Is No Exam Life Insurance A Good Choice for People in Their 40s?
If you’re in your 40s and haven’t purchased life insurance yet, it’s probably on your mind. Buying life insurance is one of the best ways to ensure that your loved ones will be taken care of financially after you’re gone. While its importance is clear, in today’s busy world, many people put off getting life insurance because the application process includes a medical exam. Fortunately, today many insurers offer an alternative: no exam life insurance. These policies grant coverage without requiring the pesky medical exam.
Want to find out more? Read on.
No Exam Life Insurance Basics
Traditional life insurance policies require applicants to undergo a medical exam. No exam life insurance lets you skip the exam and still get coverage. One of the main reasons people choose no exam insurance is because they are afraid — either of doctors, needles, wasting time, or being rejected due to a preexisting condition.
All of these are valid reasons. The main thing to remember is that just because no exam is required, that doesn’t mean that you don’t need to disclose medical information. In fact, many no exam policies include short health questionnaires, and you are required to answer truthfully. Additionally, some policies require underwriters to gather information about you from third-party sources like pharmacy and DMV records.
On the other hand, one of the main reasons that people don’t get no exam life insurance is because it has a reputation for being expensive. In some cases, this is true. In others, it’s not. We’ll elaborate more on that soon, but to get an idea about how much you’ll pay, you can get a free quote here.
People also think that no exam life insurance is only for seniors with serious medical issues, but that’s not necessarily the case.
How Does No Exam Life Insurance Work?
No exam life insurance is similar to traditional life insurance in that you pay monthly premiums, and in return, you receive coverage in the form of a death benefit that will be paid out to your named beneficiaries.
The main difference is that there is no requirement for a medical exam, but from this difference stems other ramifications.
The reason insurers require a medical exam is to qualify the risk that each applicant poses to the company. The medical information that’s culled from the exam is examined by underwriters with the goal of seeing whether the applicant is statistically likely to die early. It sounds morbid, but that’s the job. Applicants who aren’t in great health are statistically likely to die earlier than those who are in great health. Therefore, those who are in great health get low monthly rates, while those with health complications get higher rates. Lifestyle also plays a part in the underwriting process. Smokers, for example, are always given higher rates than non-smokers because of the effect smoking has on mortality.
With no exam life insurance, underwriters can’t get a true sense of your health situation. That means that they are leaving themselves open to risk. To protect themselves, they raise the monthly premiums across the board.
Types of No Exam Life Insurance
There are three main types of no exam life insurance:
- Simplified issue
- Guaranteed issue
- Group life insurance
Simplified issue life insurance doesn’t require a medical exam, but you will need to answer several health questions about your medical history, recent hospitalizations, height, weight, and drug/alcohol use. In some cases, underwriters will pull any previous life insurance applications you filled out, pharmacy records, and DMV records. Since there is some underwriting involved, not everyone is approved. However, the approval process is much quicker than that of traditional policies, and you can have your answer in a few days as opposed to 4-8 weeks. Simplified issue coverage usually goes up to $500,000.
Guaranteed issue life insurance is considered a last resort for people who can’t qualify for other types of life insurance. While approval is guaranteed, monthly premiums are very expensive and coverage is limited to $25,000, two reasons why it’s considered a last resort. Guaranteed issue is usually purchased by people in the age range of 50 and 85, or by adult children who want their parents to have some sort of coverage.
Another reason why guaranteed issue is considered a last resort is because of the waiting period it comes with. The waiting period means that if the policyholder dies within two years of purchase, the beneficiaries don’t get the death benefit. They only get a refund of the premiums plus interest. Insurance companies include this condition as a way of covering the risk they take on by offering approval to everyone without asking any medical questions.
Group Life Insurance
Employers often provide group life insurance, which you can get without taking an exam or answering any health questions. In many cases, employers pay all or part of the monthly premiums, making it a no-brainer to take. However, group life insurance often offers only a small amount of coverage. Therefore, it’s considered a supplemental insurance policy, not a primary one. Also, you may lose your coverage if you quit or get fired.
Is No Exam Life Insurance Right For You?
No exam life insurance comes with one major benefit: there is no exam. That means that you can get life insurance fast and very conveniently. However, if you have health complications, it can end up being costly. If you’re in your 40s and are relatively healthy, you can often find great deals on simplified issue policies.