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Getting a life insurance policy typically involves an extensive application process that asks you about your medical history and lifestyle choices to determine how much you pay for coverage. But if you have a serious health condition or any other qualifier that the insurance company deems as too risky, you may not be eligible for coverage. In that case, you may opt for a type of final expense insurance called simplified issue life insurance. This policy offers less coverage and is more expensive than traditional life insurance, but is a good alternative for people who can’t get traditional life insurance.

Read on to learn more about what simplified life insurance is, how it works, and if you need it.

What is simplified issue life insurance? 

Simplified issue life insurance is a type of final expense insurance, which lasts your entire life as long as you pay the premiums. All final expense policies offer lower coverage than traditional life insurance and charge higher premiums. It’s generally for people who are above the age of 45 and in too poor health to get a traditional life insurance policy. 

Getting a policy doesn’t require a medical exam, though there is a medical questionnaire. Barring a few key factors, most people are eligible. But you will not be able to get coverage if there are some extenuating circumstances that the insurer deems as too risky, such as a terminal illness or a cancer diagnosis within the last two years. 

If you are unable to get simplified issue life insurance, then you can opt for guaranteed issue life insurance. Coverage for guaranteed issue is pretty much guaranteed, though rates are even more expensive and coverage provided is even lower. 

How does simplified issue life insurance work?

Once you get a simplified issue life insurance policy, it is active for the rest of your life, as long as you pay the premiums. 

Many simplified issue life insurance policies have a graded death benefit, which means the policy needs to be active for at least two years before your beneficiaries can receive any of the life insurance money. If the policyholder dies within two years of purchasing the policy, then the beneficiaries won’t receive any life insurance money. 

Advantages and disadvantages of simplified issue life insurance 

Like all policies, simplified issue life insurance comes with its own set of advantages and disadvantages. 

Advantages of simplified issue life insurance

Accessibility: Simplified issue life insurance provides a life insurance option and financial protection for people who can’t get traditional life insurance due to pre-existing health conditions or other factors. 

Easy application process: Unlike traditional life insurance policies that involve extensive underwriting, simplified issue life insurance only requires a set of health-related questions, making it faster and easier to obtain coverage.

Quick Approval: With simplified issue life insurance, the approval process happens within days, while traditional policies that require a medical exam can take weeks. 

No medical exam: Simplified issue policies do not require applicants to take a medical exam. 

Disadvantages of simplified issue life insurance

High premiums: Compared to traditional life insurance policies, simplified issue policies cost a lot more. This is because they rely on limited medical information and have a higher level of risk for the insurance company. 

Coverage limitations: Simplified issue life insurance policies offer lower coverage than traditional life insurance, generally maxing out at $50,000. Coverage. Policies also have a waiting period of two years before the full death benefit is payable. 

Limited options: Simplified issue life insurance does not offer the same level of flexibility and customization as traditional policies. Policyholders may have fewer options for riders or additional coverage enhancements that can be tailored to their specific needs.

Not guaranteed: While simplified issue life insurance offers coverage to some applicants who would otherwise not be eligible for life insurance coverage, not everyone is eligible. 

How simplified issue life insurance compares to guaranteed issue life insurance

Both simplified issue life insurance and guaranteed issue life insurance are both types of burial insurance that provide life insurance coverage for people who can’t get traditional coverage. However, they still have some major differences. 

Simplified issue coverage offers up to $50,000 in coverage and while most applicants are eligible, people with certain health conditions may not be. For example, someone who received an alzheimers diagnosis may not be able to get a simplified life insurance policy.

Guaranteed life insurance, on the other hand, is pretty much guaranteed. Even if you have a diagnosis that makes you ineligible for simplified issue life insurance, you will likely be able to get guaranteed issue coverage. However, because insurers are taking on even more risk with this type of policy, it is a lot more expensive than simplified issue life insurance. 

Additionally, guaranteed issue life insurance offers less coverage than simplified issue life insurance. It usually maxes out at about $25,000.

Who should get simplified issue life insurance?

Simplified issue life insurance is best for people who aren’t eligible for traditional life insurance due to their health or other factors. While it doesn’t offer much coverage and isn’t cost competitive, it provides some financial protection for your family after you die. But, it usually isn’t enough. If you are eligible for traditional life insurance, then you will be able to get more coverage at a lower cost. 

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