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How Does No Medical Exam Life Insurance Work?

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9 mins

One of the biggest objections people cite for not getting life insurance is the medical exam. Some don’t want to commit the time, others hate needles, and many are afraid the examiner will find something wrong with their health.

If you’re willing to pay more for life insurance and/or accept a smaller death benefit, you can find several examples of no medical exam life insurance.

What is no medical exam life insurance?

As its name implies, this is a type of life insurance policy that allows you to apply for coverage without undergoing a paramedical exam.

How is it different than regular life insurance?

For most types of life insurance policy, the medical exam is a key part of the underwriting process. Underwriting is the process of assessing the risk you carry of dying within a certain period, which would cause the insurance company to pay out a death benefit claim. The more risk you pose, the more you will pay in premium. Some insurance companies may consider you too risky to insure and deny you coverage.

A medical exam helps the insurance company assess your health risk. The exam can also uncover underlying medical conditions, such as diabetes or HIV, that will affect your qualification for coverage.

During the exam, the examiner will measure and weigh you, take your pulse and blood pressure, can collect blood and urine samples. In most cases, the medical exam can be conducted in your home. It takes about 20 to 30 minutes.

No medical exam life insurance has one main advantage in that the person being insured does not have to undergo that medical exam. The other benefit is that you can be issued a policy in a shorter amount of time because it often takes weeks to schedule a medical exam and additional time for the insurance company to receive and analyze the results.

You may still be asked health questions

Even without a medical exam, some life insurance policies will still consider your health when they assess your risk.

You may have to submit a medical questionnaire. This document will ask you questions about past and current medical conditions, as well as the history of medical conditions in your family. You will be asked about:

  • Health conditions you have
  • Medications you take
  • Past hospitalizations
  • Medical procedures you have had
  • Your family medical history
  • Lifestyle habits such as smoking, drinking and drug use

If your answers indicate higher than normal risk, you could be denied coverage or be charged a much higher premium than somebody with fewer health risks. Some insurance companies may insist that you undergo a medical exam before they will issue you a policy.

Lying on the application or health questionnaire to avoid disclosing health conditions can affect whether the policy pays out a death benefit.

Life insurance policies typically have a contestability period. The provision gives the insurer the ability to investigate the insured’s death if it occurs within the first two years of the policy. If the insurance company finds deception on the application, it can potentially deny the death benefit claim.

For example, if you die of cancer and the insurance company discovers that you knew you had cancer when you applied for the policy, they can potentially deny or reduce your death benefit if death occurred during the contestability period.

Higher costs and limitations on benefits

With no medical exam life insurance, the life insurance company is taking on added risk because they don’t obtain a full picture of your health. Because of that, no exam life insurance has limitations compared with policies that do require a medical exam.

One is the amount of coverage you can buy. Some insurance companies that sell individual no medical exam policies cap the death benefit at $25,000, while others may go as high as $50,000 to $100,000. There are some no exam policies available where the death benefit can be as high as $500,000, but there are not many.

In addition, the premium on an individual no exam policy will almost always cost more than a comparable policy that requires a medical exam. In some cases, the premium can be close to double. This is especially true the higher you want your death benefit. Because there are fewer options available in the market for higher death benefits, you can expect to pay significantly more.

The cost of an individual no medical exam life insurance policy will vary by company, and by your age and other factors. One quote showed a female in her late 60s paying $122 a month for $25,000 in coverage. A woman in her mid 30s would pay close to $12 a month for $30,000 in coverage, according to another quote. Another company's guaranteed acceptance life insurance plan, available for customers between the ages of 50 and 85, started at $9.95 a month with up to $50,000 coverage.

Another limitation on some no medical exam life insurance policies is that they have a waiting period. This period typically covers the first two years of the policy. If you die of natural causes during the waiting period, you will not receive the full contracted death benefit.

There are a number of insurance companies that advertise no waiting period policies for their no medical exam policies.

[ Related read: How Much Does Life Insurance Cost in 2021? ]

Types of no medical exam life insurance

There are five main types of life insurance with no medical exam. Let's take a closer look at each of them.

Group life insurance

Group life insurance is typically available through employment or professional association. It provides guaranteed coverage based on employment or membership, but coverage is no longer available if your employment or membership ends.

Group life insurance is typically cheaper than an individual policy because the life insurance company is collecting premium and spreading its risk among multiple people. Also, group policies are sometimes provided at no-cost to the insureds by the plan sponsor, be it an employer or association.

However, group life insurance plans also limit the amount of coverage you can apply for. Employers, for example, often limit your coverage to an amount based on your salary.

Guaranteed issue life insurance

With a guaranteed issue policy, you automatically qualify for life insurance coverage once you submit an application. There is nothing about your age, health or other factors that disqualify you from coverage, except in some cases when the insurance company asks three to five knockout questions about possible terminal illnesses. Most group life insurance policies are guaranteed issue.

Simplified issue life insurance

This type of no medical exam life insurance is similar to guaranteed issue, with one key difference: You are not guaranteed coverage when you apply.

While there isn’t a medical exam for a simplified issue policy, there is typically a detailed health questionnaire as stated above. The answers you provide can determine your premium rate and even if you qualify for coverage.

No medical exam term life insurance

Term life insurance policies with no medical exam are comparable to a medically underwritten life insurance policy. Instead of conducting the paramedical exam, the insurance company’s underwriters will thoroughly evaluate your medical history.

However, as stated above, the cost will likely be higher and you may be limited on the amount of death benefit you can apply for.

No medical exam policies offer term lengths up to 30 years and can typically be purchased up until you turn 75, though some insurers restrict term lengths based upon your age.

There are no medical exam term life insurance policies that are level premium, meaning you will pay the same amount of premium for the life of the policy.

However, there are also no medical exam term life policies where the premiums increase as you age.

No medical exam whole life insurance

As with regular whole life insurance, this type of policy is designed to cover you for life as long as the required premiums are paid.

However, the no medical exam version of whole life generally offers small death benefit amounts, ranging from $25,000 to $50,000.

This type of coverage is typically used for final expense insurance, which helps cover funeral expenses and estate settlement costs.

If you want final expense insurance and are unable to qualify for traditional coverage, simplified issue whole life insurance will be less expensive than a guaranteed acceptance policy.

[ Related read: What Are the Different Types of Life Insurance? ]

Who is no medical exam life insurance for?

If the only reason you are considering no medical exam life insurance is to avoid the exam, you may want to reconsider that stance. Because if you’re relatively healthy and have coverage needs beyond final expenses, you can typically get term life insurance or whole life insurance much cheaper by submitting to a medical exam than you could by buying an individual no medical exam policy.

Plus, you should be able to buy a higher coverage amount with traditional life insurance.

No medical exam life insurance helps people who are older or who may have health issues to buy at least some coverage to help with financial needs after their death.

It is often marketed to older adults with no dependents who just want to leave enough money after they die to cover their funeral and other final expenses.

If you have access to a guaranteed issue group life plan through work or association membership that you can get at little to no cost, you should absolutely do so. But you also use this insurance as a supplement to an individual policy that offers more coverage and does not expire if you quit employment or association membership.

Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published January 19, 2021
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