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No-exam life insurance can be a quick and convenient way to get coverage. It’s also a frequently misunderstood option.
Misleading information can leave you with the impression that a no-exam policy is only for certain types of applicants, or that it only works in one way. Life insurance without a medical exam comes in several forms that can fit different situations.
Separate the myths from truth to get a better picture of whether a no-exam policy could be a good option for you.
Generally, most life insurance policies include a physical medical exam and some lab work (e.g., blood and urine testing). Comprehensive medical info helps insurance companies score your risk accurately and determine the best fit for rates. If you’re in superb health, you get the best premium rates. If your health is poor, you might get more expensive rates or be declined for a policy altogether.
The biggest no-medical-exam myth is that no-exam policies are a worst-case option for people whose health keeps them from getting a policy anywhere else.
No-exam policies come in a range of options. Some, like guaranteed issue life insurance, have low coverage limits and relatively high premiums, meaning you might get more value with a different policy. This is, indeed, more of a worst-case insurance option for those who would struggle to be covered otherwise.
But options like no-exam term life, which uses accelerated underwriting processes to skip the medical exam for qualifying applicants, offer competitive premiums and comparable coverage to a standard policy. Term life without a medical exam can be an excellent choice for healthy people who want extra convenience and competitive coverage.
A widespread myth about life insurance in general is that it’s nearly impossible to find coverage without a pristine health history. Insurance companies do sometimes take different views on asthma, weight, mental health issues and more. It can be easy to assume that if you have any health issues, you may as well throw in the towel and look for a guaranteed life policy.
Depending on what condition you have and how severe it is, you may have various life insurance options. People with mild or moderate, well-managed conditions have the best chances to find traditional term or whole life policies. It’s worth comparing options to see which policies offer the best premiums and coverage for you.
It’s also worth reiterating that no-exam insurance can be specifically for people in great health, too. Accelerated underwriting works as a sort of “cut the line” option for applicants whose health is in tiptop shape.
No-exam insurance is designed to make life easier when it comes to the medical side of your application, but that doesn’t mean insurers stop factoring in your health altogether. At least, not all the time.
Guaranteed issue life insurance doesn’t require either an exam or health questions. This kind of policy approves nearly everyone.
Simplified issue life insurance often requires a simple health questionnaire. This streamlines the application process, so you might be approved for coverage in minutes or a few days.
No-exam term life asks much more detailed health questions. Algorithms and predictive models assess data, and you may be able to get near-immediate approval — a major perk for medically underwritten life insurance.
The point of life insurance is to secure coverage so your loved ones can claim the benefit when you’re gone. Once you’ve applied and been approved for a no-exam policy, you can die tomorrow and be covered — right?
With term life policies, you do get instant coverage. Once your policy is in effect, you can relax and trust that the insurance company will pay the promised benefit, whether you pass away next week or many years from now (as long as you’re within your policy’s term).
Some simplified or guaranteed life insurance policies, however, may not offer the full benefits from day one. You may need to hold a policy for at least two years before you pass away for the insurance company to give your loved ones the death benefit. Simplified and guaranteed issue policies are easy to get approved for, so the insurance companies set this two-year “graded benefit” to discourage people from opening a policy in their final days or weeks. With these policies, your loved ones will typically get back whatever premiums you paid into the policy, often with interest.
By contrast, no-exam term life policies don’t need this graded benefit to protect the insurance company because you’re still going through medical underwriting.
Compared to the lowest term life insurance rates, premiums for simplified or guaranteed life policies are typically much more costly. But this single comparison doesn’t tell the whole story about no-exam policy affordability.
No-exam term life policies often have rates comparable to other term policies. That’s because the no-exam option is meant for applicants who meet health qualifications. If your answers to health questions flag a potential concern or more questions, the insurance company may have you undergo a medical exam anyway to ensure they match you with the correct rating.
While simplified or guaranteed issue policies cost more per amount of coverage than traditional term policies, there are ways to keep premiums costs affordable. Lowering the coverage amount is one quick way to lower premiums, for example.
All things being equal, who wouldn’t pick a no-exam option over the same coverage where you have to make time in your day for a needle stick? But all things aren’t equal — life insurance applications collect so much information so they can tailor your policy to you, and different policy options can vary widely in the coverage and rates they offer.
No-exam term policies offer the closest match to traditional policies. Premiums are closer to traditional term policies (and might be identical in some cases), so there are options with a face value of $1 million or more. If your health qualifies, you’ll pay less per the amount of face value coverage than other types of no-exam insurance, and you’re much likelier to find a policy large enough to cover your family’s needs.
Guaranteed life insurance tends to cap at a relatively low amount, $25,000 or so. This type of coverage tends to work best for people hoping to cover final expenses, rather than replace income.
Simplified issue policies offer more coverage, but most cap out around $100,000 or $250,000. Substantially better, but these policies may still not be enough to cover everything you have in mind for your family.
While there are some persistent myths about no-exam life insurance, the truth is this is a helpful set of insurance policy options that can offer financial protection for your loved ones. Finding the right insurance fit should always start with you — your coverage needs, your health and how much you prioritize convenience in the application process. Understanding different types of policies and debunking common myths can bring you closer to finding a policy that matches what you’re looking for.
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Fabric by Gerber Life exists to help young families master their money. Our articles abide by strict editorial standards.
Information provided is general and educational in nature and is not intended to be, and should not be construed as, financial, legal, or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. We make no warranties with regard to the information or results obtained by its use, and disclaim any liability arising out of your use of, or reliance on, the information.
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