Life insurance has had a major role in restoring peace of mind for families during the pandemic. But despite rising demand, the health scare has also made it harder to get coverage.
Medical exams are more difficult to schedule thanks to social distancing, and many people are hesitant to get an exam at all.
As a result, there has been an increased interest in no-exam policies. One of the most popular forms is simplified life insurance, also called simplified issue life insurance. If you worry about your approval odds because of your health, or if you want to avoid an exam, simplified life insurance is a convenient path to coverage.
Simplified Issue life insurance involves a basic underwriting process, with fewer steps for the applicant and faster decisions. Simplified issue policies are a type of no medical insurance, where you don't need to take a medical exam as part of your application.
You don't need a medical exam, but you do have to fill out a questionnaire. Fortunately, simplified life questionnaires don't usually have the 60+ questions of a standard application.
Instead, a questionnaire will have about half the normal amount of questions. It will look for information about your health, with questions asking about the following:
The standard approach to underwriting can take 4-8 weeks before an insurer makes a decision. Simplified life insurance is much faster, and they may approve or decline an application in a matter of minutes.
That isn't the case for all applications. Insurance carriers may need to take a deeper look at your history and follow up with more questions.
Insurers will still verify information on your application through third-party databases. They look at certain areas like medical and prescription history, credit reports, and arrest records.
Simplified life insurance is perfect for people over age 45 who have health issues that may keep them from getting a traditional plan. Younger individuals may still be able to qualify, but some companies set age minimums for these types of life insurance options.
You will likely still get denied coverage if you have a severe or terminal illness. It's possible to miss out if your arrest or driving history deems you to be too high-risk as well. But if a health problem is keeping you from getting affordable insurance, the lack of an exam can help you get the best possible rates.
Although simplified issue life insurance plans are some of the best options for people in a grey area in terms of health, they aren't limited to people with health problems.
As soon as your application is approved, your life insurance coverage begins. You may want simplified life insurance if you have an urgent need for coverage, and you can't wait weeks or months for a decision. Or, if you just don't like the idea of a medical exam, it makes getting life insurance as easy as filling out a form online.
Without a medical exam, life insurance providers assume that you are a greater risk than someone who does take the exam. That risk is reflected in the cost, which can be two to four times the cost of a traditional plan.
Premiums may go up, but coverage amounts go down with simplified issue plans. Many insurers cap their death benefits at $100,000. With limited personal information and no medical exam, insurers may offer different payout amounts based on your age.
Standard life insurance has a two-year contestability period where the insurance company looks over your application. If you die in the first two years, there is a chance your life insurance won't pay out.
Your life insurance provider checks for inaccuracies on your application during the first two years. If they find missing information or errors, it could cause a claim denial if you die during that time.
Some simplified policies have a graded death benefit during the contestability period. Unlike standard policies, if you die during that time, the insurer won't pay the full benefit regardless of whether you had mistakes on your application or not. Instead, your beneficiaries will get a refund for the premiums paid to that point.
Simplified life insurance provides a sort of safety net to keep you from settling for guaranteed life insurance.
Guaranteed life is like simplified life insurance because it doesn't have a medical exam. But it goes a step further by getting rid of the questionnaire part as well.
People with extreme illnesses often opt for guaranteed life insurance for final expenses. Compared to simplified coverage, the highest available death benefit is often much lower and the premiums much higher.
Simplified issue life insurance often gets confused with accelerated underwriting. It's another kind of no medical life insurance that can make sense for young or healthy individuals. Compared to simplified issue coverage, accelerated underwriting can offer lower rates and higher death benefits.
Accelerated underwriting may take a day or a few days to get a decision, but the process is still limited to a questionnaire. The insurance provider uses big data to assess your risk based on your medical history, records, and lifestyle. It's more involved than simplified life insurance, but it's almost as quick and convenient.
A simplified whole insurance policy covers you for your whole life as long as you pay your premiums. Beyond that, there aren't many similarities to a standard whole life insurance plan.
An important selling point of whole life policies is the cash value component, where a part of your payments goes into an interest-bearing account. You can take that money out for loans or even to pay your premiums. It can take several years or even decades to build up a substantial cash value, but it's a sound savings vehicle if your other investments are maxed out.
Unfortunately, simplified whole life policies are just that — simplified. Most plans carry no cash value. And although some providers offer riders for more benefits, the options are usually not as comprehensive as a normal whole life plan.
Opting for simplified term life insurance is similar to standard term life insurance. Rather than having a plan for your whole life, term life covers you for a set time.
Simplified term coverage options are available in 10, 20, 30, or even 40-year spans. You pay your premiums for that amount of time, and when the term is up, your coverage ends. At that point, you can apply for a new insurance policy or roll your plan over into a whole life plan.
For younger applicants, a traditional term life option is often a better idea. Premiums are locked in for the entire term, so getting a lower rate will save you a ton of money over time.
Even if you aren't in excellent shape, it may be worth trying for a traditional plan if you feel comfortable going in for an exam. You may qualify for lower rates. Plus, there's little risk because, in Canada, the insurance provider pays for the exam.
Simplified life insurance is offered through most life insurance carriers. We've highlighted some of what we believe offer the best of the best in terms of coverage. Have further questions about any of the companies below? We are here to answer any additional questions you may have.
Canada Protection Plan is a Canadian-owned company that specializes in simplified and no medical life insurance. Since 1992, CPP has been offering a growing suite of permanent and term no medical options, with plans fit for most individuals.
Canadian citizens with health problems or a dangerous job or lifestyle are encouraged to apply for a CPP plan. But they have practical plans for applicants in good health as well. If you want low premiums and large death benefits without the medical exam, they have a few plans to choose from.
Guaranteed life and Deferred options are designed for hard-to-insure individuals. Meanwhile, individuals who don't have noteworthy health issues can get up to $1,000,000 in instant coverage at competitive rates through the Preferred and Preferred Elite Program.
The program guarantees acceptance regardless of your health. Plans are available for anyone up to 80 years old, with coverage amounts ranging from $10,000-$500,000.
You can get either permanent or a term plan. Unlike CPP, which only offers T100 programs for permanent life applicants, iA offers V100 insurance options. These plans have the added benefit of building cash value.
The Access Life plan consists of three stages — Deferred, Deferred Plus, and Immediate Plus. Depending on your health status, you'll fall into one of these categories, which define your premiums, coverage limits, and policy rules. If you don't qualify for any of those three plans, you can still get Guaranteed Access, a final expenses policy.
Assumption Life has earned excellent reviews for its simplified issue plans. Industry leaders and customers like Assumption's efficient sales process.
Given the success of their program, Assumption recently revamped their simplified issue products. With the new system, Assumption makes the process faster and more customizable for applicants between 18-85 years old. Coverage ranges from $1,000 to $250,000.
Even though the limits aren't as high as some other options, the main feature is the ease of applying. Assumption reworked applications to be more clear and basic, with some only involving three questions!
Assumption offers four coverage levels of term and permanent options — Silver, Golden, Golden Elite, and Platinum. All four levels are fit for individuals with prior severe illnesses, like cancer or stroke. The length of time since you were treated is the basis for determining which plans you qualify for.
Humania provides one of the simplest no medical options. The Insurance Without Medical Exam plan is ideal for individuals with poor health who have been previously denied coverage. The application, which is only six questions long, takes under 15 minutes to fill out.
The process is simple — instant coverage, simple terms, and easy to buy. The one downside is that the contract options are just as simple.
You only have a 10-year term, 20-year term, and a T100 option available. They cover anyone between 18-70 years old, but you have a guaranteed renewal for term plans until you reach 80 years old.
Humania offers a generous payout despite the light application process. You can get policies with death benefits of up to $300,000. And even if you are coming off of a cancer diagnosis, heart attack, or stroke, you can get up to $100,000 in coverage.
The standard life insurance options are slim, but simplified coverage doesn't stop there. Three more levels of insurance cover critical illnesses and disability for 10 or 20-year terms.
With disability, you can receive up to $2,500 monthly to cover lost income or debts. To make it even easier, you can apply for all five insurance packages at once.
Life insurance should be a priority for everyone, especially those whose health conditions make them vulnerable. At the same time, it's understandable to be hesitant if you have been denied before.
That's why knowing that an option like simplified life insurance is so critical. It gives anyone confidence that no matter their unique situation, there are providers that can find a truly beneficial coverage option. For more information about the best simplified life insurance rates available, talk to our experts at Insurdinary.