Pros and Cons of No-Exam Life Insurance

No-exam life insurance offers a way around the physical exam many insurance companies require. Applying can be faster and more convenient when you don’t need to make time in your schedule for a blood draw and in-person exam.  Accelerated underwriting allows life insurance companies to offer certain  life insurance products without requiring a medical exam. including  one term product offered through Fabric. Here are the pros and cons to know before applying for a no-exam life insurance policy.

Pro: Convenient, Painless Application

The medical exam is the part many people dislike most in the life insurance application process. You can typically expect elements like:

• Medical questions

• Height and weight check

• Pulse and blood pressure check

• Collect urine sample

• Draw blood for testing

• Conduct physical exam

• Possibly additional tests like an electrocardiogram or treadmill stress test

For some people, the life insurance medical exam is inconvenient, but not especially uncomfortable. For other people, including people who may have medical trauma or fears of doctors or needles, a medical exam can be a significant hurdle to applying for a policy.

With no-exam term life insurance, you’ll still complete a detailed health questionnaire. But it may be much more convenient to answer questions on your own time than work around a medical professional’s availability. Skipping the physical component of the exam also saves time and the pain of a blood draw. Other forms of no-exam life insurance, like simplified issue, ask even fewer health questions, although these policies tend to come with higher premium payments for the amount of coverage.

Pro: Quick Approval for Life Insurance Policy

Once you apply for life insurance, you need to wait for the company to approve you before you can open your policy and start coverage. Underwriting traditionally means that after you submit your application, a professional underwriter reviews all the material to do a full risk evaluation. There’s a benefit to having a real person look at your application — they follow complex guides to calculate your risk and can also make an informed judgment call if you fall on the border between categories. The downside is this process takes some time, generally days or even several weeks for more complicated cases.

No-exam life insurance applications rely on software algorithms to review applications super quickly. You might be able to get approved immediately, meaning you can start coverage faster.

Pro: Affordable Premium Rates

One reason many people are attracted to term life insurance is for its low premium rates. Depending on your age, health and other factors, you might pay the equivalent of a few lattes for hundreds of thousands of dollars in coverage.

No-exam life insurance sometimes gets a bad rap for being expensive — and it’s true that guaranteed or simplified issue policies tend to cost more than a term policy would for the same amount of coverage. 

The important distinction is that no-exam term life insurance isn’t the same as no medical underwriting at all. These policies use accelerated underwriting to skip the exam for certain people, but they still factor your health into the equation, which helps keep premiums as low as possible. If you’re young and healthy, you may not notice a difference between traditional term and no-exam term premiums. Premiums increase along with age and amount of coverage, so if you’re older or looking for a fairly sizable policy (e.g., $500,000 or more), it might be worth comparing estimates with and without an exam, but even then, there might not be any difference in premiums.

Pro: No Graded Coverage

Guaranteed issue life insurance comes with the significant benefit that almost anyone can be approved for a policy. One downside to consider is that full coverage doesn’t start right away. Typically, if the insured person passes away within the first two years, the insurance company will refund the premiums (plus interest) to the beneficiary, but won’t pay a death benefit.

With no-exam term life insurance, you don’t need to wait for coverage to take effect. Starting from Day 1 of your policy, you can feel assured that the benefit will be available for your loved ones. 

Note that this is a separate consideration from a life insurance contestability period or a suicide clause. Most life insurance companies will not pay a death benefit if the person passes away by suicide within the first two years (this is to dissuade people from buying a policy as part of preparations to self-harm). Policies also typically have a two-year contestability period to check for inaccuracies on the application before paying the claim.

Con: You Might Need a Medical Exam After All

Accelerated underwriting is generally meant for people whose health is so straightforward that the insurance company’s software can calculate risk without running into issues. In other words, your best chance to qualify for no-exam term life insurance is to be in spotless health, without issues that could be flagged as a concern.

So what happens if the accelerated underwriting algorithm encounters an unexpected hiccup? If health information comes up and you can’t get an immediate offer from the no-exam application, it doesn’t mean you’re rejected. Typically, companies like Fabric can try working with you to get doctors’ records or prescription information to answer outstanding questions. Some people may be asked to go through the medical exam after all, which could add some time and inconvenience before you get final information about policy options.

Con: May Have Lower Coverage Limit

When you’re shopping for life insurance, one of the most important steps is making sure you have as much coverage as you need. Debts, living expenses, your income and future goals are all part of your total coverage estimate. No-exam life insurance policies generally don’t offer quite as much coverage as traditional policies. Simplified or guaranteed life insurance policies may max out at $100,000, or even less. No-exam term life insurance offers a lot more. Policies through Fabric, for example, are available for up to $1.5 million face value without a medical exam. 

For many families, this coverage limit can be high enough to cover all your needs. But if you need more, you might be better off just going with that medical exam.

Con: May Not Be a Good Fit for Seniors

Getting life insurance can get somewhat more complicated as you get older. People’s likelihood to develop certain health issues increases with age, so life insurance premiums go up and some companies may be more conservative in what they require in an application for a policy. 

If you’re over 60 years and interested in no-exam life insurance, it may be more difficult to find companies offering term life insurance without a medical exam. Other no-exam policies like simplified and guaranteed life insurance are options, but these are more costly than term life. If you’re a senior in good health, you may find more options and better value by considering policies that include a medical exam.

Getting life insurance without a medical exam offers several worthwhile advantages to keep in mind. It’s also important to know potential downsides going in, but if you qualify, no-exam life insurance can be a pain-free and convenient way to get a policy quickly.