Exam vs. No Medical Exam Life Insurance
A medical exam helps collect information on things like blood sample, height, urine sample, and blood pressure, along with your health history, family, gender, age, and fitness level. The insurance company uses this collection of data to figure out the rate class in which you fit.
Note that you can always reduce your rate by improving your health and fitness level, and this is something your insurance company can explain to you more. Talk to your insurance agent before you take the medical exam required as part of your life insurance application. That way, you know upfront the medical restrictions on the policy, what is out of the coverage scope, and how any personal health condition would affect your premium quote.
There are two stages to the typical life insurance medical exam.
- A verbal questionnaire. The medical practitioner will ask you a series of questions ranging from height and weight to substance use, existing medical history, prior hospitalizations, and more.
- Sample collections. You’ll be notified in advance by your agent or life insurance broker exactly what tests they’ll be running, but the most common are urine and blood analysis. Fortunately, these tests are simple enough that they can often be done from your home.
The Types of No Exam Life Insurance
No medical exam life insurance is often marketed as affordable, convenient, and fast. While this is somewhat true, it is still not the right solution for everyone. Only certain people will truly benefit from purchasing no exam life insurance.
Although each company may offer different policies, coverage amounts, and term periods, there are four common types of life insurance with no medical exam required.
Simplified Issue
Simplified issue life insurance is a type of term life program that strikes a healthy compromise between the benefits you can receive for taking a medical exam while still having the convenience of forgoing it. Instead of requiring lab work and a full exam, prospective customers will instead be asked several basic health questions to gauge medical history and hospitalizations. You might also be asked about drug and alcohol use, which can increase your monthly premiums.
This type of insurance is one of the most popular out there, simply because it is quick and offers a decent amount coverage. You can also get whole life insurance simplified as well. The immediate benefits of going simplified issue is that your life insurance company could issue their decision in a matter of minutes. Overall, the process is significantly faster than a traditional policy where you have to schedule and take exams and wait for those results to be analyzed. You can expect coverage in amounts up to $500,000.
Guaranteed Issue (GI)
On the opposite side of the spectrum is guaranteed issue life insurance, which has become quite divisive in the past several years. The best thing about guaranteed issue life insurance is that, like the name says, it is guaranteed. Just about everyone is eligible to apply after filling out a quick, easy application.
There are several items to consider, however, before you decide on GI life insurance with no medical exam. The most obvious is cost. Since no medical exam is required, and only the most basic of information asked of you, the company knows nothing about you. Therefore, you can expect a significantly higher premium proportionate to the risk the company takes.
In addition to higher monthly rates, there is a waiting period to be approved for guaranteed issue life insurance—this usually takes two years. You need to be a little strategic when applying for life insurance and have an honest conversation with medical professionals about any conditions you might have and whether the possibility exists of you passing away before becoming eligible for this type of insurance.
That being said, GI life insurance is a good fit for those who have serious medical conditions no other company will cover. This type of insurance is often seen as a last resort. Speak to an experienced broke to help guide you through what options are available and seek a lower rate if possible.
Graded Death Benefit
This type of life insurance with no medical exam can be seen as the midpoint between the two above types. Graded death benefit life insurance is slightly stricter than GI insurance but can offer several more benefits.
After answering a few common health questions, the phased in death benefit is the most notable advantage. Instead of completing a waiting period like other types of life insurance, policyholders can expect an amount of coverage determined by how many years you are a member. If you pass away within the first two years of being a member, the company might only pay half or a fraction of how much your policy is worth.
Graded death benefit life insurance is also less expensive than guaranteed issue (but more than traditional policies). Because some degree of underwriting is being done, your rates won’t be as high. Finally, you can expect higher coverage amounts than guaranteed issue, typically up to $50,000.
Final Expense Insurance
Where Guaranteed Issue is often seen as the last resort of life insurance policies, final expense can be considered ‘burial insurance.’ You might even see it offered as such while searching around.
Final expense coverage is designed to cover the expected costs associated with death, which can include burial and ceremony, small debts incurred, and any final medical bills.
This type of life insurance offers policies that are small, permanent, and locked-in premiums. Coverage can go up to $100,000 from some companies, and policies can be issued usually up to age 85.
