If you’re looking for life insurance, you’ve probably wondered: what if I don’t pass the medical exam? First things first: don't worry too much, because it's easier than you think. Secondly, it’s normal to be worried; many people feel the same. This is because the medical exams required by insurers can be difficult and demanding. For many, especially older people, they seem like an insurmountable barrier. But there is a way of avoiding this obstacle: no medical exam life insurance.
In this article, we will explain insurance that doesn’t require you to pass a medical exam and how it works. These policies are usually expensive, but they give you access to insurance. Read on to learn more.
No Medical Exam Life Insurance: Article Contents
How No Medical Exam Life Insurance Works
Data from the 2017 Insurance Barometer, complied by the insurer organization LIMRA, found that 70% of Americans would avoid going through medical exams if they could. This gives you an idea of the fear these exams provoke in people looking for life insurance. Sometimes, this fear is due to their poor health and the chance that they may not pass the exam. Other times, it has to do with a phobia of needles or medical tests in general.
If you’re afraid of the insurer’s medical exams, you should first know that these tests aren’t as hard as people think and can be passed relatively easily, especially if you are honest and avoid making certain mistakes. If you still think you won’t pass them, or don’t want to go through them for any reason, you can instead opt for any of the types of life insurance that don’t require medical exams.
Of course, there is one major downside of no medical exam life insurance: it can cost up to 30% or 50% more than the same insurance with a doctor’s visit.
You can see why the higher price would be justified: during the insurance qualification or underwriting process, insurers need to properly evaluate the risk they would assume by giving you a policy. They need to know your actual state of health and if you have any so-called “preexisting health conditions” that would disqualify you from accessing traditional insurance.
They will also want to know your age and weight and if you smoke, take drugs, participate in extreme sports, etc. But your health is the most important factor in deciding whether you can sign up for the policy you’re interested in. In addition to being demanding, the process can also be long and repetitive. These requirements are stricter with permanent life insurance. While the requirements are more relaxed with term insurance, they are still significant.
Because of these obstacles--or others, such as advanced age--many people turn to no medical exam life insurance. But just because there’s no exam doesn’t mean they won’t ask you any questions.
In these cases, the insurer usually uses statistics to set the price of premiums: it will ask you for various pieces of information and will then compare your answers to information from the Medical Information Bureau (MIB), pharmacy reports, or the Department of Motor Vehicles. Using all this information, an algorithm will determine the risk and the cost. Usually, your insurance will be accepted within 10 business days.
Types of Policies That Don’t Require Medical Exams
Once you’ve decided to purchase no medical exam insurance, you’ll need to decide which type. There are five main types of no medical exam insurance: simplified issue insurance, level death benefit whole life insurance, graded death benefit whole life insurance, guaranteed issue insurance, and final expense insurance.
These different policies all give you access to insurance without having to go through a medical exam, but they function very differently:
- Simplified issue insurance. With this type of insurance, the insurer will ask you a series of questions to decide whether you can access the policy. The process may take as long as one month. You won’t need any tests, but it’s easier to get this insurance if you are in moderately good health. Generally, these policies are cheaper than other no medical exam insurance and are offered both as permanent and term insurance. They are usually available for people between the ages of 21 and 65. For term insurance, the periods of validity can range from 10 to 20 years. The maximum coverage offered can reach one million dollars.
- Level death benefit whole life insurance. This type uses one of the most sought-after policies on the market, traditional or whole life insurance. As you probably know, this insurance generates cash value, a form of saving that accompanies the payout. The main feature of this insurance is that premiums will always stay the same, as will the death benefit. This insurance costs more than simplified issue, and the death benefit is significantly lower: around a maximum of $50,000. In addition to the smaller payout, your beneficiaries will only be able to collect it two or three years after you sign the policy. If you die before this time, there will be no payout. In exchange for these conditions, you will have practically no issues signing up for it, the policy will be available very quickly, and you can purchase it until you are 80 or 85 years old.
- Graded death benefit whole life insurance. This is similar to the type described above, but the death benefit is graded. If the insured dies one year into the policy, the beneficiaries will only receive 25% of the payout. If they die during the second year, they receive 50%. Starting from the third year, they will collect 100% of the benefit.
- Guaranteed issue. Guaranteed issue life insurance is insurance anyone can purchase: no one will be rejected because there is no qualification process. In exchange, it is much more expensive than any other type and the death benefit rarely reaches $50,000; the usual payout is $25,000. Just like in the previous case, there is also a two- to three-year period waiting period: if you die before that time, your beneficiaries won’t collect anything.
- Final expense insurance. Final expense insurance is designed to cover the cost of the insured’s funeral. There are no medical exams, the price is moderate, and it can be purchased until up to age 89. In exchange, it only offers a maximum of $100,000 and has a three-year waiting period.
In addition to understanding each of these policy types, you should also be careful not to confuse them with accidental death life insurance. This type of policy doesn’t cover death by disease, only death from accidental causes, so make sure it’s the policy you want before you sign it.
As you can see, medical exam life insurance policies are not very complicated. The most obvious drawback is that the premiums are much higher and the benefits and coverage much lower. In fact, if you need insurance with a payout of over $500,000, we recommend that you try to pass the medical exams before opting for one of these policies.
Scenarios for No Medical Exam Life Insurance
Despite these disadvantages, these products are in high demand because they allow many people to access policies and overcome problems of all kinds. The most common obstacles for the insured, and as such the most common reasons for purchasing no medical exam insurance, are the following:
- Getting life insurance right away. Many people are in a rush and need life insurance as soon as possible, and are unable to wait the weeks or even months the qualification process can often take. No medical exam insurance is perfect for them, because the process is much quicker. Some types, such as guaranteed issue, don’t even have waiting periods. It can be useful for people going on a dangerous trip, or those who need to take out insurance to finalize a divorce settlement.
- Fear of needles or doctors. Many people are afraid of needles and so are physically incapable of taking the blood tests the insurers require. Others might have a phobia of the doctor's office: their blood pressure literally skyrockets in the presence of doctors. No medical exam insurance is a good solution for either of these circumstances.
- Preexisting conditions. This is likely the most common reason. In general, you cannot access insurance if you have a chronic disease, such as uncontrolled diabetes, heart disease, or liver disease. In these cases, opting for no exam insurance is a reasonable solution. Sometimes, your medical condition might not be so serious and could improve over time. If you’ve bought no exam insurance, you will be paying a lot for it. Therefore, if your health improves, you can request a reevaluation and negotiate a reduction in premiums or a switch to traditional insurance.
- Dangerous hobbies. Sometimes, having an extreme hobby can make it difficult to access insurance. This can happen with scuba diving, BASE jumping, or car racing. Though insurance denials for these reasons are becoming less and less frequent, they are still possible.
- Age. Obtaining traditional insurance can be very difficult for older people. Insurers will consider your risk to be high, and so rarely grant normal policies. In contrast, you can apply for some no medical exam insurance past age 80. Learn about life insurance in your 60's. .
As you can see, there are many reasons to opt for no medical exam life insurance. If you find yourself in one of these scenarios, it might be the right choice for you. However, remember that your fears might not be justified: if you can, go the normal route and take the exam. It will probably be much easier than you expect. And if not, you can always ask an insurance agent for advice and more information. Lastly, remember that you can always opt for group insurance offered by companies: ask your employer if they offer this benefit.