Life insurance polices that do not require a medical examination are often referred to as “no exam life insurance.”
Most life insurance policies for healthy applicants under age 30 are generally written without a medical exam requirement as a matter of procedure and without limitations. Policy values can range from $5,000 to $500,000. No exam policies benefit insurance companies because they reduce underwriting time and costs. A short questionnaire about the applicant’s medical history is usually all that is required. Premiums are typically higher and policy values are lower for applicants over age 30.
No Exam Whole Life:
A no-exam whole life insurance policy will provide permanent features. The amount of your premium is fixed and remains the same as long as you have the policy. The benefit payment on death is also fixed and permanent. Many elect a whole life policy because they have the added feature of allowing you to cash in the policy while you are alive, if you choose.
No Exam Term Life:
A term life policy is based on a set period of time that usually ranges range from 1 to 30 years. Benefits are paid to beneficiaries if you die before the term expires. For example, benefits would be paid on a policy for a person who purchased a 10-year term policy in 1990, and died in 1998. On the other hand, if the person died in 2002, no benefits would be paid. However, most policies can be written with conversion features prior to the end of the term, but will often require an increase in the premium payment, especially if the policyholder still prefers no exam term life insurance.
Guaranteed Issue Life Insurance:
More than likely you’ve heard and seen commercials for this life of no exam life insurance. Guaranteed issue life insurance policies are heavily marketed to seniors and emphasize that there is no required medical examination.
What is important to know is that this type of insurance generally has a cash value of less than $20,000.00. Even still, many people of all ages find the availability of this type of coverage as an important financial planning tool. It provides comfort in knowing that in the event of death, funeral and burial expenses will be provided for.
However, it is equally important to know that guaranteed issue insurance has limitations if death is imminent. The death benefit is very limited if the policyholder dies as a result of natural causes within two years of the issuance of the policy. Full value benefits are only paid after two years from the date of issuance.
Considerations:
Keep in mind that many companies assume that there could be a potential medical condition that is driving the applicant to get a no exam policy.
As stated on Financial Web, “Naturally they’re going to charge higher premiums for life insurance without a medical exam than they do for persons who undergo the physical examination.”
Do comparison shopping to get the best coverage, rates and look for special offers. Check the companies rating with the Better Business Bureau. Carefully review the terms, conditions, eligibility, termination and cancellation for the policy before signing.