Simplified Issue Term Life Insurance: How It Works

Simplified issue term life insurance is a term life policy issued on the basis of a short health questionnaire (typically 10 to 25 yes/no questions) plus a third-party records check including prescription history, MIB (Medical Information Bureau) reports, and motor vehicle records. No paramedical exam, blood draw, or urine sample is required. Decisions are typically returned within 24 to 72 hours and policies can be in force within a week. Simplified issue is positioned between fully underwritten term (which requires a paramedical exam and takes 3 to 6 weeks) and guaranteed issue (which has no medical questions but caps coverage at $25,000 to $50,000).

The applicant completes a short health questionnaire covering tobacco use, current and historical health conditions, prescription medications, height and weight, occupation, and lifestyle factors (hobbies, foreign travel, DUIs). The carrier then pulls third-party records: prescription history through Milliman IntelliScript or Express Scripts, MIB Group reports for any prior life or health insurance applications, motor vehicle records, and sometimes credit-based insurance scores. The underwriter compares the questionnaire answers to the third-party records; if they match and meet the carrier's simplified-issue criteria, the policy is issued without further review.

A healthy 35-year-old non-smoker can buy $500,000 of 20-year simplified issue term for roughly $25 to $35 a month with most major carriers, which is typically 10 to 25 percent more expensive than the same coverage with a fully underwritten application from the same buyer. The premium gap narrows or disappears for applicants with health conditions where simplified-issue underwriting is more friendly than fully underwritten underwriting. For applicants in their 50s or 60s, simplified issue is often the better choice because the time and inconvenience of a paramedical exam outweighs the modest premium increase.

Coverage caps vary by carrier and applicant age. Common caps: Mutual of Omaha - up to $750,000 for ages 18 to 65, Foresters Financial - up to $1 million for ages 18 to 55, AAA Life - up to $500,000, Sagicor - up to $1 million (Sage Term), AIG Direct now Corebridge - up to $1 million for ages 18 to 60, Banner ASAP and Protective Velocity - up to $1 million to $3 million depending on age and health profile. Pacific Life Promise Term issues up to $3 million on a simplified-issue basis for the healthiest applicants. Above $3 million typically requires a fully underwritten application.

Yes, for buyers who value speed and convenience and are reasonably healthy. The trade-off is a modest premium increase (10 to 25 percent for healthiest applicants) in exchange for a 1 to 3 day decision instead of a 3 to 6 week fully underwritten timeline. Simplified issue is especially valuable for: (1) buyers who need coverage before a closing date (mortgage, business loan, divorce decree), (2) buyers over 50 who want to avoid the inconvenience of a paramedical exam, (3) buyers with mild health conditions where simplified-issue carriers may underwrite more friendly than fully underwritten carriers, and (4) buyers who do not want to commit to a paramedical exam during their day job.

Most carriers approve simplified issue for healthy applicants ages 18 to 65 who: do not currently use tobacco (or have been tobacco-free for 12 to 36 months depending on carrier), are not currently under treatment for cancer, heart attack, stroke, kidney disease, liver disease, COPD, ALS, Parkinson's, or other serious chronic conditions, have not had a DUI in the past 5 years, are not currently disabled, do not engage in high-risk hobbies (scuba beyond 100 feet, aviation as a non-commercial pilot, motorcycle racing), and have not been declined or rated for life insurance in the past 24 months. Specific carrier criteria vary; an independent broker can pre-screen which carrier you qualify for.

Simplified issue requires a short health questionnaire and a third-party records check; applicants can be declined if the answers or records show certain conditions. Coverage caps are typically $250,000 to $3 million. Guaranteed issue has NO health questions and NO underwriting; everyone who applies in the eligible age range is approved. Coverage caps are very low (typically $5,000 to $50,000) and the policy usually has a 2 to 3 year graded death benefit where only premiums plus interest are returned for non-accidental deaths in the first 2 to 3 years. Premiums are 2 to 4 times higher per dollar of coverage than simplified issue.

Decisions are typically returned in 24 to 72 hours. The fastest carriers (Bestow, Ethos, Corebridge Direct, Sagicor Sage Term) can return an instant decision in 10 to 15 minutes for the lowest-risk applicants. Carriers that perform a full Rx history pull and MIB check before issuing typically take 1 to 3 business days. If the underwriter needs additional information (a clarification on a questionnaire answer, a prescription that triggers further review), the timeline can extend to 1 to 2 weeks. Once approved, the policy is typically in force within 24 to 48 hours of accepting the offer.

Yes, most simplified issue term policies include a conversion option that lets the policyholder exchange the term policy for a permanent (whole or universal life) policy without a new medical exam. Conversion windows and product availability are typically more limited than fully underwritten policies; some simplified issue products only allow conversion to a single in-house universal life product. Banner Life ASAP, Protective Velocity, and Pacific Life Promise Term include conversion provisions similar to their fully underwritten products. Mutual of Omaha and Foresters simplified issue products have more limited conversion options.

Because the underwriter has less data and prices a small mortality buffer into the simplified issue premium to account for the risk that the questionnaire and records check missed something a paramedical exam would have caught. The buffer is typically 10 to 25 percent for the healthiest applicants and narrows to zero for applicants with mild health conditions where simplified-issue underwriting is just as accurate as fully underwritten underwriting. For applicants with documented preferred-class health, fully underwritten is usually slightly cheaper; for everyone else, simplified issue is often the better choice on time, convenience, and rate.