a “graded” classification, 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.

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 this coronavirus, consider opting in for one of the following:

How do you buy simplified issue life insurance?

Most life insurers offer a simplified issue option in addition to their traditional life insurance policies: if you take a look at major insurers like Amica, MetLife, USAA, Liberty Mutual, or Wells Fargo, you’ll see this product offered.

In some cases you’ll be able to go through the entire process online. The health questionnaire can be filled out at your convenience, and because you don’t need to set up a paramedical exam, not all insurers will require you to speak to an underwriter.

What's good about simplified issue life insurance

1. The most obvious benefit of a simplified issue plan is that you get to skip the paramedical exam. It’ll 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.

2. 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.

3. If you’re dead set on not taking a paramedical exam and your only other 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?

1. There are some wrinkles to the simplicity that a simplified issue life insurance plan provides. The main catch is that they’re more expensive 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 at 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.

2. The coverage you get is also more limited with a simplified issue plan. Again, the insurer knows relatively little about you, and they don’t want to cover you with a million dollar policy. Some insurers offer as high as $400,000 coverage, but most top out closer to $100,000.

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

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Riders

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

In the event that 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.

Other Types of Permanent Life Insurance

Consider Term Life Insurance

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.

Is simplified issue life insurance worth it?

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

If you’re looking to get coverage quickly, simplified issue insurance is your best bet. Since much of the regular approval process is taken up with scheduling your paramedical exam, waiting for results, potentially needing more information from your doctor, and having that all reviewed by the insurer, you can save a lot of time by cutting out the exam. You can usually get coverage within a few days with a simplified issue plan.

There’s also the issue of simply not wanting to take the paramedical exam. Despite it being a relatively basic checkup, some people find the process invasive, especially if the insurer requires a more detailed look at your health history. It could also be the case that you don’t have time to wait around for the exam to be scheduled.

Overall, though, if you don’t mind the paramedical exam, a standard insurance plan is your best bet. It will provide more accurate coverage and will almost always be cheaper. Plus, you’re basically getting a "free" physical, and it’s always nice to check up on your health. If you have the choice, you should probably take a pass on simplified insurance to get the most out of your life insurance. But if taking a paramedical exam is out of the question, it’s good to know there’s an option that still offers you some level of protection.

Not sure what kind of life insurance you need? Our calculator will help you decide in minutes.

About the authors

Insurance Expert

Colin Lalley

Insurance Expert

Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness. Colin has a degree in English from the University of North Carolina at Chapel Hill.

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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