Life Insurance

Simplified vs Guaranteed Issue Life Insurance

Dock David Treece · Sep 29, 2021
It's easy to get life insurance coverage completely online.

Simplified issue is a type of life insurance that is issued to eligible applicants without requiring them to undergo a medical exam, blood tests, or other assessments. Applicants just need to answer a few health questions. Guaranteed issue life is a type of life insurance that has no qualification requirements — anybody aged 66 to 85 can purchase coverage (albeit in smaller amounts) quickly and easily.

Not many life insurance companies offer coverage without a medical exam, but those that do typically offer coverage up to $500,000 or $1 million. Because anyone — even those with serious medical ailments — can qualify for guaranteed issue life, however, coverage is usually only available up to $20,000 or $25,000. In addition, death benefits for guaranteed issue policies are typically reduced for the first several years to just the premiums paid, potentially plus some amount of interest.

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How simplified issue underwriting works

The process for getting simplified issue life insurance is just that — simplified. All you need to do is answer some questions about yourself and your medical history. An underwriter then verifies that information and uses it to evaluate your risk level, qualify you, and set your premiums for the amount of coverage you want.

Simplified issue is a preferred way that many people use to buy life insurance because it’s convenient. This type of insurance can be purchased online or over the phone with no medical exam, no blood test, or other headaches — just a few health questions.

Of course, not everyone qualifies for simplified issue life insurance. Something may be found in their medical records, or information can’t be verified, that may keep them from completing purchase of their policy online. However, many providers (including Ethos) make an effort to provide policies for as many people as possible using this process. And, they’re trying all the time to make the process better and to qualify more applicants without requiring them to undergo medical exams or other inconvenient tests.

Nevertheless, there will always be limits on who can qualify for coverage using this process, and some people will always have trouble purchasing coverage this way, due to prior medical conditions or other issues in underwriting.

Who should consider a simplified issue life policy

  • Young, healthy people who are too busy to deal with medical exams and blood work
  • Technology-savvy people who don’t mind making big purchases online
  • People with no serious medical conditions or other ailments
  • People who don’t have a primary care physician
  • People who live outside major cities, where medical exams can be even more of an inconvenience
  • People who want to bind coverage quickly online or over the phone

How guaranteed issue life insurance works

Unlike simplified issue, guaranteed issue is a type of life insurance that everyone qualifies for. With guaranteed issue, there’s no medical exam for applicants; in many cases, there’s not even a medical questionnaire. Instead, every eligible applicant can get covered, regardless of health conditions.

Because everyone qualifies for guaranteed issue life insurance, this coverage is usually sold for much smaller amounts than other types of life insurance. Guaranteed life insurance is not designed to help policyholders transfer wealth to the next generation. Instead, it’s designed to help cover things like final expenses or to help beneficiaries pay off some debt to settle an estate.

Typical uses for a guaranteed issue policy

  • Covering the cost of a funeral
  • Paying off any outstanding debts
  • Legal fees to settle an estate
  • Resolving the mortgage on family home
  • Educational expenses for a loved one

To learn more about whether simplified or guaranteed issue life insurance may be right for you, simply start an application at your convenience. Our proprietary underwriting process will automatically tell you which type of policy you qualify for and how much coverage you can get.

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