How to Apply for Simplified Issue Term Life Insurance

To have to write a simple guide on applying for simplified issue term life insurance seems a bit redundant. After all, if it is simplified term life insurance it should be simple.

Look at your needs first

Since we are only considering simplified issue term (not simplified issue whole life) then the length of coverage you will need to consider is very important. In other words, if all you need is 5 years with of coverage then don't purchase a 10 year term plan or longer. That may be a waste of money. So, consider your needs carefully including amount of coverage. Beware that there is one instance we know that buying more coverage than is needed may be a good idea. If you need $75,000 to $99,000 it is often best to get a $100,000 policy. Why? Simply because it is often cheaper to get a $100,000 simplified term life insurance policy than the lower amount. Many people do not know that, at $100,000 and higher, the cost per $1,000 is lower than at under $100,000. As a matter of fact other breakpoints may include $250,000, $500,000 and $1,000,000 and other higher amounts. It is unlikely that you will find a truly simplified issue term life insurance policy over $500,000 though.

Then Select the proper insurance company

Before you waste time looking at 100's of plans from 100's of companies, one way to quickly narrow down your choices is by selecting the right company. What is the right company? it is the company that has strong financial ratings. One measure that is most used is the AM Best rating. We strongly recommend that you select a company that is A- to A++ rating. These are the top rating sot of 16. No guarantees of course and you need to follow these rating yearly but that should help greatly in avoiding the bad apples. We have not found that the length of time the company has been in business is that important of a factor. That is more of a personal choice!

Then look deeper into the plan choices.

Once you have narrowed down to the company and type of plan you need, now you need to select a specific plan. First of all, not all simplified plans are truly simplified. To put it simply, simplified should mean that all you need to do is fill out an application and at worst do a quick phone interview. Once that is done, you should receive a final answer within one to four days. Anything other than that we do not consider simplified. Watch out for companies that "just" need to order medical records. They are not bad companies. The problem is that their plan does not qualify as simplified. These plans could take weeks to underwrite and may require much more information form you.

Another thing to consider is conversion options. Although today you may want and need a term life insurance plan, you may also want to keep your options open. Some plans do offer a conversion option while others do not. Simply, the conversion option allows you convert your term plan to a permanent life insurance plan within a certain period of time - usually the guarantee period of the term life insurance plan. Another important thing to consider is the ability to just continue the simplified term life insurance plan beyond the guarantee period. After the initial rate guarantee period, some plans continue and charge you higher premiums, some just end.

What if I have bad health, can I apply for a simplified plan?

The answer is often yes! Simplified term life insurance is not just for the supper healthy. As a matter of fact many companies that offer these plans have broadened their medical acceptance criteria. It is more and more common for companies to accept diabetics, people with depression history or even cancer history and others. Make sure to mention to the insurance company or your agent that your health history has some issues. It will save you time and probably money too. Beware that, with some companies, if you have been declined in recent years, you may not be able to apply for their simplified term life insurance plan. Try not to get declined if at all possible (no one can give you 100% guarantee though).

Beware of the delayed or graded benefit simplified term life insurance. These plans are wonderful if that is all you qualify for but we have heard too many stories of beneficiaries who were surprised when, instead of receiving the full death benefit, they only got a premium refund with some interest. In the case of a graded life insurance plan, the full benefit is usually delayed for two to three years because the insured's past or present health would not qualify them for a level simplified term life insurance plan. Again, these graded plans can work wonderfully and can be well worth the expense and really offer no risk but only if the inured could not qualify for an immediate level benefit plan.

In conclusion

As we say in all of articles, don't blame someone else for your mistakes. You must ask, ask and ask again as many questions as you need to. You also MUST look at your simplified issue term life insurance policy once you receive it and ask more questions. Don't go by what you remember during the search process. The actual policy is what really matters! As a matter of fact, we suggest that, if you have an agent, you also ask your insurer the same questions you asked your agent. Not that your agent is dishonest but rather he/she may have missed some details that are important to you. Seems tedious, well you don't want to find out later that the policy was not what you expected - particularly after the insured dies. There will be NOTHING you can do after that no matter what options was available. Bottom line is, it's your responsibility to make sure you have the plan you think you wanted, no one else. Please do not hesitate to ask us questions!