If you need life insurance coverage, but having blood drawn makes you pass out, you dislike being poked, you don’t have time to undergo an exam, or you have potential medical concerns, you may want to check out no-exam life insurance.
However, no-exam life insurance usually isn’t cheap, and the coverage is often limited. Let’s discuss the pros and cons of buying a no-exam life insurance policy.
What Is No-Exam Life Insurance
Usually, when applying for most types of life insurance, an applicant will be expected to meet with a healthcare professional to take an exam, which includes medical questions, blood pressure readings, collecting blood and urine samples, and EKG. You can read more about the life insurance underwriting test.
No-exam life insurance is a type of coverage that doesn’t require an individual to go through a clinical examination as a part of the underwriting procedure. Also, since there is no medical exam to deal with, such policies are often issued way more quickly than a fully underwritten policy.
Hence, someone who applies for no medical exam coverage could have his or her plan approved in as little as two days. The coverage can range anywhere from $25,000 to as much as $500,000. (If you need more than $500,00 in coverage, you may want to apply for a traditional term life.)
Types of No Medical Exam Life Insurance
There are two types of no physical exam life insurance:
Simplified issue life insurance. For this kind of coverage, the carrier will ask a few health questions depending on the amount you are buying and the carrier. There is no medical exam; however, they will check the Pharmaceutical Database, Motor Vehicle Record, and Medical Information Bureau. The max amount you can buy is $500,000 in death benefit. Also, you can expect a phone interview with most carriers.
Guaranteed issue life insurance. As the name implies, this coverage is guaranteed with no medical exam or health questions. The max death benefit is typically $25,000, and there is a graded benefit, which means that the carrier will not pay the full death benefit for the first 2–3 years. If you die within 2 years, your beneficiaries will get the premium amount you paid plus 10% in interest. This is the last resort for someone who can’t get approved for a traditional policy. This type of policy should never be your first choice. You can read more about top companies that offer guaranteed issue policies.
What to Pay Attention to When Buying a No-Exam Policy
- Health Classes – When you buy a no-exam life insurance policy, you trade convenience for a premium. What you also may not know is that you trade health classes too. Most no-exam policies have a standard rating right from the start, which means that, even if you are in perfect health, you will get a standard rating. SBLI is one of the only companies that offers preferred plus rating for no-exam policies—for the one who is qualified, of course.
- Underwriting Processing Time – This may be a surprise to you since the appeal of buying a no-exam policy is that you can get the policy very quickly. The reality is that the processing time can differ drastically from one carrier to another. Some carriers, such as Sagicor, can issue a policy in a few minutes while others, such as Transamerica, can take three weeks. Just because it’s a no-exam policy, it doesn’t always mean fast approval. It also depends on your health, age, and other underwriting factors.
No-Exam Life Insurance Pros
- If you need life insurance immediately and don’t want to wait, this could be for you. For instance, in certain divorce cases, the court may order the breadwinner to purchase life insurance as part of the settlement.
- Buying life insurance with no medical exam is an appealing alternative for people who don’t want to go through the trouble of getting checked out by an unfamiliar medical professional.
- Maybe you have trypanophobia, an irrational or extreme fear of needles, pins or shots. This kind of policy frees you of those things.
- Some look for term life insurance without a medical exam because they know they’re not in the best of health and might end up paying a higher rate as a result of the medical report.
No-Exam Life Insurance Cons
- The main downside of a no-exam life insurance policy is that it is more expensive than the usual life insurance coverage. The reason this type of coverage costs more is that the carrier is taking an increased risk. The company will not know whether you have underlying health issues that could shorten your lifespan.
- The amount of death benefits you can get is limited, and many insurance companies won’t provide more than a $500,000 life policy.
Exam vs No-Exam Sample Monthly Rates
Male 10-Year Term Exam
Male 10-Year Term No-Exam
Female 10-Year Term Exam
Female 10-Year Term No-Exam
Male 20-Year Term Exam
Male 20-Year Term No-Exam
Female 20-Year Term Exam
Female 20-Year Term No-Exam
*All rates quoted on this page are for a super-preferred healthy individual who does not use tobacco. Monthly rates are updated as of Jun 2016 and are subject to underwriting approval.*
There are a few times when a no-exam policy really costs a few dollars more per year than a regular traditional policy—usually when you buy a lower death benefit and you are in your 30s or 40s. At this point, if you need less than $500,000 in coverage, a no-exam policy may be a good choice.
Other times, usually in your 50s or older, a no-exam policy may be two times more expensive. In my opinion, you should get a traditional policy with the medical exam at this point.
As you are aware by now, “no-exam” doesn’t translate all the time to instant approval, or even cutting the underwriting processing time. The only guarantee is that you won’t take an exam as part of the underwriting process.
So, the ultimate question to ask is: Is the rate I’m getting worth not taking an exam when compared with a full exam?
You are the only one who can answer this question. Your job is to compare all the options before making a selection.