Securing life insurance can be challenging due to medical exams and extensive paperwork, and simplified issue life insurance can help. Before deciding to obtain a simplified policy, you should understand exactly what this product is, who it is designed for, and when a different path makes more financial sense.
Key takeaways: Simplified issue life insurance skips the medical exam but still requires a health questionnaire, and YES, insurers can decline you. If declined, guaranteed-issue remains available.
What is Simplified Issue Life Insurance?
Simplified issue life insurance provides coverage without a medical exam. Instead of blood tests and a physical check-up, you will complete a short health questionnaire. The questionnaire asks about your health history, medical conditions, and lifestyle.
The insurance company reviews your questionnaire answers to assess your risk profile. Unlike guaranteed-issue, it’s not automatic approval; your answers to the health questionnaire determine whether you’re accepted, rated up, or declined.
The key advantages of simplified life insurance are speed and convenience. It is an accessible option if you want to avoid medical examinations, have minor or well-managed health conditions that could complicate a traditional application. or need coverage in place quickly. The core trade-off is that you would pay higher premiums and accept lower coverage limits.
What Types of Simplified Issue Life Insurance Are Available?
You can find simplified underwriting options for both term and permanent life insurance.
Simplified Issue Term Life Insurance
Simplified term life insurance provides temporary protection for a specific period, such as 10, 15, 20, or 30 years. It pays a death benefit if you pass away during the term. Term policies are a cost-effective way to cover temporary needs like mortgages, child-raising expenses, or debt repayment.
Simplified Issue Permanent Life Insurance
Simplified permanent life insurance provides lifelong protection as long as you pay the premiums. These policies often accumulate a cash value component that can be borrowed against or withdrawn. Permanent insurance is best for covering final expenses, creating a legacy, or estate planning.
Simplified Issue vs. Guaranteed Issue and Fully-Underwritten
Simplified issue life insurance differs from traditional and guaranteed issue products when it comes to underwriting requirements, speed, cost, and coverage limits. Here is an in-depth comparison:
| Feature | Simplified-Issue | Guaranteed-Issue | Traditonal |
|---|---|---|---|
| Medical exam required? | No | No | Yes (usually) |
| Health questionnaire? | Yes (short) | No | Yes (detailed) |
| Approval guaranteed? | No | Yes | No |
| Cost | Moderate. Higher than traditional, lower than guaranteed. | Highest | Lowest cost for healthy individuals. |
| Coverage limits | Moderate (typically up to $500,000) | Low (typically $25,000 – $50,000) | High (can be $10 million+) |
Where this breaks:
Guaranteed-issue sounds appealing because there are no health questions; however, most guaranteed-issue policies include a 2-year waiting period during which death from illness only returns your premiums. The full death benefit only pays for accidental death during that window.
Simplified issue life insurance provides a middle ground between traditional and guaranteed issue products, balancing underwriting requirements, speed, cost, and coverage limits.
Should You Apply for Simplified-Issue or Try Fully-Underwritten First?
The assumption that “I probably won’t qualify for regular insurance” drives many Canadians toward simplified-issue prematurely.
The logic is that applying for fully underwritten coverage first carries no penalty. If you are declined, you can still apply for a simplified issue. There’s no shared database among insurers that marks you as “high risk” for simplified products.
In reality, many Canadians get approved for fully-underwritten life insurance at standard rates, so applying there first could save you thousands.
In practice, brokers often recommend submitting a fully underwritten application first, especially for applicants under 55 with no major diagnosed conditions. Some weeks of underwritting is worth it if approval is likely.
When Simplified Issue Life Insurance Makes Sense
This type of policy is an excellent fit for:
- Individuals with minor health conditions like asthma, anxiety, depression, or obesity. Traditional underwriting would likely rate them higher or decline.
- People who want to avoid medical examinations and testing for personal reasons. The invasive process is a barrier for some applicants.
- Young, healthy families seek protection on an accelerated basis. The simplified issue gets them covered quickly when traditional underwriting would take 4-6 weeks.
- People requiring urgent protection, such as new parents or new homeowners. The rapid approval provides security when you need it most.
- Canadians with high-risk occupations or active lifestyles who participate in activities like scuba diving, rock climbing, or motorcycle racing could complicate traditional underwriting.
What Affects Simplified Issue Life Insurance Cost?
Premiums for simplified-issue life insurance are based primarily on the following:
- Age has the largest impact. Premiums roughly increase every 10 years after age 40.
- Gender affects pricing due to differences in mortality tables. Females typically pay less than males at the same age.
- Smoking status is the second-largest factor. Smokers pay 2 to 3x more than non-smokers for identical coverage.
- Coverage amount scales premiums proportionally, though some products offer volume discounts above $250,000.
- Term length affects total cost. A 20-year term costs more monthly than a 10-year term.
Overall, simplified issue premiums are more expensive than traditional life insurance but less costly than guaranteed issue products.
Common Mistakes to Avoid
These errors cost Canadians money, coverage, or both. Here’s how to sidestep them.
Mistake #1: Assuming “No Medical” Means “No Health Questions”
“No medical exam” describes the process. It doesn’t mean the insurer ignores your health. The questionnaire is the underwriting. Answer it wrong or dishonestly, and you’ll either be declined upfront or have your claim denied when your beneficiaries need the money most.
Mistake #2: Not Disclosing a Condition That Was Asked About
This is the most expensive mistake. If the questionnaire asks “Have you been diagnosed with diabetes?” and you answer no despite a Type 2 diagnosis, your policy is voidable. Insurers routinely request medical records during claims investigation.
Mistake #3: Skipping Fully-Underwritten to Save Time
Some weeks or months of underwriting are a one-time inconvenience. The premium difference compounds for every year you hold the policy.
If you need coverage immediately, simplified-issue makes sense as a bridge. But planning to apply for fully underwritten coverage afterward, if you qualify, can help you save thousands. Some weeks or months of underwriting are a one-time inconvenience.
How to Apply for Simplified-Issue Life Insurance
Here is an overview of the simplified life insurance process:
- Choose insurer or product: Work with a broker who can compare multiple insurers, or apply directly through an insurer’s website.
- Complete the application: This short questionnaire will ask about your health, medical history, family history, prescription medications, and lifestyle, such as smoking. Be sure to answer truthfully, as inaccurate responses may result in denied claims.
- Underwriting review: The insurer analyzes your questionnaire answers along with other data, like prescription history. They use this information to assess your insurability risk profile.
- Policy offer: Based on your assessed risk, the insurer provides a rapid quote with premiums and coverage terms for a policy that suits your needs. Simplified underwriting means much faster turnaround times than traditional policies.
- Accept offer: Review the policy details, including premiums, coverage amount, exclusions, and waiting periods, if applicable. If satisfied, accept the offer and submit the first payment.
- Policy issued: The insurer issues the policy quickly. You are now covered by your simplified issue life insurance policy.
Where to Buy Simplified Issue Life Insurance?
Many major life insurance companies like Sun Life, Canada Life, Canada Protection Plan (CPP), and RBC Insurance offer simplified issue products online. Their websites make it easy to get quotes and apply digitally.
A broker who has access to policies from many providers can often identify which insurer is most likely to approve your specific health profile.
Tips for Getting Simplified Issue Life Insurance
Follow these tips to get the most suitable simplified issue life insurance policy:
- Be thorough and truthful when completing the health questionnaire. Inaccurate answers could lead to denied claims.
- Compare premiums from at least three providers. Rates can vary significantly between insurers.
- Align your coverage amount with your specific needs. Don’t overpay for unnecessarily high coverage.
- Ask about waiting periods for pre-existing conditions. Choose a policy that covers your conditions.
- For very healthy applicants, weigh the cost vs undergoing full underwriting for lower traditional premiums.
- Seek advice from an independent insurance advisor. They can explain options and recommend the right solutions.
The Bottom Line
Simplified issue life insurance provides a valuable option for individuals who want an easy and fast way to secure coverage without extensive medical underwriting. While costs are higher than traditional policies, simplified issue enables access to crucial protection for those with minor health issues or an urgent need.
FAQs on Simplified Issue Life Insurance
What health conditions may prevent qualification for simplified issue life insurance?
Severe conditions like cancer, heart disease, and stroke often lead to declined coverage or higher premiums, even with simplified underwriting. Minor conditions are more likely to be accepted.
Can I get a simplified issue life insurance if I have sleep apnea?
Yes, sleep apnea is a minor condition that typically would not preclude qualification for simplified issue coverage. The condition may need to be reflected in slightly higher premiums.
Does simplified issue life insurance require a medical exam?
No. Simplified issue life insurance only requires completing a short health questionnaire with no medical exam or laboratory tests.
Does simplified issue life insurance build cash value?
Simplified issue permanent life insurance builds cash value just like traditional permanent policies. Simplified issue term life insurance does not build cash value.
Is the death benefit on simplified life insurance guaranteed?
The death benefit is guaranteed as long as you pay the premiums and is not reduced by any accumulated cash value.
How do I determine the right amount of simplified issue coverage I need?
Consider final expenses, mortgage balance, replacement income needs, and family situation. Your advisor can help determine the right amount.
Is the claims payment on simplified life insurance different than traditional policies?
No, the claim payment process is the same. The death benefit is paid to your designated beneficiaries when the required documentation is submitted.
Will my minor health conditions be covered by simplified issue life insurance?
Most minor conditions will be reflected in somewhat higher premiums but still included in coverage. Certain severe illnesses may be excluded.
Does smoking marijuana impact qualification for simplified issue life insurance?
Occasional marijuana use is unlikely to pose an issue. Regular use could result in the smoker's premium class and higher rates.
