Qualifying for life insurance protection can be harder when you have a serious health condition.
When you apply for coverage, underwriters determine the risk your life insurance policy would create for the insurance company.
Healthier people pose less of a risk. If you have a chronic or unmanaged health condition, your policy presents a greater risk, and underwriters might not approve it.
Or, if you can get approved for coverage, it may be too expensive.
The same can happen when senior citizens seek coverage since underwriters evaluate risk based on life expectancy as well as health.
So if you can’t get coverage, and you need it to protect the people who depend on you financially, what can you do?
One alternative is to apply for a no medical exam life insurance policy.
The Top 12 Best No Medical Exam Life Insurance Companies for 2018
- Banner Life
- Mutual of Omaha
- Principal Financial Group
- Phoenix Life
- American National
Or, learn more about no exam life insurance:
- What is no medical exam life insurance?
- How does it work?
- How much coverage can you purchase?
- What does it cost?
- How is it different from medically underwritten coverage?
- Who should purchase no exam life insurance?
- What features to look for in a policy?
What is No Medical Exam Life Insurance?
Typically, life insurance applicants meet with a paramedical professional, also known as a paramed.
During this meeting, the paramed will:
- ask some in-depth health questions
- get the applicant’s weight and height to calculate body-mass index
- get a blood pressure reading and a resting heart rate
- take blood and urine samples from the applicant.
A lab then tests the samples for various health conditions that could make the applicant a riskier policyholder.
This process can prevent people with hard-to-manage health issues such as diabetes from getting medically underwritten life insurance.
Bypassing the health exam could make qualifying for coverage much easier. And, with no test results to wait for, underwriters can make a much quicker decision.
Naturally, there’s a catch. No exam insurance typically costs more and provides less coverage than a medically underwritten policy because underwriters don’t know as much about the risk your policy would create.
If you are in good health, you should be able to find better coverage at better rates by getting insurance that requires a health exam.
Types of No Exam Life Insurance
If, however, a medical exam would prevent you from getting covered or would make your coverage just as expensive as a no exam policy, no exam life insurance may help.
No exam life insurance falls into two main categories: guaranteed issue and simplified issue:
Guaranteed Issue Life Insurance
When you apply for a guaranteed issue life insurance policy, not only do you avoid the medical exam, but underwriters do not even see your medical records.
The insurance company knows almost nothing about the risk your policy would present, so guaranteed issue (sometimes called guaranteed acceptance) costs more than just about any other kind of life insurance.
When you apply, the company will ask a series of yes-or-no questions, such as:
- Do you smoke or use tobacco?
- Are you currently residing in a hospital or long-term-care facility?
- Do you have AIDS or HIV?
- Have you been declared terminally ill (defined here as having less than 24 months to live)?
Based on your answers, underwriters will decide whether to accept your application.
Getting approval doesn’t always mean you’ll have coverage right away because guaranteed issue policies for life insurance often come with a graded death benefit.
This means if the insured were to pass away in the first 2 or 3 years of owning the policy, the beneficiary would not receive the full life insurance coverage amount.
Instead, depending on how soon the policyholder died, the beneficiary may receive only a refund on the premiums paid so far, along with interest.
If the policyholder survives and continues to pay premiums for two to three years (this varies depending on the insurer and the details of the policy) the beneficiary would qualify for the full coverage amount.
You’re just about guaranteed to get coverage with this kind of policy, but you’ll also pay more and possibly not have coverage when your family needs it.
For these reasons, many people consider guaranteed issue a last resort for life insurance coverage.
Simplified Issue Life Insurance
With a simplified issue policy, you can bypass the medical exam, but underwriters will access your medical records and ask more thorough questions than you’d see on a guaranteed issue policy application.
If your health records or questionnaire answers reveal evidence of serious health issues, you may not get approved for coverage.
A simplified issue application will ask more complex questions such as:
- Are you currently employed and have you actively and continuously participated in the duties of your regular occupation on a full-time basis (at least 30 hours per week) for the past 6 months?
- If retired or currently unemployed, are you physically and mentally capable of being employed on an active full-time basis?
- Have you been disabled for 30 days or longer during the previous 12 months, and has said disability prevented you from performing your normal daily duties or activities, or are you currently receiving disability benefits?
- In the last five years, have you been diagnosed by a member of the medical profession as having, or have you been tested positive for or been treated by a member of the medical profession for any of the following: Acquired Immune Deficiency Syndrome (AIDS), AIDS Related Complex (ARC), HIV virus, or any other disease or disorder of the immune system?
- Within the past 24 months, have you used or are you currently using narcotics, amphetamines or any controlled substance, other than on the advice of a physician?
- Are you now receiving or within the past 12 months have you received chemo or radiation therapy for cancer or have you ever been diagnosed as being terminally ill?
- Do you require any assistance with two or more of the following activities: bathing, dressing, toileting, indoor or outdoor mobility, or eating or do you use oxygen for a medical condition?
These types of policies can be more specialized and have names like burial life insurance or final expense insurance.
In reality they can cover much more than just your final expenses. Like just about any kind of life insurance, your beneficiary has the freedom to use the money as needed.
It’s usually not as expensive as guaranteed issue, but simplified issue policies still cost more than a comparable medically underwritten policy.
How Does No Medical Exam Life Insurance Work
In many ways, a no exam policy works like a traditional life insurance policy:
- Once you’re approved for coverage, you pay your premium in exchange for the life insurance protection.
- If you die with the policy in force, your beneficiary would receive the coverage amount.
- Life insurance premiums are not tax deductible, but the payout is tax free.
So other than the obvious — the ability to avoid a medical exam — how is a no exam policy different?
- Coverage amounts tend to be lower for no exam insurance. We’ll get more into these details below.
- As we’ve already mentioned, guaranteed issue no exam policies sometimes have a graded death benefit which means you may not have full coverage in the first 2 to 3 years of the policy.
- Since underwriters know less about your health, no exam premiums will cost more than comparable coverage from a medically underwritten policy. More about this later, too.
- You can often get no exam coverage more quickly since underwriters won’t be waiting on your lab results or considering more nuanced criteria.
How Much Coverage Can You Purchase?
No exam policies cost more, and they usually place a limit on the amount of coverage you can buy.
A traditional, medically underwritten term policy, such as a million dollar term life insurance policy, can offer a lot of coverage at a low rate.
Many companies cap guaranteed issue policies at $25,000. Exceptions include Guaranteed Trust Life which offers up to $100,000 in guaranteed issue coverage.
With simplified issue, it’s possible to get up to $350,000 in coverage from Assurity if you’re younger than 50. Most insurers cap coverage at $250,000, though you can find some exceptions.
If you’d like your life insurance coverage to replace several years of your income, pay off a mortgage, or protect your family’s savings, simplified or guaranteed issue policies likely won’t be big enough.
A positive medical exam unlocks your eligibility for a million dollar or more in life insurance coverage, and depending on your age and health, this level of coverage may cost less than a lower amount of no exam coverage, especially if you get a term policy.
To get around this shortfall, some people whose health prevents a medically underwritten policy buy two no exam policies.
For example, someone could get $350,000 of coverage with Assurity and another $150,000 with Fidelity.
This approach can get you closer to the coverage amount a medically underwritten policy can provide.
But it will work only if you can afford to keep up the premiums for both policies.
The Cost Of No Medical Exam Policies
We’ve talked a lot about the high cost of no exam policies. But just how expensive are they?
If you watch much TV, you’ve probably seen ads offering cheap life insurance with no medical exam.
That’s not exactly the case, at least when you compare no exam policies to traditional, medically underwritten term policies.
Any time you bypass a medical exam, it’s going to cost more, and it makes sense: Without access to the information gathered from traditional underwriting, your insurance company risks more with a no exam policy.
With insurance, more risk equals higher premiums. It’s that simple.
For example, a 30-year-old applying for $250,000 in no exam life insurance from Assurity could get the same coverage for about half the cost with a term policy that requires a medical exam.
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If you’re reluctant to get a medical exam because it’s a hassle, you may want to give the situation a little more thought.
Yes, making an appointment and spending a couple hours with a paramed takes time and effort. But if you’re healthy, the medical exam can save you a lot of money over the life of the policy.
If it’s your fear of needles holding you back from a traditional policy, well, we can’t help much there. You’ll have to decide how much extra you’ll pay for a no exam policy in order to avoid that needle.
Usually, the higher cost of no exam coverage will be worthwhile only if you can’t get medically underwritten coverage.
Are There Reasons Other than Health to Get a No Exam Policy?
Your health may steer you toward guaranteed or simplified issue life insurance, but health isn’t the only reason that motivates people to go the no exam route.
Other factors that make no exam life insurance attractive include:
- Speed: If you need coverage fast because it’s required for a divorce or a business deal, simplified issue life insurance can cut through the waiting time. Sometimes you can have coverage the day you apply.
- White coat syndrome: Some people fear the medical profession so much they’ll pay higher premiums just to avoid the medical exam, not because they fear the results of the exam. These customers often point, specifically, to the needle used to draw the blood sample as the main reason to stay away.
- Dangerous jobs and hobbies: Along with age and health, traditional medical underwriting considers your hobbies and your occupation. If you’re a skydiving instructor or you drag race every weekend, you may get a better deal from a no exam policy.
- Simple convenience: Maybe you’re older and need coverage only to pay your final expenses and $25,000 in coverage will be enough. If that’s you, a simplified or guaranteed issue policy will do the job without a lot of hassle. If you buy guaranteed issue policy, be sure to pay attention to whether the payout will be graded.
Unless one or more of these reasons rings true (or unless, of course, you have a serious health condition) you’ll probably do better with traditional medical underwriting.
Who Should Purchase No Exam Life Insurance Policies?
When you’re shopping for a life insurance policy, speed and convenience can be appealing. It takes a while to research coverage and check out company ratings.
Adding a medical appointment to the mix won’t speed things up.
Despite the temptation to speed things along, it’s usually worth the time if one or more of the following is true:
- You need coverage that would replace 5 to 10 years of your salary so your family wouldn’t have to worry about finances if you died.
- You’d like a policy to protect your mortgage so your loved ones wouldn’t have to consider selling the house if you died unexpectedly.
- You can wait four to six weeks to have coverage in place and you don’t have serious health concerns.
- You’re not crazy about needles but can put up with that fear for a day.
- Your health isn’t perfect but you don’t know about anything serious that’s going on.
- You have some health concerns but have successfully managed the symptoms for several years.
- You’re in excellent health.
- You have saved up the money you need to leave your loved ones.
It boils down to this: Unless you have a reason to avoid the exam, you will probably save serious money and get better coverage by going through with the exam.
What To Look For In A No Medical Exam Life Insurance Policy
If you’re still reading, you’re probably serious about getting no exam coverage. So let’s be sure you’re getting a policy that meets your individualized needs.
Life insurance doesn’t come with a one-size-fits-all approach, so be sure to consider the following factors when you’re shopping for your no exam coverage:
When you apply for your coverage, make sure you know whether 100 percent of the benefit will be paid to your named beneficiary, regardless of when the insured passes away.
If not, find out for sure how the policy will be graded. Some guaranteed issue policies take three years to reach 100 percent of the payout.
In the earliest months of a policy, it may only refund premiums paid by the policyholder before death.