Buying term life insurance can be a cumbersome and invasive process. Clients often ask us to look at
By far the easiest way to get approved for life insurance is to go with a Simplified Issue Term Life Insurance. This type of life insurance skips the exam and the prolonged underwriting. Though it does cost more for healthy people, a person with mild to chronic conditions should definitely consider these types of policies.
Simplified Term: A Straight Forward Process
The way most of these products work is by asking you simple yes or no questions. If you answer no to all of these questions you should qualify unless they find some red flags in your records that do not match your answers to the questions.
You typically get an approval over the phone or within 24 hours. It’s important to differentiate between this and “No Exam” or “accelerated underwriting.
While some products may go deeper than simple yes or no questions, the ones that doe are just easier to qualify for. However, if you have one no, it’s a simple rejection. Even if that “no” doesn’t mean you’re unhealthy.
Simplified issue means quick instant decision and easy answer. If your answer is more nuanced, you should look for a different product. Chances are the product that does ask for clarification will also be more affordable.
The Easiest Policy to Qualify for goes up to $300,000
No simplified issue products offer death benefit higher than $500,000. However by far the easiest Term Life Insurance to qualify for only goes up to $200,000.
This product is offered by UFF and has 10 simple yes or no questions. Here are the types of people who would not qualify.
- People suffering from Alzheimer’s & Dementia
- People Who have been treated for Cancer in the past 5 years
- Severe Heart Conditions (heart attack, stroke etc..) in the past 5 years
- Sickle Cell or Major Blood disorders
- COPD or Major Respiratory Disorders
- HIV/AIDS patients
- People on Disability
- Diabetics on Insulin
- People who have been recently declined for life insurance
- People participating in hazardous activities (aviation, skydiving etc..)
If you fall in any of the last 4 bold bullet points, you will still be able to qualify for their $50,000 product.
The lower the death benefit, the easier the approval process.
Lower death benefits products reduce the risk for insurance carriers. When Life Insurance companies make it easy to qualify for their products, they’re taking a risk on some people with poor health being able to obtain insurance when they would otherwise not be.
By minimizing the death benefit, they can minimize their exposure to an insurmountable amount of unexpected death claims. If they start to see that the numbers does not work in their favor, they may just tweak the policy by making it tougher to qualify for. The low death benefit buys them time to properly evaluate the numbers and their risk exposure.
Though It’s Easier, It’s Not Necessarily Cheaper
Simplified issue products are attractive because they’re easier to qualify for. However this added benefit comes at a cost. Because the insurance company is taking a risk, they mitigate this by charging more.
Here are some examples for Simplified Issue Term vs No Exam & Traditional Term Life Insurance. These examples are all males seeking for 20 year $200,000 term life insurance.
|Age||Simplified Issue||No Exam||Traditional Term|
As you can see, the simplified issue product cost significantly more than other no exam policies. The difference can be double in some cases. Because of the significance difference in price, this is not ideal for healthy individuals who know they will have no problem qualifying for a standard life insurance policy.
Keep in mind that this is compared to a Standard Rating. Traditional term life insurance products also have better pricing for Super Healthy individuals and the ones with above average health.
Simplified Issue is Still A Great Option for Those with Chronic Conditions
This type of product is ideal for someone with chronic conditions. When applying for term life insurance with a chronic conditions, there are many hoops you’d have to jump through.
Let’s say you have crohn’s disease as an example. While you can still qualify for traditional term, it’s a lot harder and cumbersome. Here is what he would need to do to qualify
- You would need to take an exam to make sure his health is in check.
- You would also need to provide a history of his colonoscopy.
- The insurance company would ask for your medical records which could take 4-8 weeks and sometimes longer.
- You would need to show a good track record of following up with his PCP and other specialists
If one of these come back with an unfavorable result, you could get denied for life insurance. By going this route, you are taking a risk and it could cost you as some Simplified issue products don’t accept people who have been previously denied life insurance.
If you would instead apply for the simplified issue product that avoids questions related to your disease. There is a high likelihood that you would qualify as long as you don’t have any other major issues affecting your eligibility.
Using Simplified Issue Before Switching to a Standard Term Life Policy
If you’re not sure how the insurance company will view your condition, it’s not a bad idea to purchase a Simplified Issue policy at first. You can always apply for a fully underwritten term policy later. This gives you a chance to qualify for life insurance just in case you would be denied otherwise.
This is the exact strategy I suggest to clients who are not quite sure about their health. This also works for folks who do not like to follow up with their doctors in fear that the news might be worse than it already is.
Here is a list of Conditions that Could Benefit Greatly From A Simplified Issue Policy
If you fall within any of these conditions below, it’s probably best to consider Simplified issue first. Once you have a policy in hand, we can try to find you something cheaper by going the traditional route.
- Cancer in remission over 5 years
- Inflammatory Bowel Diseases: Ulcerative Colitis, Crohn’s Disease.
- Rheumatoid Arthritis
- People with Down Syndrome
- Morbid Obesity
- Diabetes with no insulin
- People suffering from depression (not bi polar)
- History of Hepatitis with Liver Disease
Final Expense as An Alternative for More Serious Conditions
Final Expense is simply a simplified issue life insurance product aimed at people age 40 and older with moderate to severe health conditions. If you can’t qualify for the simplified issue term, you may qualify for final expense, as long as you’re old enough
The downside to final expense is twofold: The death benefits are low ($50,000 or lower) , and most products start at age 50 and older. There a few that start at 40 or 45 as well but your options would be limited.
The list of conditions accepted by Final Expense companies is a lot more comprehensive than simplified issue term.
- Diabetes with insulin and even some diabetic coma
- Heart Attack / Strokes
- Cancer in remission over 2 years
- Atrial Fibrillation
- ..and many more…
Keep in mind that some of these conditions and can improve and later on you could always apply for a cheaper product.
Not Sure Which Way To Go? Reach Out To Us
Feel free to fill out the form on our page. We’ll reach out to you so you can further explain your dilemma
We will advise you on whether or not you should go with a fully underwritten policy, a standard No Exam or a Simplified Issue product. Keep in mind that you would have to be honest with us so we can best help you.