Simplified Issue Definition
The Simplified Issue tables apply to Simplified Issue business, as defined below, but should NOT be used for Simplified Underwritten business, also defined below.
Simplified Issue - Simplified Issue program requirements vary widely from one company to the next. SI provides the least protective underwriting value as compared to other underwriting programs that use more extensive health information. These programs may use both health and non-health data.
- Decisions may occur in advance of the application through directed marketing or market segmentation strategies
- Easy (Short) applications are typically less than three pages in length
- Applicant is either accepted or rejected based on the same information for each applicant. No additional data is collected to make classification decisions.
- Risk classification is usually limited to composite (unismoker), standard smoker and standard non-smoker. Some programs may creatively identify classes as preferred or broad ranges of sub-standard classification using only data requested from all applicants.
- The premium associated with SI tends to be lower than GI and higher than programs with more extensive underwriting requirements.
Simplified Underwritten - Historical Simplified Issue programs have evolved into new Simplified Underwritten programs that increase the protective value of the underwriting and have either allowed products to become more profitable or reduce consumer premiums rates.
- The application includes more health questions or provides authorization that allows the underwriter to obtaining potentially invasive and non-invasive information on the applicant.
- Many underwriting decisions may still follow a specified list of requirements for most applicants and may also order discretionary items to obtain additional information.
- The SU programs may offer standard, preferred, substandard underwriting classes
- Premium rates still tend to be higher than AU or MU because there is still an anti-selection disadvantage because validation of health history is not as robust as AU or MU.