Recently I have been working with a number of people who are looking for life insurance but don’t want to take a physical exam. The purpose of this blog is to discuss the difference in cost and benefit regarding life insurance policies that require and exam and life insurance policies that do not require an exam.

In our industry many folks who look for what we call Guaranteed Issue life Insurance policies are headed down that particular road for a reason. They either have a preexisting condition or have something in their past disqualifies them from a Non-Guaranteed policy (NG).

Most of the public does not realize the enormous difference in cost between the policy types. Did you know there are three types of basic structure when referring to risk classifications with life insurance? First there is Non Guaranteed (This type of policy requires a detailed list of medical questions be asked along with an exam that includes a urine and blood sample). Second is Simple Issue (This type of policy asks a less detailed list of medical questions but does not require an exam, although the insurance company will pull medical history records if there are any red flags on the application). Lastly Guaranteed Issue policies (These types of policies do not require an exam or any medical questions to be asked, you simply pay the premium and receive the insurance).

What does this mean with regards to your pocketbook, well you see the more an insurance company is allowed to know about you, the more they can accurately gauge you as a potential risk. The non-guaranteed plan allows the insurance company full disclosure of ever aspect of your life and therefore if approved, you stand to receive the most cost effective life insurance policy. The Simple Issue policy is the second runner up, it is not as popular as the NG because not many carriers offer it but it is certainly priced more competitively than the guaranteed Issue. Once more the Simple Issue policies can be issued to the insured as quickly as 48 hours.

Basically a guaranteed issue policy holds the best value when the insured lives past two years from the time of issue but less than ten. The premiums to these policies are very high in cost and will normally not pay the entire death benefit until after the policy reaches two years in maturity. Prior to that point, if the insured were to pass away the premiums would be refunded in full, including a marginal interest rate close to around 5%.

Ok so now to give you some of the finer points to watch out for in making sure you pick the product right for you. First, if for any particular reason you feel that you may not be accepted by an insurance provider when applying for a non-guaranteed plan call us immediately. During the time your policy is in underwriting you may be able to apply with other companies that better suit your circumstances and you will not have a Decline on your MIB report. This is crucial.

If you have a preexisting condition and you still want to apply with a non-guaranteed issue policy than you need to realize that not all underwriting amongst companies is the same. There are certain companies that are much, much, more flexible than others, when they are considering your specific circumstances and health issues. This could result in an unnecessary decline or in the savings of thousands of dollars. I mean it, thousands.

The reason I right this is because I have met so many people who do not know that Simple Issue policies exist and they throw away hundreds of dollars a month on guaranteed issue policies. Moreover people qualify for non-guaranteed issue policy but the company they are with holds them in a higher risk class than they could be offered with a different company.

We have specific companies that we have found to be more flexible when referring to certain categories. I have listed off a few below to show some of the topics in which we have been able to help people find more competitive pricing and policies they can be happy with.
1. Obesity
2. Tobacco chewers and cigar smokers
3. Drug Rehabilitation
4. Resent Gastric Bypass Surgery
5. Insuring between ages 80-85

Now most of the time these Simple issue and Guaranteed Issue policies are for people who have seen some health issues or had a circumstance in their life that prevents them from receiving a non-guaranteed life insurance policy. That is why you should contact us for advice before applying for a life insurance policy with an agent that may not have the experience we do. Thank you for reading.

Guaranteed Issue Life Insurance vs. Simple Issue Life Insurance