How Does No Exam Life Insurance Work?

If you have ever applied for life insurance in the past, you probably remember having someone come out to your home or office to ask you intrusive medical questions, take blood and a urine sample. But nowadays, you can actually get a no exam life insurance policy or non-medical life insurance policy. Different names for the same thing.

You will typically pay a bit more for your coverage than you would if you went through the hassle of subjecting yourself to a full paramedical exam. But 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 is a deal-breaker.  And I completely understand.

Some people suggest you should never pay more for a no exam life insurance policy and that you should always undergo the full exam to get a  lower price. But having been in the life insurance business for more than 20 years, I can tell you that having a life insurance policy is always better than not having one.

So, if you would rather purchase a policy that does not require a medical exam or talking to an examiner, you should absolutely purchase a non-medical or no exam life insurance policy.

What is the Process for Buying a Non-Medical Policy?

Let’s take 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 does not require any sort of medical exam.  The non-medical 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 are many pages long and include a plethora of questions, most simplified issue life policies are just a couple of pages and only require basic personal and health information.

The major reason that this sort of underwriting process is now possible is because of artificial intelligence and big data. Life insurance companies are able to purchase vast amounts of compiled data about you after you have given your authorization—signing your life insurance application means you are agreeing to that in most cases. Software is able to quickly pull information about you, compile it and compare you with similar profiles of other insureds they have on file and determine your insurability.

In many cases, these policies do not offer a specific rating but instead are a ‘yes’ or ‘no’. And the decision is made instantly or within a few hours. On occasion, the application may require a manual underwriting review and in that case, the underwriter may have a few additional questions or seek clarity about something from you. Generally, your agent will act as the messenger for underwriting.

The MIB Group (medical information bureau) keeps tabs on information that has been provided by you on other life insurance applications.  Think of them as a credit bureau for your health information as it relates to life insurance. This allows the life insurance company underwriters to easily and quickly access information about you and make quick underwriting decisions regarding your policy.

Most no exam type life insurance policies will also run a check for any prescriptions that you take. There is a separate database that is kept for all of your prescription medication. Be sure that you disclose any medications you take when you apply.

One major red flag for any automated/algorithmic underwriting system or for an actual human underwriter is when they uncover medications you have been prescribed but did not disclose.

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.  Once upon a time, just several years ago, the range of what you could purchase as a no exam life insurance policy was $5,000 to about $350,000.  Admittedly, the upper end of the limit is not very high but it is adequate for most people who are looking to get coverage quickly without a lot of hassle and inconvenience.

In the last few years, non-medical life insurance offerings have expanded a great deal. As technology has improved, we see more and more companies coming into the space with whole life insurance and indexed universal life insurance being available without a medical exam. And available death benefits above $2million. What a time to be alive!

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.

Is a No Exam Type Policy Right for You?

It's not the right fit for everyone or in every circumstance but it definitely has its place. Cost is not always the most important component of making a life insurance purchase. The most important aspect of any life insurance policy is making sure that it is in force when you die so that your family is provided for as you believe they should be.

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. The process is simple, fast, and can be done 100% electronically through phone and email.

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