Ever heard of no medical exam life insurance? With life moving as fast as ever, there’s a new type of life insurance aiming to solve the problem of time.
You know life insurance is important for your family, but if you’re trying to find the work/life balance everyday and can’t seem to make it work, how on earth are you supposed to find extra time in your week to schedule a medical exam?
Interestingly, no medical life insurance is very comparable to fully underwritten policies where a physical is still required, yet most people simply didn’t know it was available.
For some, time may not be as big of an issue. However, even though they feel good, there’s a lingering uncertainty of what the results of the exam might yield, too. Maybe you haven’t been to the doctor in a while and you’re not very confident of your blood pressure, cholesterol levels, or some other unknown factor. Perhaps getting coverage in place first, then attempting the medical exam may be a better solution, just in case.
There are really several reasons you may want to consider life insurance without a medical. Let’s talk about them.
No Medical Exam Life Insurance Is The Solution (Well, Maybe)
Thankfully, we’re in a new age of life insurance.
Life insurance can be approved almost instantly now, with other no exam policies taking just a few business days. With the standard turnaround time of 4-6 weeks for a traditional, fully underwritten life policy, this is a huge step in the right direction for both insurance companies and consumers alike.
It greatly cuts down on the the man power required of an insurance company through automation, and it also gets you, the consumer, what you need as quickly as possible. There are advantages and disadvantages to both, but the industry is definitely making a strong step towards no exam life insurance underwriting styles with some of the best term life insurance companies entering the marketplace constantly.
What Are No Exam Policies?
A no exam policy is one where you can skip the normally required medical and still qualify for a standard policy type. Getting approved for life insurance is based on your age and health, so under normal circumstances a carrier would require a third party examiner to see you in person to perform a quick physical on behalf of the insurance company.
The normal exam measures your current height and weight, your blood pressure (usually 3 times), a brief questionnaire, and both samples of blood and urine for analysis. You would verify any use of tobacco, or maybe even go through a 20-minute EKG. This all gets signed by both you and the examiner and the two samples are sent for profiling. This can take several days, or even a week or more which only adds time to your underwriting process.
With advancements in technology and large amounts of data, insurance companies are able to bypass this while charging only nominally higher rates. The increase in premiums are due to the percentage of applicants who aren’t honest, are unaware of hidden medical issues, or other variables which can’t be accounted for with more limited information.
A no exam policy will still require a few things:
- Medical Questions
- Motor Vehicle Reports
- Prescription Checks
- Financial Justification (in some cases)
- Doctor’s Records (in some cases)
They all have some similarities in their process, but each has some uniqueness as well, especially with which risks they’ll consider.
Qualifying for No Medical Coverage
Just because you don’t have to go through the entire process doesn’t mean you’re guaranteed to get the coverage. In fact, it’s potentially a little more difficult than a normal term life insurance policy because answering “Yes” to any health question is going to raise a flag. You might still be approved as applied, but the heightened sensitivity to any question answered “Yes” may spur a manual review of your application.
Those who are healthy, have a clean family history (meaning void of cancer, heart disease, diabetes, etc among immediate family), a clean MIB and MVR will get the best rates. If one or more of these are a concern, you could miss out on a discount but still be eligible for coverage. With no exam life, there are different levels, also called ratings, which you could be approved at. Preferred Best, Preferred, Standard, and Rated are the non-tobacco ratings, and Preferred Tobacco and Standard Tobacco are for those who smoke.
For those who do have a health condition, like diabetes, you may still be able to get coverage, but you’ll get either Standard or Rated based on the carrier you apply with and your current condition and medications. You could also be declined, as well.
Limited Carrier Choices
While there are huge amounts of carriers to choose from for your standard term life policies, a policy requiring no medical isn’t offered by quite as many. As of now, there are about 15 no exam life insurance companies to choose from.
Not many of the top carriers are ready to move to a non-underwritten term life plan because there are hidden risks for the issuer based on the limited human element for reviewing approvals. Without their underwriting personnel taking time to review each application, it’s statistically impossible for them to be able to account for the higher risk individuals who slip through the cracks and still get approved.
The carriers who have moved, however, are using big data platforms and complex computer algorithms to ensure they are limiting their exposure to risk, and they’ve published higher rates to offset those who do slip through the cracks. In other words, each person is paying a slightly higher premium for no exam life insurance because of the pool of others who are also applying for the same policy.
Limited Coverage Amounts
Depending on how much death benefit you require to suit your needs, a no exam insurance policy may or may not be the most practical fit. Because of the reasons stated above, even the companies who have moved to non-medical underwriting still are keen enough to not offer as high of face amounts to ensure they aren’t putting a lopsided case through.
Until just this past year, the highest death benefit from a single company was $350,000. Today, it’s $1,000,000 by just a single insurer.
One tip if you do need more than a million in coverage and want to skip the medical: apply to more than one company. Just because you are maxed from one company doesn’t mean you can’t get more insurance from another and ‘stack’ the policies. You may be asked additional information to justify the coverage, like income, but this isn’t any different than if you had applied for over a million of fully underwritten life insurance.
Higher Risk Types
If you were unable to qualify for a no exam life insurance policy, you can still get coverage in a couple of different ways. If not for medical reasons, it may be harder if you’re already much older.
First, you can go ahead with the exam and apply with another carrier to see if you can be approved. This may be your only way to secure coverage close to what you had originally applied for. If, however, you still don’t want to go through the exam for whatever reason, you still do have a few more options, although they add more limitations. Here are your choices:
- Graded Life Insurance
- Guaranteed Life Insurance
- Final Expense Life Insurance (more on Burial Insurance)
If you opt for one of these, expect to need to change carriers as most of the best no exam companies do not offer both a true no exam term policy and a graded one.
Graded will be your next best case scenario if you really don’t want to do the physical and need term coverage, but understanding how the policy works and why it’s different is crucial.
A graded term or graded whole life policy will not pay out in the first few years, but instead pay a partial percentage or your premiums back plus interest. A two- and three-year graded benefit period are most common. If the company offers partial percentage pay outs, expect 25-45% in the first year, up to 75% in the second, and a full payout thereafter. If the company offers a return of premium plus interest, you can see anywhere from 3% to 10% interest in addition to your principal payments.
You will also be forced to lower your coverage amount if you sought more than $150,000 because the companies who offer graded understand an even higher risk profile for their applicants. The questions asked are limited, fortunately, to around 10 questions and they tend to be much, much more liberal than the questions asked on a no exam kind.
Guaranteed Issue / Guaranteed Acceptance
Even someone who applied for a graded policy may not get covered for several reasons, like health, recent DUI’s, or medical conditions which are yet to be clearly diagnosed.
The good news is, as the name implied, you can’t be turned down for a guaranteed issue policy. The applications are simple, quick, and not much more than contact information, beneficiary information, and payment info. You can expect to have coverage in just a few business days or quicker.
The biggest drawbacks to guaranteed acceptance life insurance are price per thousand, maximum coverage amount, and age. Age becomes a big factor here because until 45 to 50, there really aren’t any options of insurers to choose from. But once you’ve attained the age, you’re also limited to $25,000 per carriers, with limited choices of companies to choose from. You’ll also be paying the highest cost per thousand of any type of life insurance because you likely pose the highest risk.
Final expense, or end-of-life insurance, is a small death benefit policy which is much like a guaranteed issue policy. $10,000 or less in death benefit will be available and they tend to be permanent policies only. Like graded and guaranteed, there will be a waiting period of two or three years before the benefit period is active. These policies should be reserved for those who are looking to cover minimal expenses at death.
Understanding both your needs and your overall risk class is top priority when choosing a no exam life insurance policy. It will not only determine your rates, but what type of policy you are eligible for in the first place. An independent agent is your friend here, especially one who focuses his or her practice on this type of coverage.
There are also special considerations only an expert might know, like no exam coverage options for SBA loans where the maximum coverage can be as high as the loan being taken. It’s a short, one-year duration type, but it is renewable every year until the applicant can find other coverage or no longer needs the death benefit for the loan originator.
Still have questions? Click here for more common questions about no exam life insurance.