Simplified Issue Life Insurance: A Helpful Guide for Canadians
What is simplified issue life insurance?
Simplified issue life insurance policies in Canada are a type of no medical life insurance that offer a simplified application with no medical exam. This can help some people get approved faster.
- Application: Fewer health questions
- Approval: Easier than fully underwritten policies
- Premiums: Higher than fully underwritten policies, lower than guaranteed issue
- Coverage: Higher than guaranteed issue, lower than fully underwritten
Who is it for? Because it has higher coverage amounts compared to guaranteed issue coverage, simplified issue life insurance may help people with manageable health conditions get coverage if they’ve been denied standard life insurance.
Always apply first for standard, fully underwritten coverage since it is generally cheaper and offers higher coverage amounts. Not all standard policies require medical exams. Then, if you’re denied, apply for simplified issue life insurance.
How simplified issue life insurance works in Canada
The application process for simplified issue life insurance works like this:
1. Select coverage amount and type.
The average range for simplified issue policies is $50,000 to $500,000. Permanent life insurance policies and whole life insurance policies are more common but term and other types of coverage also exist.
2. Answer 2-5 health and lifestyle questions.
No medical exam is required for simplified issue policies, but you must disclose diagnoses and medications. The company may request to review your medical records, depending on your answers.
3. Wait to be approved.
Low-risk applicants may be approved via automated system in minutes, but some applications take days and manual review.
Once you get approved, your simplified issue life insurance coverage works like any other life insurance policy. It covers you for the length of the term and pays out a death benefit to your chosen beneficiaries if you pass away while it’s active. Term policies have fixed premiums but no cash value. The payout can be used for funeral expenses or anything else.
Why simplified issue exists
Simplified issue life insurance helps bridge the gap for moderate-risk applicants who don’t fit into fully underwritten policies (suited for low-risk applicants) or guaranteed life insurance policies (suited for high-risk applicants).
Someone with health conditions may prefer to avoid a full medical exam or may have been denied standard coverage. 26% of Canadians say medical tests make them less likely to buy life insurance, according to PolicyMe’s Life Insurance Gap Report.
A person may choose to apply for simplified issue coverage because it has:
- A shorter application process
- A less invasive health questionnaire
- No medical exam
- Higher coverage limits than guaranteed issue policies
From a company’s perspective, this type of policy is a risk management strategy.
You answer a few questions about your health history, which the provider may verify using internal and external databases like prescription histories and insurance records. But they don’t get a full picture of your health, so they charge you moderate premiums.
Fully underwritten vs. simplified issue vs. guaranteed issue life insurance
The biggest difference is the underwriting (level of individualized risk assessment), but the underwriting style also affects the application process, approval timeline, and coverage types available.
Simplified issue policies fall in the middle across every category, from cost to approval timeline to coverage amounts.
Here’s a comparison of these three types of underwriting when it comes to life insurance in Canada.
Did you know? Some insurance providers, like PolicyMe, use accelerated underwriting to streamline the application process for fully underwritten policies. Rates with accelerated underwriting are similar to fully underwritten policies with medical exams, but eligible applicants get to avoid the medical exam entirely. This may eliminate the need for simplified issue for many applicants.
Which option should you try first?
Start with the most robust underwriting option, then move down (simplified, then guaranteed) only if needed.
Many people in Canada overestimate how difficult approval will be. Don’t skip applying for fully underwritten policies first!
Fully underwritten term life insurance policies are better for the majority of eligible Canadians, with higher coverage caps and lower premiums (also known as value per dollar).
What if I’m denied? Even if you are ultimately not approved because of your risk level, your initial application can help you understand your actual risk class and coverage options without locking you into a higher-cost life insurance product.
"Apply for a fully underwritten term policy first. Then try simplified issue life insurance. If these options don't work, look into guaranteed issue life insurance as a Plan B." — Erik Heidebrecht, Licensed Life Insurance Advisor at PolicyMe
Who should consider simplified issue life insurance?
Canadians who have a reasonably stable health profile and want life insurance without a medical exam should consider a simplified issue life insurance policy from the best no medical life insurance providers in Canada.
Which health issues matter? The exact questions vary by insurer, but simplified issue applications typically focus on recent diagnoses, treatments, medications, hospitalizations, and high-risk activities.
Simplified issue may be a good fit for people with well-managed conditions:
- Someone with controlled diabetes
- Someone with high blood pressure managed by medication
- Someone who wants to avoid a medical exam
If you have severe health issues, recent diagnoses, or were recently declined, then guaranteed issue life insurance may be more appropriate.
How much does simplified issue life insurance cost?
In Canada, simplified issue life insurance costs between $15 and $150+ per month, depending on your age, coverage amount, and health status. That’s slightly higher than the average cost of life insurance for standard coverage.
Here’s a cost comparison of simplified issue vs. term life insurance premiums in Canada.
*Table displays the approximate monthly cost of a 10-30-year fully-underwritten or simplified issue term life insurance policy for a 35-year-old non-smoker.
Why simplified issue usually costs more
Less medical information means more uncertainty for the provider, which means that companies charge higher premiums in order to cover the higher claim risk per policy. In terms of cost, choosing a simplified issue policy means you’re trading detailed underwriting (and accurate pricing) for access. Insurers understand this so they build in higher premiums to help applicants get faster, simpler coverage.
Life insurance is a risk assessment agreement where a company agrees to cover you for a fair price based on what they know (or do not know) about your health and lifestyle risks.
Less health information can mean higher premiums. Simplified underwriting is more expensive because the company doesn’t know a lot about your risk in lieu of a medical exam. Companies must charge a higher rate due to the extra uncertainty about your mortality risks.
More health information can mean lower premiums. Full underwriting is cheaper because the insurance company does know a lot about your risks and medical history. This is why medical exams may help some people save money.
Alternatives to simplified issue life insurance in Canada
If you want to balance health disclosures with cost and coverage, then you might want to consider fully underwritten and guaranteed issue policies as alternatives to simplified issue life insurance.
Fully underwritten policies cost less and cover more than simplified issue policies, whereas guaranteed issue policies cost more and cover less.
Fully underwritten
Fully underwritten life insurance follows the traditional underwriting process. It may be harder to get but has the best long-term value. It’s generally a good alternative for people with well-managed minor health conditions.
Apply first for fully underwritten policies to find out if you’re eligible.
Guaranteed issue
Guaranteed issue life insurance is the easiest to get but it’s expensive and rigid. It’s generally a good alternative for people who may have difficulty qualifying for traditional or simplified coverage.
Consider guaranteed issue policies a last resort, if you can’t qualify for standard or simplified coverage. Sometimes this is marketed as final expense insurance or life insurance for seniors, but you can use any life insurance policy for final expenses.
PolicyMe offers guaranteed issue life insurance with permanent coverage, fixed premiums, and online quotes for eligible Canadians. It may be worth considering if traditional life insurance isn't available to you.
FAQ: Simplified issue life insurance
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.
Bonnie Stinson is an insurance writer and researcher in Toronto with a decade of experience producing helpful, accurate content for Canadians. They have published resources for some of Canada's most innovative and consumer-trusted companies in the health, legal, and fintech sectors.