What is a Simplified Issue Life Insurance Policy?

Simplified Issue life insurance is simple, uncomplicated and requires no medical exam. However, it does require that you answer a few questions relating to your health and lifestyle.  

As a result, applying for a Simplified Issue life insurance policy and getting approval is easy, fast, and painless. All the same, not everyone who applies will be approved by the insurer.

If your answers to the health and lifestyle questions reveal to the insurer that you are too risky to insure, your application may be denied. Keep in mind, insurers are likely to access medical databases and other records to make sure that applicants are being truthful.

Why choose a Simplified Issue life insurance policy?

Simplified issue life insurance can be a good option for Canadians who do not want to:

• Take a medical exam.

• Answer invasive questions regarding their health and lifestyle.

• Wait for up to six weeks to get approval.

However, the convenience of skipping the procedures comes at a price. The premiums for Simplified Issue life insurance policies are higher than a comparable Term life policy (term life policies are life insurance policies that last for a specified amount of time, hence a term). Simplified life insurance policies usually have smaller death benefits and are less flexible than other life insurance plans.

The average policy takes about six weeks to receive approval. Not everybody wants to wait that long to have a life insurance plan in place. If you need a life insurance policy quickly, Simplified Issue life insurance may be a good option for you and will often only take 2-3 days to receive approval.

Since these life insurance policies have small payouts, Simplified life insurance also makes sense for individuals who want to provide for their funeral or burial expenses.

How much does Simplified Issue life insurance cost?

Simplified Issue life insurance in Canada is more expensive than traditional plans because it is harder for insurers to calculate the risk involved without the applicants taking the health assessment. As a result, insurers have less information about an applicant’s health. Insurers, in turn, compensate for this lack of information by charging higher rates for Simplified life insurance. Traditional policy rates reflect the risk outlined in the medical evaluation.

The exact cost of a Simplified life insurance policy, however, may vary from person to person. It largely depends on two factors — age and health. Young and healthy people will receive better rates than people who are older or dealing with health issues or illness.

What is the difference between Simplified Issue and Guaranteed policies?  

For both Simplified Issue and Guaranteed life insurance policies there is no medical evaluation. However, for Guaranteed life insurance there is also no medical questionnaire and you are guaranteed to receive a policy. As long as the Guaranteed life insurance applicants fall within the specified age range, they are typcially guaranteed to be approved for life insurance coverage. For this reason, Guaranteed life insurance policies are more expensive than traditional life insurance coverage.

Simplified Issue policies involve an underwriting process and applicants will be asked questions about their health and lifestyle. Applicants may be denied Simplified Issue life insurance depending on the answers to those questions.

The disadvantages of a Simplified Issue life insurance policy?

• Simplified Issue life insurance policies are costlier than a standard life insurance policy. If you do not want to take a medical assessment but are in good health, you may want to consider an accelerated Term life insurance policy instead. Term life insurance policies also do not require the medical assessment, are generally cheaper and offer more flexibility.

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• The Death Benefit amount is minimal because the insurer knows little about you.
• Many Simplified Issue plans include a waiting period, usually two years. If you pass away within this period, the insurer will not pay The Death Benefit amount to your family. Instead, it will return to them the premium amount you had paid.
• Simplified Issue plans have limited rider options compared to other plans. Insurance riders are additional features you can add to your policy — usually in exchange for a small fee — for extra protection.

Conclusion

Simplified Issue life insurance lets you forgo the medical exam and get approval quickly. However, you will pay higher premiums and there will be limitations on coverage options. Considering this, a Simplified Issue plan makes sense only for those who do not qualify for a traditional life insurance policy. Others should consider buying a Term life policy, before committing to a Simplified Issue life insurance policy.

Whatever your situation, one of our Dundas Life advisors can help find the right coverage for you at an affordable price.