Simplified Issue Life Insurance

As the name implies, the application process for a simplified life insurance policy is easier. Everything is streamlined to make it quicker. While the traditional life insurance application process takes 4 to 8 weeks, the simplified issue process can get the time down to mere seconds.
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What Is It?

Basically, simplified life insurance policies don’t require a medical exam as part of the application process. The key word is “require.” Some companies that offer simplified issue policies may request that you take a medical exam, depending on how complex your responses are on the application.

Features of a simplified issue life insurance application include:

  • Digital/online process
  • Shorter applications
  • No medical exam required in many cases
  • Lower coverage amounts
  • Use of an algorithm to decide whether to approve, decline, or send the application to an underwriter for review

The Positives:

No paramedical exam

The most time-consuming and invasive part of the life insurance application process is the medical exam. Nobody likes taking a medical exam, and this step often prevents people from buying a life insurance policy. With a simplified issue policy, there’s a good chance that you’ll get to bypass this part

Fast

On average, the time it takes to get a policy approved, issued, and active is 2 weeks, though many policies are issued right away. It just depends on the company and policy you choose. Some companies use algorithms to underwrite applications. In that case, the second you finish your application online, you get an offer.

You can apply over the phone

Typically, if you’re offered a simplified issue policy, you’ll need to have a short phone call with an agent or a representative from the insurance company to complete the application process. This can take anywhere from 10 to 45 minutes.

No need to meet with an agent

At the heart of it, life insurance agents are salespeople, and some will try to pitch other products while they’re working with you to get a life insurance policy. , If you just want life insurance coverage, then simplified issue products are the easiest way to ditch the sales pitch.

You can complete the application online

If you’re computer savvy and don’t want to talk with an agent at all, you can go online and get a policy. Several companies now offer a totally online process.

The Negatives:

Lower coverage amounts

While simplified issue insurance can be a great option for customers, it involves a higher risk for insurance companies because there’s no medical exam. As a result, coverage amounts are limited. Available coverage for traditional simplified issue whole life policies ranges from $2,500 to $400,000. Few companies offer simplified issue whole life policies with more than $50,000 in coverage.

Higher cost

When compared with traditional policies, where you take a medical exam, you can expect to pay about 5% to 25% more for a simplified issue policy. This is because of the increased risk to the insurance company when they don’t have you take a medical exam. The price differences are narrowing, especially with level term life insurance, and there will likely be even less of a price difference in the future. The price difference varies greatly among insurance companies, so it’s a good idea to shop around.

Many term life policies don’t have conversion options

Most term life policies that require a medical exam offer a conversion option as a standard benefit. What that means is you can convert all or part of the policy to a permanent whole life policy later — without any additional medical requirements. While insurance companies vary on this, the trend is not to offer a conversion option on simplified issue term life policies. That means once the term is over, you no longer have life insurance.

Many term life policies don’t have conversion options

Being declined for a life insurance policy is not good. The decline is recorded in the MIB, which is a database that insurance companies share. It’s like a blemish on your permanent record. Furthermore, many companies that offer simplified issue life insurance products won’t approve people who have been declined elsewhere. So, getting declined by one insurance company can make you ineligible for products at other companies.

There Are 2 Main Types:

1. Whole life

  • Coverage up to $400,000
  • Eligibility starts at birth
  • Standard length applications (10 – 40 pages)
  • Medical history may be required
  • Medical exam may be required
  • Phone interview may be required
  • Medical records may be requested
  • Some policies have immediate 1st-day full coverage
  • Some policies have waiting periods for non-accidental deaths
  • Policies with no health questions may be available

2. Term

  • Coverage up to $1 million
  • 10, 15, 20, 25, and 30-year terms
  • Eligibility starts at age 16
  • The average time to approval is 14 days
  • Some policies can be issued instantly online
  • Full medical history required
  • Medical exam may be required
  • Phone interview may be required
  • Medical records may be requested

How do insurance companies qualify someone without a medical exam?

With the exception of guaranteed issue, accidental, and group life insurance, insurance companies run public reports on applications — with the applicant’s HIPAA authorization, of course. These reports include the following:

  • MIB report
  • Rx/pharmacy report
  • Motor vehicle report
  • LexisNexis risk assessment score (not all companies use this)

Using the above reports along with the application responses, most companies provide one of the following instant decisions:

  • Approved as applied
  • Approved better than applied
  • Approved other than applied
  • Referred to an underwriter for manual review
  • Declined

Which company you are applying to determines how simplified the application is. Some companies bypass human underwriters completely

What is the main difference between a simplified issue life insurance policy and a traditional life insurance policy?

Simplified issue life insurance policies do not require a medical exam like standard fully underwritten life insurance policies do. This makes the process easier and faster.

Why don’t they just call simplified issue products “no medical exam” life insurance?

Products are called “simplified issue” rather than “no medical exam” for legal and compliance reasons. In many cases, simplified issue products may require a medical exam before a policy can be issued. So, to avoid potential problems when using the name “no medical exam,” asterisks and disclaimers are required wherever it is mentioned. It’s just easier to call a product “simplified issue” instead of“no medical exam.”

Is there a difference between simplified issue and “no medical exam” life insurance?

No. Simplified issue and “no medical exam” life insurance are essentially the same.

Why do companies offer simplified issue products?

People want simplified issue life insurance products and they want to buy insurance online. A study by Limra indicates that the “intention to buy using online methods is increasing every year,” with 29 percent of people in the study saying they would like to buy their insurance this way. And, people are more likely to buy insurance when there is no medical exam involved. According to the study, “50 percent of respondents indicated they are more likely to buy life insurance with a simplified underwriting process compared with traditional underwriting.”

What role does artificial intelligence (AI) play in simplified issue life insurance?

Many insurance companies hope to eventually be able to accurately assess risk without having an actual person involved in the process. To accomplish this goal, insurance companies are developing algorithms to evaluate the digital data that applicants provide. Just about every simplified issue product uses an algorithm to make an instant decision. The possible decisions are approved, approved worse than applied, approved as applied, approved better than applied, ineligible, declined, and referred to an underwriter for a final decision. Expect to see greater use of algorithms and AI as the technology matures.

What are other names for simplified issue products?

Simplified issue products are also called rapid issue, express issue, accelerated underwriting, no exam, no medical exam, and instant issue life insurance. As noted above, though, calling a product “no medical exam” life insurance can raise legal and compliance concerns.

Other Names for Simplified Issue Life Insurance

NameMedical examPhone interviewDoctor’s records
Simplified issueMay require a medical examMay require a phone call with an underwriter or company representativeDoctor’s records may be requested
Instant decisionNo medical examNo phone callsNo doctor’s records are requested
Rapid issueNo medical examMay require a phone call with an underwriter or company representativeNo doctor’s records are requested
Express issueNo medical examMay require a phone call with an underwriter or company representativeNo doctor’s records are requested
No medical examMay require a medical examMay require a phone call with an underwriter or company representativeDoctor’s records may be requested
Accelerated underwritingA medical exam will likely be requiredMay require a phone call with an underwriter or company representativeDoctor’s records may be requested

Simplified issue

Process:
An approval, decline, or sent to an underwriter decision is sometimes provided after you complete the application.
Note:
There are multiple health classes, so pricing is good. The majority of applications are sent to an underwriter.

  • May require a medical exam
  • May require a phone call with an underwriter or company representative
  • Doctor’s records may be requested

Instant decision

Process:
An approved as applied, approved better than applied, approved other than applied, referred to an underwriter for further review, or a declined decision is provided immediately after you complete the application.
Note:
There are multiple health classes and prices are good. It is easy to get declined for technical reasons.

  • No medical exam
  • No phone calls
  • No doctor’s records are requested

More on Instant issue life insurance

Rapid issue

Process:
An approval or decline decision is provided immediately after you complete the application.
Note:
Generally, there is just one health class, which means that everybody gets the same rates. Often on the expensive side.

  • No medical exam
  • May require a phone call with an underwriter or company representative
  • No doctor’s records are requested

Express issue

Process:
An approval or decline decision is provided immediately after you complete the application.
Note:
Generally, there is just one health class, which means that everybody gets the same rates. Often on the expensive side.

  • No medical exam
  • May require a phone call with an underwriter or company representative
  • No doctor’s records are requested

No medical exam

Process:
An approval, decline, or sent to an underwriter decision is sometimes provided after you complete the application.
Note:
This is a broad term, so the underwriting process depends on the company you choose.

  • May require a medical exam
  • May require a phone call with an underwriter or company representative
  • Doctor’s records may be requested

More on no medical exam life insurance

Accelerated underwriting

Process:
An approval, decline, or sent to an underwriter decision is sometimes provided after you complete the application. This type of product is only available for coverage amounts of $1 million or less.
Note:
These are traditional products that usually require a medical exam. In rare cases when the applicant is in good health and has a clean medical history, the medical exam is waived. These products have the best pricing for healthy people, but there is a high chance that an exam will be required.

  • A medical exam will likely be required
  • May require a phone call with an underwriter or company representative
  • Doctor’s records may be requested

Other possible names

The products listed below are sometimes referred to as simplified issue, even though they never require a medical exam. Technically, these are simplified issue products.

Conclusion

Insurance companies have made many advances in how they evaluate insurance applications, and more are coming. When companies sell directly to customers, there are no commissions to agents. That means more profit for the insurance companies and an easier process for customers. It’s a win-win situation for both parties.
Simplified issue policies are a great option for most people. Just be prepared to pay slightly more than you would for a product with the same amount of coverage that involves traditional underwriting.

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About the author
Brian Greenberg author
Brian Greenberg
Founder and CEO
Brian is licensed to sell life, health, annuities, and property and casualty insurance in all 50 U.S. states. He is the author of The Salesman Who Doesn't Sell and is a member of the Million Dollar Round Table, an organization that consists of the top 1% of financial advisors worldwide.