Life insurance medical exams have spoiled so many of the best intentions.
Maybe it’s the needle or the weight check. Or maybe it’s the hassle of setting up the appointment.
Whatever the reason, the exam thwarts a lot of insurance shoppers who intended to get the life insurance coverage their family needed.
Because of the medical exam, shoppers want to put off their coverage ‘til they lose a few pounds or get their blood pressure back under control. (We hear these stories all the time.)
Or, they opt for no-exam life insurance coverage which may include significant drawbacks.
Table of Contents:
- Should I Get No Exam Life Insurance?
- Why Does It Cost More?
- Types of No Medical Exam Life Insurance
- Term vs. Whole No Exam
- Why You Should Get No Exam Life Insurance
- Life Insurance Riders
- ‘My Employer-Based Life Insurance is No Exam’
- Can I Get Medically Underwritten Life Insurance Without an Exam?
- How Much Coverage Do I Need?
Should I Get No Exam Life Insurance?
If you’re considering no-exam life insurance, you already know about the one, huge advantage these policies offer: You can skip the medical exam and still get life insurance coverage to protect the people you love.
That’s the only information some applicants need to hear. “If I can avoid giving blood and urine and still get my coverage,” they say, “then sign me up.”
Not so fast, we say. Let’s at least consider some of the disadvantages of no-exam life insurance.
In a nutshell, here’s the deal: no-exam coverage costs more — sometimes a lot more — and it offers a smaller payout than most traditional, medically underwritten policies.
So when shoppers are in a hurry and are considering no-exam, we use these guidelines:
- Shoppers Who Should Avoid No-Exam: If you’re a healthy applicant who could qualify for the best life insurance rates, getting the medical exam can save you a lot of money and unlock a lot more coverage for your family.
- Shoppers Who Should Consider No-Exam: If you’re older, have health complications, and don’t need very much coverage, you’re a good candidate for no-exam coverage.
Why Does No-Exam Life Insurance Cost More?
No-exam coverage costs more and offers less because insurance underwriters have to make guesses about your health.
The medical exam offers a snapshot of your health — your body-mass index, your blood pressure, a blood and urine analysis. If you had an underlying health condition, the exam would likely reveal it. If you had warning signs of a chronic condition, the data would show that, too.
Without the exam, underwriters do not know the risk your health would present. You might sign up for $2 million in term life coverage and then pass away within two years. The company would have lost a lot of money on your policy.
They won’t take this chance. To compensate for their lack of knowledge, no exam life insurance companies charge higher premiums. Even if you’re healthy, you’ll pay higher premiums with no exam because your insurance company won’t know you’re healthy without data from the exam.
Underwriters do have other ways to gather information — both from you and from online databases. How this process works depends on the type of no-exam coverage you buy.
Types of No Exam Life Insurance
Life insurance without a medical exam comes in several forms.
The form of policy you choose will affect your cost, your coverage amount, and your family’s ability to file a claim if you died within the first couple years of coverage.
So it’s worth taking a closer look before making a purchase:
Simplified Issue Life Insurance
Simplified issue life insurance usually caps coverage around $250,000, but you can find policies with larger benefits, often up to $500,000 or even $1 million for a term life policy.
Instead of taking a medical exam, you’ll take a questionnaire about your health. You’ll answer questions about:
- Tobacco use
- Drug use
- Medical conditions
- Height and weight
- Family health history
- Your occupation and hobbies.
Underwriters will also consult online databases to assess your health and lifestyle:
- Medical Information Bureau: Life insurance companies manage this database which holds details about your previous life insurance applications.
- Pharmacy Records: Underwriters see your past and current prescription medications which give insight in your overall health.
- Driving Records: Your driving habits — as recorded by your state DMV — can help insurers see your likelihood of being in a wreck.
This information will help underwriters decide whether to approve your application. If they do, these details will help them set your premiums, too.
They use some simple calculus: More risk from you equals higher premiums for you. Normally, you’ll get a decision about your coverage quickly. For larger coverage amounts, your insurer may want to speak with you in person or get a statement from your doctor.
Guaranteed Issue Life Insurance
As its name says, just about anybody can get a guaranteed issue life insurance policy. Your insurer will ask a couple yes-or-no questions. They’ll want to know:
- If you live in assisted living or have a full-time caregiver.
- Whether you have a terminal health condition.
If you answer no to these questions, you’ve most likely made the cut for this kind of coverage. Your age will influence premiums, but rest assured: they will be expensive.
Most companies will cap your coverage around $25,000, but you could find a few exceptions. It would be rare to find $50,000 in guaranteed issue coverage.
These cost and coverage limits compromise the value of guaranteed issue, so we recommend this kind of policy only if you can’t get simplified issue coverage.
And guaranteed issue has yet another drawback: a graded death benefit. Though you can get approved for coverage quickly and easily, your family couldn’t file a claim if you died within the first year or two of the policy.
Instead, they could apply for a refund of your premiums. Over time, the policy’s death benefit builds up to its full amount — usually after you’ve had coverage for three years.
Burial Life Insurance
Burial life insurance does not require a medical exam. This kind of policy resembles a simplified issue policy, but it may have even less coverage since it’s designed specifically to cover final expenses.
The cost of a funeral and burial averages about $10,000, so most burial policies will offer at least this much coverage. Higher end burial policies can surpass $50,000 in coverage.
As with any life insurance, your beneficiary could spend the money as needed. They could pay off your small debts or donate the money to your favorite charity in your memory.
Underwriting for burial life is more stringent than guaranteed issue coverage. Your insurer will check your pharmacy records and the Medical Information Bureau. Also, if you’re older than 85, you won’t qualify.
|Insurance Type||Coverage Cap||Premium Cost||Underwriting||Full Benefit|
|Simplified Issue||Usually $500,000
(More for term.)
|Most Affordable||Strict||Available Immediately|
|Guaranteed Issue||Usually $50,000||Most Expensive||Relaxed||Increases Gradually|
|Final Expense||Usually $100,000||Intermediate||Intermediate||Available Immediately|
Is No-Exam Life Whole or Term?
All life insurance shoppers should decide early in the process whether to buy term or whole life insurance.
This still holds true when you’re shopping for no-exam coverage:
- Term life: Lasts a specific period of time — normally 10, 20, or 30 years — and it usually costs less.
- Whole life: Can last the rest of your life and costs more. Most whole life policies accrue their own cash value, though this isn’t usually true with no-exam coverage.
No Exam Term Life Coverage
If you’d like a term life policy, you’ll need to qualify for simplified issue coverage. Simplified issue has a more rigorous underwriting process. Because the coverage is temporary, more and more insurers offer larger death benefits for simplified issue term coverage.
You wouldn’t be able to buy a multi-million-dollar term life policy as you could with medically underwritten coverage, but you may be able to find a $1 million simplified issue policy.
If you’re 65 or older, you won’t be able to buy no-exam term. You may want to consider guaranteed universal coverage instead.
No Exam Whole Life Coverage
Most no-exam policies offer permanent coverage. You buy a policy, pay its premiums, and the coverage never expires.
But this coverage does not offer one of the biggest benefits of whole life insurance: the added cash value that can become an asset over time.
Instead, you’ll get simple coverage in exchange for paying premiums just like you would with a term life policy.
A whole life simplified issue policy tends to have a lower coverage amount compared to simplified issue term. We’ve never found a whole life simplified issue policy with more than $500,000 in coverage; they average about $250,000.
Normally, you’d need to be at least 45 years old to apply for simplified issue whole life insurance.
Reasons to Buy No Exam Life Insurance
Most insurance shoppers need coverage to protect their family finances in case they die unexpectedly. The lump sum payout of a life insurance policy could keep your family from needing to sell the home or take the kids out of college.
Life insurance can give policyholders a sense of peace that their deaths wouldn’t necessarily create financial turmoil for the people they love.
No exam life insurance candidates usually have the same goals. Even within the constraints of no-exam coverage, your policy’s death benefit could be a tremendous relief for your beneficiary.
But you may have other motivations for coverage that no-exam insurance can help you achieve:
Speed of Coverage
Since you aren’t making an appointment and waiting for your medical professional to submit data to your insurer, you could have coverage in force within a couple days, and sometimes on the same day you apply.
If you need coverage and you’re in a hurry to get it, simplified issue life insurance can make it happen.
Some applicants we work with need coverage as collateral on a loan or as part of a business deal — they often want a policy in place quickly so they can proceed with the loan application.
Maybe you’re trying to quit smoking so you can get better life insurance rates but you also don’t want to go without coverage while you wait.
A simplified issue policy could get you covered now while you go a couple of years without smoking so you can qualify for non-tobacco rates on an affordable medically underwritten policy.
If your employer offers life insurance as a benefit but you’re between jobs, you may want some coverage to fill the gap. Since you expect to need the coverage for only a few months, the higher cost of no-exam coverage may not bother you.
To Cover a Debt for a While
Some of our clients need extra coverage because they’ve just taken out a big loan and worry their existing life insurance coverage isn’t quite large enough to pay off the debt, if needed.
Since they’re in the process of paying down the debt, they don’t want to scrap their current coverage; they just want to enhance their coverage temporarily.
In these cases we recommend up to 10 years of term life coverage — sometimes with simplified issue underwriting. You can find shorter-term policies but they tend to cost more.
Using this strategy our clients can have their extra coverage in force within a day or two. Then they can cancel the policy when they no longer need its extra coverage.
No Exam Life Insurance Riders
Most no-exam life insurance policies let you add riders just like traditional policies. Common riders include:
- Disability Income: If you couldn’t work because of a disability, this policy rider could provide some supplemental income. In most cases, a separate disability income policy performs better.
- Accelerated Death Benefit: This rider lets you access your coverage early — prior to death — if you have a terminal health condition. You could use the money to pay off medical bills or for living expenses.
- Waiver of Premium: You could keep your policy without paying its premiums for a while if a disability kept you from working.
Riders will add extra money to your premiums, so choose them wisely.
‘My Employer-Based Life Insurance is No Exam’
When some life insurance shoppers learn they’ll need a medical exam to access the best life insurance rates, they counter with this refrain: “My employer-based insurance doesn’t need a medical exam so why do you?”
They’re right, of course. Employer-provided life accepts everybody because it’s group-based coverage. Each group member’s risk gets spread across the entire group, making it more reasonable.
But employer-based group coverage has its limits: low coverage amounts and very little flexibility. If you changed jobs, for example, you’d lose your coverage.
To get your own personal life insurance policy with enough power to stabilize your finances if you died unexpectedly, you’ll need a medical exam or a larger simplified issue policy.
A medically underwritten term policy could give you up to $10 million in coverage. A simplified issue term policy could reserve up to $1 million.
Can I Get Medically Underwritten Life Insurance Without an Exam?
Yes, it is now possible to find medically underwritten coverage that does not require a medical exam.
About ten years ago writing that previous sentence would have seemed ridiculous. By definition, medically underwritten coverage required a medical exam. It had been that way for decades.
But now some shoppers — almost always younger shoppers — can find the best of both worlds: medically underwritten life insurance that’s affordable and high quality without taking a medical exam.
New online agencies such as Haven Life and Bestow Life have made this possible. They use tech-driven algorithms to establish your health history. If you’re 45 or younger and the system doesn’t flag you as a complex applicant, you could skip the exam and still buy up to $3 million in term coverage.
While you can find this kind of coverage, it’s still true that most life insurance applicants will need a medical exam to unlock the affordability and large benefits of a medically underwritten policy.
How Much Coverage Do I Need?
How much life insurance should you buy? This is a key question whether you’re buying whole, term, no-exam, or medically underwritten coverage.
The answer directly impacts how much you’ll pay for coverage, and it will directly impact your family’s financial life if you died and they filed a claim.
If your family depends on you financially, we recommend buying 10 times your annual income in life insurance. Someone who earns $100,000 a year would need $1 million in coverage.
Of course, with no-exam coverage you’d have a harder time qualifying for this level of coverage. You’d need to max out a simplified issue term life policy. This level of coverage is well within the abilities of medically underwritten term.
But this 10-times-your-salary guideline provides only a place to start and not the final answer to your question about coverage. Other factors should also influence your ideal coverage amount.
Consider these examples:
- Did You Just Buy a Home? You may want more coverage to make sure your family could easily pay off the mortgage.
- Have Lots of Kids in College? Families with two or three children about the same age could eventually have multiple college tuition bills, all coming due at once. You may be planning for this now, but if you died, the right amount of life insurance coverage could help make it easier for your family.
- What About Future Dreams? Maybe you’re planning to buy a beach house or renovate your home from top to bottom. Your life insurance coverage could preserve these dreams for your significant other even if you could no longer help provide them.
As you know from reading this post, no-exam coverage won’t have the power you need to make all these things happen. Traditionally, only a medically underwritten term life policy can provide this much coverage.
No-exam works better in scenarios like the examples below:
What About Other Life Insurance Needs?
Not everybody wants life insurance to preserve a standard of living after an untimely death. You may have other, more specific needs which can inform your decisions about coverage:
- As Collateral On a Loan: You’ll need enough coverage to pay off the loan if you died; in most cases no-exam has the teeth for this.
- As Final Expenses: Final expenses average about $10,000, obviously well within the power of no-exam life.
- For Liquidity: If your estate’s tied up in property and securities, you may want to leave life insurance cash to give your heirs time to liquidate your assets. A no-exam life policy should buy them some time.
- As a Bequest: Your life insurance payout could fund a foundation or a nonprofit you care about. Depending on the size of your planned gift, no-exam life could help make it happen.
Exam or No-Exam, Life Insurance Makes Sense
Life insurance lets you leverage a larger amount of money at one time in exchange for paying smaller premiums on a regular basis.
If you’re young — in your 30s or 40s — and healthy you’ll have access to the best life insurance rates. You can leverage the most for the least. You could get $2 million in term life coverage for $30 a month, for example.
But this works only if you can prove your health status by taking a medical exam or finding medically underwritten coverage that lets you skip the exam.
When you can get this much coverage at such a great price, a medical exam shouldn’t stand in your way.
If your health history is more complex, a no-exam policy may be perfectly suited to provide the life insurance safety net you need.