Guaranteed Issue vs Simplified vs Fully Underwritten Life Insurance Policies

What do they mean? What option is best for you?

What Are Your Life Insurance Options?

Guaranteed Issue vs Simplified vs Fully Underwritten Life Insurance Policies

What do they mean? What option is best for you?

Protect Your Wealth - Life Insurance, Investments, & Financial Planning Services Across Ontario

Whether it’s your first time buying life insurance, or you’ve been browsing for a while, you’ve probably come across a few different options for applying for either term or permanent life insurance. Here’s what you need to know about the difference between the fully underwritten, simplified issue, and guaranteed issue application processes.

What Are My Life Insurance Options?

While looking for life insurance, you’ll commonly come across three ways of applying: fully underwritten, simplified issue, and guaranteed issue. Each has their pros and cons, and are designed for different situations and needs. Fully underwritten and simplified are for term life insurance and permanent life insurance, whereas guaranteed issue is typically only for permanent life insurance, aimed to cover your whole life.

FULLY UNDERWRITTEN

SIMPLIFIED ISSUE

GUARANTEED ISSUE

Cost of Premiums

    
      
        

Medical Underwriting

Full medical history disclosed.

Limited medical questions. May differ by insurance company.

No medical questions asked.

Visit from nurse or paramedical company

Most often yes.

Sometimes substitued with physicians report.

No vist from nurse or paramedical company.

No vist from nurse or paramedical company.

Speed of approval process

Longest process, may take few days to several weeks.

Typically within a few hours to a few days.

Typically within a couple hours to a couple of days.

Maximum amount of coverage

No specified maximum.

Depends on company, age and health history. Can be up to 1M in coverage.

Depends on company and age. Most often between 25K and 50K maximum.

What is Fully Underwritten Life Insurance?

Fully underwritten life insurance, also known as medically underwritten insurance or traditional insurance, is for people in good health with no serious medical or lifestyle concerns.

Applying for a fully underwritten policy typically (although not always) requires a medical exam done by a nurse visiting your home. This medical exam can consist of:

  • Getting your height and weight measured
  • Providing blood and urine samples
  • Getting your blood pressure checked
  • Potentially taking other tests, such an electrocardiogram

The results for these tests and samples typically take a few days to sometimes a few weeks, which is why this process takes the longest to get approved for. However, if you have exceptionally good health, you might qualify for an even better premium rate than the one you were quoted.

In 2017, Manulife Insurance, Canada’s largest life insurance provider, introduced accelerated underwriting for life insurance policies. This new process reduced medical underwriting (no fluids or biometric testing) and has resulted in quicker underwriting decisions.

Since that time, many life insurance carriers in Canada have followed which has resulted in several options for approval with no medical tests. The COVID-19 pandemic in 2021 significantly impacted the life insurance underwriting process as companies expanded their no medical limits. Although deemed temporary measures, many expect these accelerated underwriting guidelines to remain permanent.

As of 2021, the following limits are available with no fluids:

2021 insurance coverage limits with no fluids testing. Life insurance coverage can go up to $3,000,000, $1,000,000, or $99,999, depending on age. Critical illness insurance coverage can be up to $250,000, and disability insurance can provide up to $6,000 in monthly income benefits

For Life Insurance

  • Ages 18 to 50, $3,000,000 or less
  • Ages 51 to 60, $1,000,000 or less
  • Ages 61 to 70, $99,999 or less

For Critical Illness Insurance

  • Ages 18 to 40 for $250,000 or less of coverage
  • Ages 41 to 50 for $100,000 or less of coverage

For Disability Insurance

  • Ages 40 and under for up to $6,000 monthly income benefit
  • Ages 41 and over for up to $2,500 monthly income benefit

Talk to a Life Insurance advisor today.

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What is Simplified Issue Insurance?

Simplified issue insurance policies don’t require a medical exam but do require you to answer certain health-related questions as part of your application. In return for no medical exam, premiums tend to be higher than traditional insurance. The number of questions asked vary for each insurer, and also vary depending on if the policy is deferred or not. Simplified issue insurance is an option for those who want faster approval or don’t want to take a medical exam, and are generally used for term life insurance products.

Below is a highlighted chart of simplified issue insurance options available, and the number of questions their applications ask.

COMPANY

PLAN NAME

MIN-MAX AGE

MAX COVERAGE

NUMBER OF QUESTIONS

Canada Protection Plan

Deferred or Simplifide - Term and Permanent.

18 - 80

$75,000 - $500,000

23 - 39

Foresters

Simplified Non-par whole life

18 - 70

$10,000 - $100,000

10

Humania

Insurance without medical exam

18 - 70

$300,000

6 - 18

Industrial Alliance

Access Life - Term and Permanent

18 - 70

$25,000 - $500,000

Deferred - 5, Deferred Plus - 9, Immediate - 13

Manulife

Cover Me® Easy issue
 
Manulife Quick Issue Term®

18-85
 
 
18-50


$75,000
 
 
$100,000-$500,000

15

Speciality Life

Standard Protection

18 - 70

$300,000

12

SSQ Financial

Simplified Life - is more medically underwritten than other simplified issue policies.

18 - 70

$25,000 - $500,000

51

What is Deferred Life Insurance?

Some insurers offer deferred life insurance policies, like Industrial Alliance and Canada Protection Plan. Deferred life insurance refers to a type of policy where the insured is not covered for a period of time (typically 24 months) and will only receive their premiums back plus some interest if death occurs in that period of time. Deferred policies ask less medical questions during the application, but result in higher premiums.

Some insurers offer a version called Deferred Plus that asks more medical questions, but comes at a lower premium than the regular deferred coverage. It also has no coverage in the first 24 months.

Immediate coverage is the standard policy most insurers work with, and covers the applicant on day one of getting approved.

Deferred insurance plans are similar to simplified life insurance, and are another option for those who may have been declined life insurance in the past, or have trouble obtaining life insurance.

What is Guaranteed Life Insurance?

These plans ask no questions at all, and require no medical exams. Guaranteed issue insurance is designed for those who have more serious health issues, or are older in age and do not qualify for traditional or simplified insurance. Many insurers will also have a deferral period of 24 months for guaranteed life acceptance insurance. Guaranteed issue insurance coverage generally has a maximum of $50,000, with some insurers covering less, and comes at the highest premium out of the three because it’s also a type of permanent life insurance.

COMPANY

PLAN NAME

MIN - MAX AGE

MAX COVERAGE

Canada Protection Plan

Guaranteed Acceptance Life
18 - 75
$50,000

Empire Life

Guaranteed Life Protect

40 - 75

$50,000 ($25,000 at 51)

Foresters

Guaranteed Issue Whole Life

50 - 80

$25,000

Industrial Alliance

Guaranteed Access

18 - 80

$50,000 (18-50)

SpecialtyLife Insurance

Guaranteed Acceptance Life

18 - 74

$25,000

SSQ Financial

Guaranteed Issue Whole Life

18 - 80

$50,000 ($25,000 at 71)

What is the Difference in Cost?

Quotes will vary with each insurer, but the costs follow the same pattern: fully underwritten has the lowest premiums, and guaranteed issue has the highest premiums. Simplified is a mix of the two types, and is in the middle in terms of price. To better illustrate this, below are quotes from Canada Protection Plan’s fully underwritten and simplified issue options, based on a 45 year old male non-smoker for $500,000, for a 10 year term.

Quotes from CPP for Preferred elite term insurance, simplified elite term insurance, deferred elite term insurance, and guaranteed acceptance life. Preferred is $52.65/month, simplified is $104.85/month, Deferred is $143.37/month, and Guaranteed is $164.75/month.

Note that CPP’s maximum coverage for their deferred term insurance maximum coverage is $350,000, and their guaranteed issue is $50,000. This is usually the case for other insurance companies as well: guaranteed issue coverage tends to be less than other products.

Do you have any other Life Insurance Questions?

At Protect Your Wealth, we have been providing life insurance and expert advice since 2007. If you’re not sure which type of life insurance will best fit your needs and situation, we’ll be more than happy to help.

Get in Touch With Us Today

We’re proudly based in Hamilton, and service clients anywhere in Ontario, including areas such as Burlington, Guelph, Kingston, and Oshawa, so please contact us or call 1-877-654-6119.

Talk to a Life Insurance advisor today.

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