Could a no exam life insurance policy be right for you? As an agent, when you first hear of someone looking for this type of policy, your first inclination is to let them know that it's not a great deal for them.
Why is that you ask?
Well, for starters you'll typically pay a bit more for your coverage than you would if you underwent a full paramedical exam. For most people the prospect of having an examiner come into their home or office to take some blood, a urine specimen and ask a ton of invasive questions doesn't sound like much fun. And I completely understand.
But this is a topic that we just haven't covered and I thought it would be worth taking a look at some specifics in regards to life insurance policies that you can purchase without a medical exam.
I ran the numbers on a 20 year term policy for a 35 year old non-smoker to compare what a fully underwritten (blood, urine etc.) policy would cost him and compared it with a 20 year term policy that is known as “simplified issue”. The simplified issue policy is truly a no exam life insurance policy that will not require the poking and prodding of a typical fully underwritten policy.
Unlike a fully underwritten life insurance policy where the applications which are many pages long and include a plethora of questions, most simplified issue life policies are just a couple of pages and only require some really basic personal information.
The MIB Group (medical information bureau) keeps tabs on information that has been provided by you on any other health, disability or life insurance applications. Think of them like a credit bureau for your health information–creepy right? But this allows underwriters to easily and quickly access information about you and make quick decisions regarding your policy.
How Much More Will No Exam Life Insurance Cost Me?
Well, there is a difference and generally speaking you're looking at about a $10/month differential. For example instead of $25/month for a $200,000 term policy for our example client, he'd be looking at about $35/month–all things being equal. Of course, that's assuming that he's completely truthful on his application, his MIB and prescription report accurately reflect what he put on the application etc.
If all those things align as they should, the insurance company will issue his simplified issue term policy without any additional headache and usually have it completed in a matter of days. Now if you've ever been through the underwriting on a full underwritten policy you'll know that having a policy issued in a matter of a few days is unheard of.
Many times it can take weeks if not months to get a policy issued–depending upon how quickly APS'(attending physician statements) can be obtained, when and if the paramedical examination company gets your exam scheduled in a timely manner, and answering any additional questions that the underwriters may come up with.
Depending upon your circumstances and your love/hate relationship with needles, a no exam life insurance policy may be the right choice for you. Yes, you are going to pay a little more for your policy but it will typically save you a lot of hassle and in the end you may decide that it's worth a few extra bucks just for convenience sake.
What are the limitations of no exam life insurance?
Yes there is a limit to the amount of coverage you can purchase without completing a medical exam. In my searching, I found the range to be as low as $5,000 and as high as $350,000. Admittedly, the upper end of the limit is not very high, however, my guess is that it will do quite well for a number of people who don't have a need for more than that and who are looking to get coverage quickly without a lot of hassle and inconvenience.
It's also worth mentioning that if you have some detailed medical history and take more than a couple prescriptions you might be better off going the fully underwritten route. Underwriting is a process filled with nuance and having your agent to help you navigate that process can be worth the trouble.
It's not the right fit for everyone or in every circumstance but it definitely has its place.
If a no exam life insurance policy sounds like something you might be interested in learning more about, feel free to reach out to us and we'll be happy to help.