Many people put off getting life insurance because they don’t want to undergo the medical exam that is part of the application process.
These people often seek out no exam life insurance policies, but then they get put off again because they read that these are very expensive.
The fact is, however, there are different types of no exam policies and some of them offer very competitive rates.
Before writing off no exam life insurance because you think it’s too expensive, get a free quote and see just what you’re dealing with.
Why People Choose No Exam Life Insurance
There are many reasons why people choose no exam life insurance, but these 5 are the most popular:
- They need coverage fast
- They haven’t had a recent medical exam
- They’re scared of needles and/or doctors
- No time for an exam
- They’re young and in good health
Types of No Exam Life Insurance
There are 3 main types of no exam life insurance:
- Simplified issue
- Accelerated underwriting
- Guaranteed issue
The simplified issue can be whole or term life insurance, and applicants are not, under any circumstances, required to undergo a medical exam. Coverage for these policies usually ranges from $25K to $500K.
For people who are young and healthy, they can get rates that are very similar to traditional life insurance policies.
Accelerated underwriting is a type of life insurance policy that offers up to $2 million in coverage. However, there’s a catch. The catch is that only some applicants get to skip the medical exam.
Those who are allowed to skip the medical exam get policies that are underwritten, but very quickly. Hence the term “accelerated.” Those who don’t qualify to skip the exam will be asked to do so and the underwriting process will not be accelerated.
Why do some people get to skip the exam while others don’t? Accelerated underwriting is reserved for people who are healthy and/or don’t have many medical complications.
Upon applying, the insurer will pull records or your prescriptions, credit, driving, and more. If the underwriters see that you’re in the clear, they will allow you to skip the medical exam.
If you have health complications, take certain medications, or use tobacco, you will be asked to take an exam so the insurer can assess the risk it’s taking by offering you coverage.
Applicants who get to skip the exam often get offered very competitive rates.
The third type of no exam policy is guaranteed issue (GI), and it’s considered the last resort of life insurance. People who have been turned down for other types of traditional and even no exam policies can apply for guaranteed issue and get accepted.
Of course, there’s also a catch with this type of life insurance. Any type of policy that offers guaranteed acceptance will have some strings attached. These include:
- A waiting period – Many GI policies come with a waiting period, which means that the full death benefit will only be paid out if the policyholder dies after two years of purchase. If they die within two years, only a percentage of the death benefit is paid out, or the premiums will be refunded.
- Limited coverage – GI coverage only goes up to $25,000.
- Expensive – GI policies are often the most expensive on the market. This is so the insurer can cover itself against the large risk it’s taking on.
While most life insurance policies come with conditions, it’s important to be aware of them all before signing. This means reading the fine print carefully and finding an insurance advisor you can trust.
Misconceptions About No Exam Life Insurance
Many people think that no exam life insurance doesn’t include any underwriting, but that’s not the case. Only a guaranteed issue is not underwritten, but a simplified issue does include some underwriting.
Of course, accelerated underwriting also includes underwriting, as the name implies.
Underwriting means that specific medical information will need to be given to the insurer. Additionally, it can mean that insurers gather information about you from third party sources, as discussed above.
While some people are scared off by the idea of underwriting, it actually works in the applicant’s benefit. The more an insurer knows about you, the better it can assess its risk and offer accurate rates.
Policies that don’t require underwriting, like GI, come with high price tags exactly because insurers can’t assess their risk. So don’t be frightened by underwriting — it’s a process that serves to benefit you in the end.
How Much Coverage Should You Get?
The question of coverage is highly personal. The amount of insurance you buy needs to be based on what you intend to use the death benefit.
Are you trying to leave a little nest egg for your loved ones or leave enough money to pay off your mortgage?
In the past, insurance agents recommended buying 10 times your salary in life insurance. However, that is very old-fashioned advice and usually results in people being overinsured or underinsured.
Rather, take stock of your personal finances, your debt, and the needs of your loved ones. If you need help crunching the numbers, turn to a trusted financial or insurance advisor.
The most important thing is that you have enough coverage to meet the needs of your loved ones.