Simplified Whole Life Insurance

What Is Simplified Whole Life Insurance?

Simplified whole life insurance is for seniors who procrastinated about buying life insurance when they were younger. Simplified whole life insurance is also those who have medical issue and don't want to go through a medical exam.

With simplified whole life insurance, you don't have to get a medical exam. Your premium will be more expensive as a result, however, the death benefit will ensure that your family is protected from any outstanding debts and make sure you’ll have enough money left over for end-of-life expenses like funeral or burial costs.

If this situation sounds like you, then simplified whole life insurance, also known as simplified issue life insurance, may be a good solution. This type of insurance is called final expense insurance.

Two Types Of Simplified Whole Life Insurance

There are two types of simplified whole life insurance.

1) Simplified whole life insurance

Simplified whole life insurance is for seniors or people who can’t qualify for a more traditional life insurance policy, but who are only at moderate health risk. A detailed medical questionnaire is required.

2) Guaranteed life insurance

A guaranteed life insurance is for those who can’t qualify for simplified whole life. No medical questions are asked and almost no one is turned down. As a result, the premium amount is much higher because the life insurance carrier assumes you have more risk of death.

With either type of insurance, the death benefit amount isn't huge. We're talking $25,000 – $50,000 at most. This coverage is used to cover for end of life expenses like a funeral.

Benefits Of Simplified Whole Life Insurance

There are many different types of life insurance options to choose from. If you decide to go with simplified whole life insurance, here are some of the benefits.

  • No medical exam is required for a simplified whole life policy, but a detailed medical questionnaire is.
  • If approved, you’ll be able to secure up to about $50,000 of coverage which will be paid to your beneficiaries at the end of your life to settle any debts.
  • You’ll pay monthly or annual fixed premium that never goes up or down to keep the policy active until death. This is a type of permanent life insurance policy so you don't have to worry about your coverage lapsing.
  • If you should pass before the holding period before benefits are paid, your beneficiaries will be refunded the amount you’ve paid into the policy. In other words, you won't lose money or as much money as you think.
  • Because there is no medical exam, you can get coverage more quickly with a simplified issue plan. Typically you’ll be covered within days, as opposed to the weeks with a standard insurance plan. It took me 6 weeks to get coverage for my term life insurance plan.

Unlike traditional whole life insurance, most simplified whole life policies don’t have a savings component called cash value that builds over time. If there was a cash value component, the premiums would b much higher because you're not only paying fo the death benefit but also the cash value.

Therefore, in a way, a simplified whole life insurance policy is more like a term life insurance policy that doesn't have an agreed upon term end date. So long as you are paying the premium, your life is covered.

Average Cost Of Simplified Whole Life Insurance

Simplified whole life insurance is more expensive on a relative basis when compared to term life insurance or whole life insurance due to the lack of a medical exam. The age at which you apply is also a significant factor to the premium cost. Usually, applicants of simplified whole life insurance tend to be over 50 with health issues.

Here's a chart from PolicyGenius, my favorite way for consumers to get affordable life insurance.

Mutual of Omaha45-85Standard$2,000 – $40,000 (in WA, $5,000 – $40,000)
45-80Graded$2,000 – $20,000 (in WA, $5,000 – $20,000)
AIG50-85Graded$5,000 – $25,000

Two out of the three policies only offer a “graded” classification, which means that they will only pay out the death benefit if you die after owning the policy for two years.

The cost of these two monthly policies will range from $30 – $150/month, depending on your age and amount of death benefit elected.

While it’s always better to have some life insurance coverage in place as opposed to none at all, you should only buy a simplified whole life policy if there are no other policy options available to you.

Here are some other life insurance options you can consider that require no medical exam.

Easiest Way To Buy Simplified Whole Life Insurance

You can buy simplified whole life insurance by going to the largest insurers major insurers like Mutual of Omaha, MetLife, USAA, Liberty Mutual, John Hancock, or TransAmerica.

However, it is a pain to apply to each insurer one by one. The much more efficient way to apply for life insurance is to go on PolicyGenius, fill out your info and have qualified insurance companies compete for your business. You'll see several options and PolicyGenius will help you choose the option best suited for your needs. PolicyGenius also has people you can talk to to help out.

You should be able to get health insurance entirely online now given there is no medical exam necessary. The health questionnaire can be filled out at your convenience.

Negatives Of Simplified Whole Life Insurance

The main negative is the cost. Simplified whole life insurance costs much more than a standard life insurance plan. With a standard plan, the insurer is doing their due diligence and getting a comprehensive look at your medical status and history. They have a pretty good idea at how risky you are to insure and can provide a more accurate premium quote.

The other negative is that you can't get as large of a death benefit with a simplified whole life insurance plan. Most insurers top out closer to $100,000 for a death benefit, although some do go as high as $400,000.

In my case, I was able to get a $1 million, 10-year term life insurance policy for just $40/month. But this was back when I was 28-years-old and very healthy. You should study all the various life insurance options to know what's available and make a more informed decision.

You Can Add Riders

Like all life insurance policies, simplified issue life insurance can be customized to meet a policyholder’s needs with add-on features called riders. Riders add extra coverage and will increase the cost of monthly or annual premiums.

Here are some popular riders:

Accelerated Death Benefit Rider

Allows policyholders to use the death benefit payment early in the case of terminal illness to cover necessary medical costs.

Long-Term Care Rider

In the event that the policyholder requires long-term care that his or her health insurer won’t pay for, such as nursing home or at-home care, a long-term care rider will cover the cost.

Long-term car can easily cost $5,000 – $10,000/month if the patient requires 24/7 care.

Disability Waiver of Premium

If a policyholder becomes unable to pay monthly premiums because of loss of income stemming from a disability, a disability waiver rider allows the premiums to be skipped without the policy being canceled until the policyholder recovers. This may be limited by age, so be sure to ask your insurer for details.

Simplified Whole Life Insurance Is A Last Resort

Simplified whole life insurance doesn't provide a lot of coverage and it is expensive. Therefore, it's much better to get a term life insurance policy instead.

However, if you’re looking to get coverage quickly, simplified issue insurance is your best bet.

Not having to coordinate the medical exam, do the medical exam, and wait for results cuts the time to get life insurance by 50-80%. You can usually get coverage within a few days with a simplified issue plan.

Further, if you just hate needles, then going the simplified whole life insurance option is a solution. However, you can certainly get a term life insurance benefit of up to $500,000 without a medical exam. Therefore, a dislike of needles is not a good reason.

Life gets in the way. If you did not properly plan for your life insurance needs, then simplified whole life insurance is a solution.

If you can plan better, than getting a term life insurance policy is the best way to go. Besides, even if you have to get a physical, at least it's free. Getting a free physical ain't so bad. Once you get the results, you can work on specific areas of improvement to get better.

The most efficient way to get competitive life insurance quotes is to check online with PolicyGenius, the #1 life insurance marketplace where qualified lenders compete for your business.

Life insurance is an act of love. Please plan ahead and get life insurance to protect your family. 

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