Guaranteed Issue vs. Simplified Issue vs. Graded Benefit

Final expense insurers sort applicants into different plan designs depending on health. The names below are common, but each company labels its plans a little differently, so always read how a specific policy treats the first few years.

Level benefit (also called immediate benefit)

This is the design for applicants in good health. The insurer asks a set of health questions, and if the answers qualify, the full death benefit applies from the start for any covered cause. Premiums are usually the lowest of the four designs for a given age and amount.

Simplified issue

Simplified issue is the broad term for policies that skip the medical exam and ask a short list of health questions instead. Many level benefit plans are simplified issue. The insurer may also look at prescription history or medical information databases to confirm your answers. If your answers show a certain condition, the insurer may decline, or offer a different plan design such as graded benefit.

Graded benefit (also called modified benefit)

A graded benefit plan is meant for people whose health history makes level benefit coverage unlikely. If the insured person dies from natural causes during the first period, often two or three years, the insurer typically pays only a portion of the benefit or returns the premiums paid with interest. After the period the full benefit applies. Accidental death is often covered in full from the start. Details differ, so ask for the exact schedule in writing.

Guaranteed issue

Guaranteed issue policies ask no health questions, and applicants in the eligible age range cannot be turned down for health reasons. In exchange, the policy usually has a waiting period, commonly two to three years, during which a death from natural causes typically results in a return of premiums, sometimes with interest, rather than the full benefit. Face amounts are often capped at lower levels, and premiums tend to be higher for the amount of coverage.

Typical comparison

The figures below are typical, not guaranteed, and vary by insurer and state. Our home page also has a coverage types table.

• Level benefit: health questions yes, waiting period typically none for natural causes, premium generally lowest.
• Simplified issue: a short set of health questions, no medical exam, outcome depends on your answers.
• Graded benefit: health questions fewer or more lenient, reduced benefit for roughly the first two years, then full benefit.
• Guaranteed issue: no health questions, waiting period commonly two to three years, often the highest cost for the amount.

How to choose

1. Be honest about your health. If you can answer the questions truthfully and qualify for level benefit, it is usually the better value.
2. If you cannot qualify, compare graded benefit and guaranteed issue. Look at the length of the waiting period and what is paid during it.
3. Do not guess on a health question to try to qualify. An incorrect answer can lead the insurer to deny a claim later.
4. Compare at least two insurers if you can. Each has its own health questions and rules.

If you are not sure which design you might qualify for, a licensed agent can walk through the questions with you at no cost. You can call us or request a free quote online.

This guide is general education about how final expense insurance typically works. It is not insurance, legal, tax or financial advice, and products and terms vary by insurer and state.