Simplified issue life insurance

What simplified issue is

Underwriting a life insurance policy means deciding how likely the carrier is to pay a claim and how soon. Full underwriting answers that with an examination, laboratory results and often a request for your medical records. Simplified issue answers it with a much smaller set of inputs, chosen because they predict the same outcomes well enough on a small policy.

Those inputs are your answers to a page of health questions, a report of the prescriptions filled in your name, a check against the Medical Information Bureau, and your age, sex, height, weight and tobacco use. That is it. There is no nurse, no blood draw and no request to your doctor for records, which is why a decision that used to take six weeks now takes six minutes.

The trade is straightforward. You get speed and you avoid the exam. The carrier accepts more uncertainty and charges a little more per thousand dollars of cover, and it caps the face amount so that its exposure to that uncertainty stays modest. On a policy sized for a funeral, that trade is a good one for almost everybody. No medical exam life insurance covers the same ground from the consumer side of the counter.

What the health questions cover

Applications differ in wording between carriers, but the territory they cover is remarkably consistent. Almost every simplified issue application asks about the same ten areas.

A general description of the subject areas covered by simplified issue applications across the market. Individual carriers word their questions differently and set their own windows, and nothing here should be read as the underwriting rules of any particular company.

Notice what is not on the list. There is no question about your income, your job in most cases, your credit, or the reason you are buying the policy. Simplified issue underwriting is narrowly about mortality, and that narrowness is what allows it to be short.

Knockout questions and look back windows

The questions fall into two groups, and knowing which is which is the difference between a useful conversation and a wasted application.

Knockout questions end the application immediately if answered yes. They sit at the top of the form and they cover situations that are close to uninsurable at any price. Currently in a nursing home, currently receiving hospice care, a terminal diagnosis, awaiting an organ transplant, on dialysis, using oxygen for a lung condition. A yes to any of these on a level benefit application means the answer is a guaranteed issue policy rather than a different carrier.

Look back questions ask whether something happened within a stated window, commonly one, two, three or five years. A heart attack eight years ago and a heart attack eight months ago are entirely different answers to the same question. This is where carriers differ most, and where an experienced agent earns their keep, because the same history can be a decline at one company, a graded policy at a second and a level policy at a third.

The practical consequence is that dates matter enormously. Do not estimate. If you are unsure when a procedure took place, find out before the application is submitted rather than guessing on the call.

Prescription history and the MIB

Two database checks verify what you said. Both are run before the policy is issued, and both can be run again if a claim arrives inside the contestability period, which is normally the first two years.

The prescription history report lists medications filled in your name over recent years, with dosages and dates. Medication is an unusually good proxy for diagnosis. A carrier that sees a particular class of drug knows what condition it treats, even if the condition itself was not declared. This is the single most common reason an application that seemed fine on the phone comes back with a different offer.

The Medical Information Bureau holds coded information reported by member insurers from previous life and health insurance applications. It does not contain your medical records. It records what you disclosed to another insurer, which lets a carrier see whether the same person told a different story last year.

Both are consumer reporting agencies, so you have the right to request your own file and to dispute anything inaccurate. If an application is declined for a reason you do not recognise, asking for the decision in writing and then requesting those files is the correct next step.

Height, weight and tobacco

Every simplified issue application asks for height and weight, and every carrier publishes a build chart giving the acceptable weight range for each height. Fall outside it in either direction and the application is either rated into a more expensive tier or declined. The charts vary between carriers by enough to matter, which is another reason to have more than one company look at the same set of answers.

Tobacco is asked separately and usually defined as any nicotine product within the last twelve months, including cigars, pipes, chewing tobacco, patches, gum and in many cases vaping. The rate difference is large. It is also one of the few things a carrier can test for during a contestability investigation, so the honest answer is the only sensible one. What burial insurance costs shows how far the tobacco question moves the premium.

The four possible outcomes

Most applicants who expect the third or fourth row end up in the first. Controlled high blood pressure, controlled diabetes, high cholesterol, arthritis, a thyroid condition and a cancer that has been clear for several years are routinely written at level rates. Graded benefit policies explains exactly how a partial payout works, and who qualifies for day one cover goes through the questions one at a time.

Face amounts and issue ages

Simplified issue is a small policy product. Face amounts on burial insurance are commonly written between $2,000 and $50,000, and the practical range most people buy in is $5,000 to $25,000. Issue ages usually run from around 45 or 50 up to 85, with a handful of carriers writing to 89 and most reducing the maximum face amount at the oldest ages.

If you need more cover than this tier will write, the honest answer is a different product rather than several stacked policies. Term life insurance with full underwriting gives several times the death benefit for the same premium if your health allows it, and working out the amount you need first will tell you which side of that line you are on.

If you are declined

• Ask for the decision and the reason in writing. Carriers are required to tell you what information was used.
• Request your prescription history file and your Medical Information Bureau file, and dispute anything that is wrong.
• Have the same answers submitted to a carrier with different rules. A decline at one company is genuinely not a verdict on your insurability.
• Check whether a look back window is close to expiring. Sometimes waiting four months converts a decline into a level approval.
• If nothing works, guaranteed issue is always available within the issue ages, and it is the right answer for a small number of people.
• Do not reapply repeatedly to the same carrier with different answers. That pattern is recorded and it does not help.