No Exam Life Insurance: Simplified Issue vs Guaranteed Issue

Jeff Root Jeff Root
Posted in Advice

Life insurance with no medical exam has gained a lot of popularity lately because it offers a convenient way to acquire life insurance coverage. No medical exam policies do exactly what the name says, and that’s let you acquire a life insurance policy without having to take the medical exam that is required with traditional policies. Many companies are jumping on board the no exam train, but with many companies comes many products, and with that comes much confusion. Overall no medical exam life insurance comes in two forms: simplified issue and guaranteed issue. Let’s discuss the difference here.

Simplified Issue

This is the more popular of the two because it’s the closest thing to getting traditional life insurance products without having to take the medical exam. It comes with its upsides and a few downsides, so let’s get into the details of what simplified issue is all about.

Fast Coverage

One of the best things about simplified issue no exam life insurance policy is that you can get coverage fast. In most cases you can get covered in a few hours to a few days. This is much faster than the traditional 6 to 8-week process. How fast you get approved will depend on the company you apply with and if there are any question marks on your records. Most companies can approve you within 48 hours while some can take up to 30 days.

Underwriting

Many think that because there is no exam there is no underwriting. However, with simplified issue there is still a look into your records. The life insurance company will look into your electronic medical records, driving history, and background history. If there isn’t anything out of the ordinary you will get approved. Simplified issue is for the low risk client. If you’re healthy overall, it may be a good option for you.

Coverage Amount

With a traditional life insurance policy, you can get any amount of coverage that is reasonable for your income and expenses. However, with simplified issue no exam life insurance companies, it is not the case. Because the life insurance company is taking on a bigger risk by not administering the exam, they coverage amounts are capped. The cap will depend on the company. Most companies cap between $250,000 to $500,000. Some companies can offer up to $1,000,000.

Who It’s Good For

Simplified issue coverage is great for any who is looking for coverage fast and without the hassle of a medical exam. Whether you need court ordered coverage, a policy to secure a loan, or just don’t like the needles, simplified issue is a good option.

Guaranteed Issue

Guaranteed issue is usually what people think about when they think of life insurance with no medical exam. This is a life insurance policy that doesn’t ask much for approval, but comes with its fair share of limits. Let’s break it down.

Guaranteed Coverage

The biggest upside to a guaranteed issue policy is that is truly a no questions asked life insurance policy. That means no exam, no underwriting and no health questions. All you have to do to get approved is a short application with your basic information and you are approved upon submission.

Waiting Period

Don’t get to excited yet, even though there are no questions asked, there is a little caveat when it comes to payout. Guaranteed issue life insurance policies come with a waiting period. The writing period is two years long which means that if you die within the first two years of the policy, your beneficiaries will only receive the premiums that you paid in. If you die after the two year waiting period, your beneficiaries will receive the entire death benefit amount.

Coverage Amount

For guaranteed issue life insurance policies the risk is huge for the life insurance companies. Because of that there is the waiting period, and also very limited coverage amounts. Most guaranteed issue policies cap out at a max of $25,000 with some companies capping it at $10,000. If you need more coverage you would have to tack policies from different life insurance companies.

Who It’s Good For

Guaranteed issue policies are good for those looking for a final expense policy that have been declined by every other company out there. If you have a serious illness and were unable to secure coverage, then a guaranteed issue policy is a good option to have. However, make sure that you actually can’t secure coverage. Often times a company can turn you down while another will approve you. This is why it’s important to work with an independent agent who can shop around and is familiar with high risk.

The Differences

The one thing they have in common is that they both don’t require a medical exam. Outside of that, they are different in every category.

Coverage caps – simplified issue has a much higher coverage cap at $500,000 to up to $1,000,000. Guaranteed issue caps out at $25,000.

Application and Underwriting – Simplified issue will ask health questions and do a full underwriting outside of the medical exam. So you have to be fairly healthy to qualify. Guaranteed issue is the exact opposite, no health questions, no underwriting, guaranteed approval.

The one other thing they have in common is that they both cost a more than a traditional life insurance policy of equal coverage amount.

Which One is for Me

As far as who should apply for which is fairly simple. If you are in good health and are just trying to avoid the hassle of the exam, then simplified issue is for you. However, if you are all out of options and need a final expense policy in place, then a guaranteed issue policy is your only choice outside of accidental coverage. Discuss this with an independent life insurance agent to weigh all your options with a professional.

Leave A Reply