"Getting life insurance with no medical exam", if you listen to the radio or watch television, you've seen or heard the commercials. It is impossible to miss them.
So what is no medical exam life insurance, and why are they always advertising on my television?
While the basic premise of no exam life insurance is straight forward, this page is meant to provide guidance on the details that are often overlooked when consumers shop for life insurance.
No medical exam life insurance is the fastest growing segment of the life insurance business. Just like fully underwritten term policies, most no exam term policies run for a period or "term" of 10-30 years.
Depending on the policy provisions, at the end of the term, the policy will either expire or offer the option to be continued as an annual renewable term or ART.
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For a look at an interesting snapshot of how Americans use and view life insurance see the Life Insurance Market Research Association (LIMRA) survey.
There are three significant benefits to using No Medical Exam policies.
Convenience- While the thought of giving blood and urine samples to a nurse upsets some much more than others, nobody looks forward to the experience.
For some it's the inconvenience of fasting prior to the exam. for others, it's the time. And, for still others, it's the needles & blood.
Whatever the rationale, lots of people have no interest in submitting to a life insurance medical exam.
Fear of the Unknown- While No Medical Exam policies do not require blood and urine samples they are medically underwritten. The underwriting is done on the basis of medical records, prescription checks, driving records and the MIB or Medical Information Bureau.
So while your past medical history is available to the insurer, any current information that would be obtained by a blood sample is not available. This may be important if you have not been to a doctor recently.
It is all too common for life insurance applicants to discover a condition when they get lab results (and a bad rating) from the carrier after applying for life insurance.
This situation can be avoided by getting life insurance with no exam and and then following up with your doctor for an annual physical.
Speed of Issue- Because there is no requirement for a medical exam and lab results, underwriting is dramatically faster.
Rather than waiting 6-12 weeks to get a typical policy in force a No Exam policy is often in force in 2-12 days.
Key Take Aways
No exam term life insurance is priced along the same model as traditional term insurance. That model or formula is roughly stated as cost of insurance (COI) + administrative costs + carrier profit = price.
The point where some life insurance with no exam policies depart is that the cost of insurance (COI) is determined by risk analysis. The risk analysis calculation is based on gender, age, health, lifestyle and any additional benefits offered such as conversion opportunities.
Because health grading is less precise with a no exam policy, many carriers will charge a premium to compensate for the additional risk being undertaken.
However, as the flow of information about all of us has become more easily accessible, some carriers are willing to offer no exam policies up to 500000 (500K) with no additional premium charged.
Key Take Aways
If the no medical exam policy is a term life insurance policy, the same rules apply as with any term policy.
The cost of term insurance is guaranteed for the length of the policy term. So, if you purchase coverage for 20 years, the payment stays the same for all 20 years.
If you have the option to keep the policy beyond the 20 year period, it will adjust every year as an annual renewable term policy (ART). Annual renewable is generally not a situation you wish to be in as the payment increases may dangerous to your wallet.
Key Take Aways
Some, but not all term policies have the option to convert to a permanent policy. This becomes important if your health declines, for ANY reason, during the conversion term of your policy.
Some policies allow conversion only in the first 5 years, others will allow conversion until the last day of the policy.
Further, some policies only allow conversion to specific permanent products, while others allow conversion to any permanent policy offered by the carrier.
The answer to "what No Exam term policy is most affordable?" depends on your goal. If it's immediate cash flow- spending the least today- then it is hard to beat a ten year term. A healthy 40 year old mom would only pay $15/mo. for a 10 year $250000 policy.
However, if your goal is to spend the least amount over a longer period of years (say, til age 60) then the 20 year term would be a safer bet.
While the dollar cost works out about the same if she were to get another ten year policy at age 50 -$24/mo, she would be gambling on getting the best health class again . This is a bad gamble as only about 10% of applicants wind up in the best underwriting class.
I'm scared of needles "
Policy 'stacking" is a life insurance protection strategy that involves the purchase of multiple policies to meet a specific need.
because most insurance companies who offer No Medical Exam policies do not allow applicants to exceed $500000 face amounts, it is sometimes necessary to "stack" policies from fore than one company to get to the desired amount of protection.
For instance if a healthy 40 year old mom who hates needles needed a $10000000 policy, she could take two No Exam policies from different carriers for $500000 each.
This would get her the $10000000 she needed while staying under the 500000 limit of individual carriers.
Key Take Aways
The primary differentiators when choosing a no exam life insurance company are price, and financial strength.
Normally, we would also consider convenience as a significant factor. However, with no exam, the convenience issue is largely off the table.. So let's take a look Price and financial strength one at a time.
With fully underwritten policies, if you are in excellent health and solely concerned with cost, it really can be that simple.
However, with so called non-med or no-exam policies the pricing tool is of limited value. This is because the insurance landscape is changing daily.
With new no exam products popping up every week, the best course of action is to give us a call or drop a note using Contact Us
In short, you have any health concerns or want to know about conversion options, so called "non-med policies or financial strength of the carrier, you're better off speaking with an independent Agent.
While S&P and moody's rate several carriers, of the well known ratings agencies, A.M.Best is the most heavily relied on in the life insurance market.
As a general rule, the Life Insurance Help Desk will offer carriers in the top four AM Best categories A++,A+,A, A- . These categories are represent superior (A++, A+) and excellent (AA, A-) ability to meet ongoing obligations.
Simply put, they are well run and can pay their debts.
Their are occasions where the only option to get coverage is to use a lower rated (or unrated) carrier.
Typically, a Low/No rating carrier situations will come up with so called "final expense" policies. These are immediate issue, small face amount policies with no exams.
Thank you for choosing the Life Insurance Help Desk to research life insurance with no medical exam. I hope this guide has left you with the conclusion that, done right, term life insurance with no medical exam can be a super deal.
I also hope that you came away with an appreciation that the details really do matter. From price and underwriting to conversion options and convenience, knowing what you want is half the battle.
If you are interested in starting the life insurance process this link will guide you along the path. Should you have any questions about the material in the guide please leave a comment or contact us.
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Jim Tobin is the owner of Life Insurance Help Desk, a Fairfield County, CT. life insurance agency. You can find him on LinkedIn and Facebook. Over the past 10 years, Jim has used his CFP-financial planning designation to help individuals with their life insurance needs. In addition to working with life insurance clients, Jim teaches ESL classes in his spare time. He resides with his beautiful wife Nicole and the 3 cats that rule their lives..
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