What Is Simplified Issue Life Insurance?

A simplified issue plan is life insurance you can obtain quickly by completing a short health questionnaire instead of undergoing a medical exam.

The death benefit payout of a simplified issue policy can range from $5,000 to about $100,000. Premiums are typically higher than premiums for a traditional term life or whole life policy.

Simplified issue plans differ from guaranteed issue life insurance, which promises coverage without a medical exam or health questions.

Simplified issue life insurance may be a good option if you can’t qualify for a traditional policy but aren’t in poor enough health to settle for guaranteed issue life insurance.

Guaranteed issue and simplified issue policies are sometimes referred to as final-expense insurance because the payouts are small and may cover little more than funeral and burial costs.

Bypassing a medical exam means life insurance companies can’t fully evaluate the risk of insuring you.

You pay higher premiums for simplified issue life insurance because insurers are trying to hedge against risk.

To obtain coverage, you must answer some health questions. Insurers use data modeling to determine whether to issue you a policy.

If you have certain serious medical conditions, your application can be denied.

Your application gives the insurance company the right to run your name through medical databases and view other records to verify your information.

Failing to answer questions truthfully is considered insurance fraud in most states.

Some simplified life insurance requires you to hold the policy for two years before it will pay the full death benefit.

If you die before this waiting period ends, your beneficiaries will be refunded the money you’ve already paid in premiums.

Simplified issue life insurance may be a good fit if your age or health makes it difficult to qualify for other policies.

It may also be a solution if you need coverage quickly.

According to Fidelity, most people who apply for a simplified issue policy can expect to have insurance as soon as the application is accepted. This gives you coverage in days — not weeks or months.

Simplified issue life insurance offers convenience with a catch. You avoid taking a medical exam, but, in return, you pay more money for less coverage.

Most experts suggest exploring all your options first. You might be able to get a better deal from a different insurer or through a group plan offered by your employer.

Make sure to consult with a licensed insurance broker who can determine whether a simplified issue life policy is right for you.