Can I Buy Life Insurance Without an Insurance Exam?

Written by Termland.com

Yes! Currently, there are several life insurance companies offering policies without requiring a medical exam. If you have a problem with needles or simply just want a life insurance policy without the hassles of seeing a nurse there are competitive options available.

There are several different types of life insurance policies you can buy without a medical exam including level term insurance, simplified issue term insurance, simplified issue whole life insurance and guaranteed issue whole life. The best no medical life insurance policy for you will ultimately depend upon your specific situation and what you are trying to accomplish.

If you have a need for a larger amount of insurance, say $100,000 to $500,000, then you will want to consider the level term no medical option. This market is fairly limited with only 5-7 companies currently offering policies. Additionally, there have been several companies that have left this market in the last few years.

Requirements for a  level term life policy with no medical exam vary among the different insurance companies. When applying for coverage, you must complete a regular application including health questions and medical details. If you have any significant health issue, you will likely be automatically excluded from coverage. In other words, to qualify for a level term no exam policy, you must be reasonably healthy.

Part of the underwriting process for a level term no medical policy includes a check of your medical information bureau (MIB) record as well as a cross reference of the prescription drug database. Additionally, some companies require a personal history telephone interview prior to being approved.

The simplified issue no medical term option works similarly to the level term no exam option with respect to the approval process except that underwriting is more liberal. In other words, you can have some health issues and still qualify. A difference is that the amount of coverage available is usually very limited with the maximum coverage being $50,000 and policies are commonly issued at $25,000 or less.

Simplified issue whole life insurance, commonly referred to as burial insurance, is similar to simplified issue term insurance in that policy face amounts are normally $25,000 or less and in many cases are $10,000. Applications for simplified whole life are usually one page and ask only 8-10 heath questions. Underwriting is limited and policies are approved or either rejected based on the answers to application questions only. Premium payments are guaranteed and like traditional whole life insurance there is some cash value growth. In many cases, these policies are very expensive due to the limited medical questions asked on the application.

Guaranteed issue whole life is a mirror image of the simplified issue whole life option with the exception that there are really only 3-4 health questions that must be answered to qualify for the policy. In fact, guaranteed issue whole life specifically designed for those who cannot qualify for other types of life insurance due to their health issues. For this reason, the policies are dramatically overpriced and some companies included a death benefit payout ceiling in the early policy year called a graded death benefit option.

The graded death benefit feature limits the amount of death benefits payable in the early years to return of premiums with interest. For example, if you purchased a guaranteed issue whole life policy with a graded death benefit for $10,000, the payout if you died in year 1 may be 100% of premiums paid in plus 20%. If you died in year 2, 100% of premiums paid plus 75% interest and the you died in year 3 $10,000. With these kind of payouts, you can see that in most cases, the guaranteed issue insurance option  is overpriced and not really an attractive life insurance option unless it is your last resort.

FOr more information, see advatages and disadvantages of no medical exam life insurance.

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2 Comments

Ted Lasseigne

Iam currentlly paying $208.00 for 125,000.00 of insurance. I can’t afford that anymore. Maybe someone would have something for $25,000.00 that would be cheaper.

May 7, 2012 at 9:37 pm
    admin

    Ted,

    There are a couple of options for you:

    1. Call your insurance company directly and ask if you can reduce the policy face amount ($125,000). Many companies will allow you to decrease the insurance amount and that should lower your cost.

    2. There are not many companies that I am aware of that will write $25,000 policies that would be considerably cheaper than your current $125,000 policy. Most companies that offer cheap term insurance will not write a policy below $50,000. I would suggest you shop the internet but there are very few agents that will help you due to the very low premium.

    3. You may just have to keep the policy at $125,000. The truth is that the premium of $208 (I assume annually) is extremely inexpensive.

    4. The last option is to simply drop the policy which we do not recommend if you can avoid it.

    Please call our office at (877) 583-3955 and we can discuss further.

    May 16, 2012 at 1:32 pm