When you think of buying life insurance, you probably think of term life policies which require getting a medical exam.
Fortunately, for some applicants in need of near instant coverage, it is possible to buy life insurance without a medical exam. There are pros and cons to no medical exam life insurance, and any smart consumer needs to understand how it works before comparing no exam life insurance quotes and companies.
What Is No Medical Exam Life Insurance?
No medical life insurance is a type of term life insurance that does not require a medical exam to get approved and buy. No needles, no nurse, just an application.
While most policies take not only an examination but also several weeks to process, no exam life insurance can be purchased within days of applying, and in some cases, instantly.
These policies offer many of the same benefits as traditional term life insurance, including:
- Term Coverage – protection for a fixed period of time – usually 5, 10, 15, 20, 25, or 30 years. However, short term life insurance (5 or 10 years) has a better chance of getting approved.
- Death Benefits – a death benefit payout for your beneficiaries should you die within the time period specified by the policy. Unfortunately, most insurance companies limit the death benefit amount to $100,000 or $250,000 and a few will cap the coverage at $1,000,000.
- Fixed Premiums – while no exam life insurance rates are higher than term life rates, the premiums are still fixed and affordable.
Please note that, while a no medical exam policy can help you avoid a physician and blood/urine tests, your insurer will require you to complete a health questionnaire. Lying or misrepresenting your current or previous health or family medical history may result in insurance fraud, the cancellation of your coverage, and/or your family not receiving a death benefit payout after your passing.
It is also important to mention that the best no exam companies, such as Sagicor, TransAmerica, American National, Assurity, Fidelity Life, National Life Group and Mutual of Omaha, will underwrite your coverage using information from your MVR (Motor Vehicle Report), pharmacy records and the MIB (Medical Insurance Bureau).
How Life Insurance Companies Calculate Risk
Normally, medical exams are required for life insurance, especially when the insurance company is underwriting and issuing a new policy. This is because life insurance companies are in the business of assessing risk, and it’s difficult to calculate your life expectancy and determine how much of a risk it is to insure you without knowing much about your health and medical history.
For term life insurance, risk is defined as the statistical probability that a policyholder will die within the term of the policy, forcing the company to pay the death benefit. The factors that determine an individual’s risk include age, weight, use of tobacco, alcohol or drugs, pre-existing health conditions such as diabetes and heart disease, family medical history, hazardous occupations and dangerous hobbies.
Individuals over 50, those who are obese, smokers or routinely engage in dangerous behavior present a greater risk of death, and the best life insurance carriers will refuse to provide them with coverage to avoid losses. This is where no exam or high risk life insurance comes into play, offering an option to those who are high risk but need life insurance.
Types of No Exam Life Insurance
Although no exam life insurance is sometimes referred to as “guaranteed life insurance” or “guaranteed issue life insurance”, there are actually three types available. The 3 types represent a spectrum of easy, easier, and easiest in terms of getting approved for life insurance without a medical exam.
Simplified Issue Life Insurance. Simplified issue life insurance only requires a medical questionnaire. If you know you can honestly answer some basic health-related questions about not having any serious illnesses, simplified issue may be the best policy to buy. A company can quickly underwrite a simplified issue life insurance policy without a medical exam, blood test, urine sample or other medical scrutiny; just be prepared for higher premiums.
Graded Benefit Life Insurance. Graded benefit life insurance is the middle of the road option among no exam life policies. The terms and conditions may be slightly more complicated than guaranteed issue life insurance, and there will be a few health-related questions for you to answer. Most graded benefit policies have death benefits that do not vest for the first year or two, depending on the specific insurance company’s contract. This means you may not have coverage for the first years.
Guaranteed Issue or Guaranteed Acceptance Life Insurance. Guaranteed life insurance offers the easiest application process, and is therefore the costliest version of no exam coverage. Guaranteed issue life insurance can help you avoid a physical exam and any health questions on your application. Guaranteed acceptance coverage is available to anyone who applies, just be prepared for a limited death benefit and expensive premiums.
However, be careful because many policies that are called “guaranteed” are actually graded benefit policies because a) they are limited, b) they have some sort of health-related screening process, c) they vest over time, or some combination of these factors.
Advantages of No Exam Life Insurance Policies
If no exam term life isn’t cheap and companies maintain a cap on coverage, why should anyone ever choose it? Here are the benefits of life insurance without a medical exam.
Health Problems and High Risk Lifestyles Are Accepted. Obviously, no exam life insurance helps people with life-threatening health conditions, long-term illnesses, and high-risk occupations.
Immediate Coverage and Convenience. You may need immediate life insurance protection. For example, if you are buying a business and need a policy to insure a business loan, you may not have 4 to 6 weeks for the application process. Whatever your reasons for wanting instant life insurance, skipping a medical exam can get you approved within 24 hours.
Similarly, if you need insurance fast, you can apply for a traditional term and simplified issue policy simultaneously. Your simplified issue coverage will kick in immediately while you wait for the cheaper term policy to get approved. Afterwards, you can cancel the simplified issue contract.
Overcome Medical Exam Phobia. If you have a fear of needles (Trypnaphobia) or a fear of blood (Hemophobia), you can purchase protection and secure your family’s financial future without procrastinating.
Easy To Qualify and High Acceptance Rates. Loose underwriting guidelines mean most applicants are accepted instantly. If you can’t get coverage for health reasons, guaranteed issue life insurance is an alternative that will help you get insured.
Disadvantages of No Medical Exam
You may wonder why anyone would bother with a physical exam if you can get the same benefits from a no exam policy without the hassle. It’s simple – if you want to get the cheapest life insurance, you will need to submit to a medical exam. But there are other disadvantages to a no exam policy as well.
Cheap Rates With Term Life. No exam life insurance policies typically cost 2 to 4 times more than standard term life policies. In essence, you are paying higher premiums to compensate the insurance company for the extra risk of insuring you without an exam, which would otherwise be used to learn more about your current health and better calculate your risk-adjusted premiums. For this reason, if you are young and/or healthy, find an affordable term life policy because no medical exam coverage should be a last resort.
More Individualized Coverage. Medical questionnaires can provide limited insight into your current health status, thus making you look unhealthier than you actually are. For instance, if you have a history of high blood pressure, cholesterol or heart disease in your family, the company may rate you a higher risk and therefore quote you a higher premium.
However, if you maintain a healthy diet and regular exercise, a medical exam can help you demonstrate good overall health despite your family medical history. Sometimes, it may not be wise to skip a physical exam and miss out on a better deal based on a more individualized assessment of your health.
Health Discoveries. Many of us don’t visit a doctor as often as we should, and a health exam may actually provide you with a much-needed health update – good or bad. A doctor may discover a potentially serious medical issue during the exam, and in this case, it is much better to address and treat the problem sooner than later.
On the other hand, the medical exam may show that you are in great health, allaying fears about an existing health issue. If it does, you will have earned peace of mind and cheap life insurance quotes.
Points of Caution
To prevent fraud, an investigation by your carrier, or the denial of your claim for a death benefit payout, keep these issues in mind when considering a no exam policy.
- Cause of Death. Life insurance companies have the right to deny claims if the insured individual commits suicide within the first 2 years.
- Contestability Waiting Period. After a death, companies have 2 years to investigate the information provided on your application and contest your claim, during which, your payout may be delayed.
- Waiting Periods and Vesting. As discussed above, not all policies vest immediately. Be sure you fully understand the terms and conditions of your no exam policy because there may be a one or two year waiting period for your benefits to be payable. If you die within the waiting period, all your premiums will be re-paid, with interest.
Life insurance without a medical exam has many pros and cons. If you are young and healthy, your best option is to apply for a cheap term life policy; otherwise, carefully consider the benefits of not submitting to a medical exam. Compare no exam life insurance quotes online to find the best company, coverage, and rates. Remember, it always pays to research before making crucial decisions that will affect your family’s long-term financial security.