Simplified-issue term life insurance was developed with a very
straightforward principle: no medical exam or blood and urine tests and
an application with a handful of questions that are quick and simple to
answer.
How does it differ from Traditional Term Insurance?
Insurance companies need to learn a lot about you, particularly your life expectancy before you are approved to buy most types of term or whole life insurance plans. In addition to completing a fairly detailed application, most insurers will require a medical technician to visit your home or workplace and take blood and urine samples, measure your heartbeat and blood pressure, and perform the same type of tests you’d be given during a traditional annual physical.There is, however, a growing trend: generally known as instant-issue term life insurance that you can purchase and does not require a medical exam. Insurance companies rely on algorithms and various databases to evaluate your health, instead of a medical exam. You essentially fill out the application over the internet.
Presently, just a few life insurance companies provide this kind of policy, and it is directed at younger and healthier individuals. But if you meet the requirements, you can get insurance coverage comparable to traditional term policies without waiting and reviewing and signing all the paperwork.
How do They Underwrite my Application?
Simplified-issue term life insurance uses up-to-date statistics to forecast how long you’ll live dependent on your age and sex at the time of your application. The underwriters will also order a report from the Medical Information Bureau (MIB) and check your prescription drug history in a national database like IntelliScript. The underwriters may also request your motor vehicle record to get a look at a portion of your lifestyle.What’s the Best way to Purchase Simplified-Issue Term Life Insurance?
Major insurance providers, such as MetLife, TransAmerica, and Amica, offer simplified-issue term life insurance policies on the web or by telephone, and Prudential offers some life insurance policies at many banks. Large discount stores like Wal-Mart may also sell this type of coverage. Your best bet, however, is to contact an independent insurance agent who represents almost all of the highly-rated carriers and have him or her shop your insurance policy among all the carriers they represent.Not only will this save you time and aggravation, but you can rely on your experienced agent to provide you needed information and answer all your questions regarding your life insurance. Since the independent agents are paid by the insurance companies, you will be getting very good advice that will allow you to make an informed decision at no additional cost.
How much Coverage can I Buy and How Long will it Last?
Most simplified-issue term life policies can be purchased in face amounts ranging from $5,000 to $100,000 or more. Insurance companies prefer applicants to purchase insurance policies when they are young and then buy additional coverage as their income and assets increase.As opposed to whole life, or universal life insurance, term policies provide coverage only for an agreed-upon period, such as five, 10, 20 or even 30 years. Most companies, however, will offer several riders that can be used to broaden the coverage of the insurance policy.
Does it Cost More than Traditional Term Insurance?
Yes, simplified-issue term life insurance costs more than traditional term. Since the insurer is not able to get a clear picture of your health history or your family’s health history, the insurance company is accepting a higher risk and will, therefore, charge more premium. In cases where the applicant is still young and healthy, the additional cost is minimal. But, in cases where the applicant is older and not as healthy, the difference in premium could be substantial.Who is Eligible for Coverage?
Not everybody can buy simplified-issue term life insurance. Also, simplified policies will need you to answer knockout questions, like whether or not you’re in a wheelchair, have a disability, or have recently been diagnosed with a serious illness like cancer or COPD. The insurance application also provides an insurer the right to investigate you in medical databases and consider other records to confirm that you are truthful on the application.What are the advantages of Simplified-Issue Life Insurance?
Every type of insurance product has its pluses and minuses that should be taken into consideration.Advantages
- Convenience: You will not have to be concerned about a medical exam or blood tests. The insurance application is simple to fill out, and about two-thirds of applicants are typically approved, according to many leading insurance companies.
- Availability: Your insurance coverage can get started at age 18, and a number of insurance companies offer policies until age 90 or higher. These smaller coverage amounts – starting at $5,000 – are affordable enough that even low-income workers can easily buy a policy.
- Privacy: Since medical exams are not part of the underwriting requirements, a medical technician does not have to come to your home or workplace, and you can typically do business online.
Disadvantages
- Limited Options: Since many of these types of policies provide cookie-cutter coverage, it may be difficult to add riders that you would like to purchase.
- Cost: As we mentioned earlier in the article, simplified-issue term life insurance is typically priced higher than fully-underwritten term insurance because the insurer is at a disadvantage when determining your risk. Most individuals with this type of coverage, however, report that the additional premium was well worth eliminating the underwriting aggravation and wait time traditional life insurance requires
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