You don't always need a medical exam to get life insurance, but you might not be able to get as much coverage as you want

You don't always need a medical exam to get life insurance, but you might not be able to get as much coverage as you want

October 8, 2020

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

  • No medical exam life insurance offers quick approval for coverage and can be good if you have are in poor health.
  • There are three types of no medical life insurance: accelerated underwriting, simplified issue, and guaranteed issue.
  • Although there is no medical exam, coverage amounts are limited and failing to disclose an illness can prevent beneficiaries from receiving the death benefit.
  • Haven Life offers affordable life insurance quotes in minutes »

Traditional insurance policies require a medical exam as part of the approval process known as underwriting. It takes about 30 minutes and usually involves a blood draw as well as a urine sample.

For some, the idea of a medical exam is unappealing. For others, pre-existing health conditions means an exam makes them ineligible for traditional life insurance. Whether you have a fear of needles or a prior health condition, no-medical exam life insurance may be able to help you get coverage.

What is life insurance?

Life insurance is a contract between you and the life insurance company, where you pay premiums (monthly or annually) for a payout that your living relatives will receive upon your death, known as the death benefit. Should you die, the insurance company pays the death benefit to your chosen beneficiary.

Most people get life insurance to cover the mortgage, education, and other expenses so their family can continue paying the bills after they die. The goal of having life insurance is to ease the burden on your loved ones after your loss.

Deciding between term vs whole life insurance

There are two types of life insurance: whole (permanent) life and term life. Either can require a medical exam. 

Term life insurance covers a 10, 20, or 30-year period. If you die during that period, your beneficiaries get your payout, known as the death benefit. Term life insurance is generally recommended for any adult with a dependent. The biggest draw of term life insurance policies is the low monthly payments. 

Permanent life insurance comes in a few variations, the most popular being whole life insurance. Whole life insurance policies consist of a death benefit — the amount the policyholder wants paid out to their beneficiaries upon their death — and a cash value component. Whole life policy premiums can also be much more expensive than term life premiums, mainly because they pay the insurance company and fund the cash value component.

What is a life insurance medical exam?

The medical exam is part of the underwriting process, which is how the insurance company determines your insurability. Underwriting is similar to the lending process you would go through to qualify for a mortgage or finance a car — determining how much of a risk you are and how much to lend you. The underwriting process collects information about your health (medical history), job, and other personal information to determine how much they will insure you and what your premium will be. 

The medical exam can take up to 30 minutes and usually includes a blood and urine sample, weight, and blood pressure screening.

Not knowing your medical history means the insurance company is taking a gamble on your health. As a result, the amount of coverage you can get without a medical exam will be for a limited coverage amount, typically with a more expensive premium, and for a limited term — no more than 20 years.

Types of no-medical life insurance

Not everyone will want to get needled and prodded. Also, if a disease is discovered during process the exam, it may make it more difficult to get coverage. That is why geneticists suggest suggest getting private life insurance coverage before genetic testing, because the results may disqualify you for life insurance in the future.

Whether you are concerned about a medical exam disqualifying you or simply just don't want to go to a doctor, there are a few types of no medical exam life insurance policies. They are accelerated underwriting, simplified issue, and guaranteed issue — summarized below:

Accelerated underwritingSimplified issueGuaranteed issue
  • Quick application process
  • Comparable to fully underwritten policies
  • Limited to $1 million or less
  • Quick application process, but includes a health questionnaire 
  • More expensive than policies with medical exam
  • Limited to $100,000 or less
  • Quick approval process, can't be denied
  • No health questions
  • Expensive
  • Limited to $25,000 or less and a waiting period for full benefits payout
  • Good if you have poor health 
  • Limited to 50-85 years old

Accelerated underwriting policies

Although it doesn't require a medical exam, your policy amounts will be limited. However, accelerated underwriting offers the highest policy limits of all the no medical exam life insurance policies — higher than simplified and guaranteed. Your age and health will be a big factor in the underwriting process, according to Quotacy.

Simplified issue life insurance

Although no medical exam is required, you still have to complete a health questionnaire and provide access to medical records. According to Fidelity Life, if you fail to disclose a condition and die, the insurance company can deny paying death benefits to your beneficiaries.

Haven Life Insurance Agency provides the following quotes for simplified issue life insurance:

Age & GenderHealthTerm lengthCoverage amountMonthly premium
30-year-old maleExcellent 30$100,000$24.30
30-year-old femaleExcellent30$500,000$80.52
35-year-old maleExcellent20$200,000$31.88
35-year-old femaleExcellent20$300,000$40.83
40-year-old maleExcellent10$200,000$26.88
40-year-old femaleExcellent10$400,000$41.50

Source: Haven Life

Guaranteed issue life insurance

Guaranteed issue life insurance is sometimes referred to as "final expense" insurance because the coverage amounts are so low that they basically only cover funeral and burial expenses. There are no health or medical questions. According to ColonialPenn, they typically have a two-year waiting period, meaning that if the policyholder dies within the first two years of having coverage, the policy won't pay out.

Who should get no medical exam life insurance?

No medical exam insurance is not only for those who might be in poor health. Many healthy individuals looking for quick coverage without an exam choose this option. It is also useful for those on a fixed income looking to provide coverage for their final funeral and burial expenses. 

For no medical exam life insurance, much depends on your health, age, and coverage amount. The healthier you are, the cheaper the premiums. However, most no medical exam insurance has limits on coverage amounts and it varies by insurance provider.

It is best to shop around online, or even check out those guaranteed life mailers that might arrive in your mailbox. Most of these offers are for low coverage amounts, but some coverage is better than none at all. If you have auto, homeowners, or renters insurance, reach out to your agent and ask if they provide no medical exam life insurance — they might be able to accommodate current customers. 

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

Source: Read Full Article