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A life insurance policy can be critical to planning for your family’s financial future. Knowing your spouse and children — or any other designated beneficiary — will receive a windfall payment when you die provides peace of mind that they can cover your final expenses, pay for their home or education, or take care of any other bills.
However, purchasing a policy isn’t always as simple as filling out an insurance application and sending payment. Most insurers require applicants to undergo a medical exam as part of the policy application process and use the exam results to determine eligibility for coverage and costs. Depending on your health, the exam could be a make-or-break factor in whether you qualify for and can afford life insurance.
You have another option if a company denies your coverage request because of your health or if you don’t want to deal with the hassle of a medical exam as part of your application for insurance. No-medical policies don’t require a health exam but provide the crucial life insurance coverage you want for your family.
The insurance company assumes a risk whenever you submit an insurance application for any type of coverage, whether it be life, home, auto, or health. Anyone they deem a high risk, meaning there’s a chance they’ll make a claim the insurer will have to cover, will pay more for coverage. If the insurer thinks you’re too much of a risk, they will deny your application and decline to provide coverage.
Because the payouts for life insurance policies are often higher than other types of insurance, the policy approval process (or underwriting) is more rigorous. If you want to purchase a high-value policy at a competitive price, you must show the insurer that you’re a reasonable risk — namely, that you aren’t likely to die soon after buying the policy.
One way underwriters evaluate whether you qualify for a policy and how much you’ll pay is with a medical exam. Insurers arrange these exams, which include a detailed interview about your lifestyle and health history and some physical examinations to evaluate specific key indicators of your health.
A medical exam reviews the following information:
Some medical exams include urine and blood tests, stress tests, heart monitoring, and more to get a complete view of your overall health. The results and other information the insurer gathers from your insurance application and public databases will determine your risk level and rates. Other factors influencing your rates include age, occupation, gender (women typically pay less for coverage), and the policy type and amount.
Because overall health can substantially impact your life insurance coverage, many purchase policies that don’t require a medical exam. Many insurance companies offer policies that don’t rely on a medical exam for approval, which is a hassle-free option. If you have a health condition, don’t have the time or desire to undergo a health exam, or simply want a quick and easy insurance enrollment, a no-exam policy might be right for you.
However, unless you purchase a guaranteed issue policy, opting for a no-medical exam policy doesn’t mean the company won’t evaluate your risk or decline your application. Even without a health check, insurers require policyholders to meet eligibility criteria.
To get this information, you may be required to complete or provide the following as part of your insurance application:
You may have to provide details about your overall health, family health history, and smoking status. Some companies also require applicants to submit a statement from their doctor regarding their overall health status.
The insurer will likely pull your driving record, as a history of speeding tickets, accidents, and other violations is a sign of risky behavior that increases the risk of death. A bad driving record will increase your life insurance rates, even on a no-medical policy.
The company may perform a soft credit check upon receiving your insurance submission. Most are looking for defaults and bankruptcies, which can be a red flag to insurers that you pose a high risk. A 2019 LIMRA survey indicated that about half of insurance companies use credit information in their decision-making processes.
Insurance companies can access databases like the Medical Information Bureau (MIB) that provide information about your medical history, prescription drugs, previous insurance applications, and more. They may use this database to confirm the information you provide on the application or collect additional details to guide their decision.
If you apply for a no-medical exam life insurance policy, you can choose from the following policy types.
A simplified issue policy doesn’t require a medical exam, but the insurer may require a health questionnaire or phone interview to review your health history. Research from LIMRA indicates that most people prefer simplified issue policies because they are more convenient, offer more transparency in terms of rates, and are more objective than traditional underwriting.
As the name implies, you may purchase a guaranteed issue life insurance policy without providing any additional information. However, skipping the underwriting process means these policies are more expensive than others and have a lower value.
Final expense policies are smaller life insurance policies intended to cover costs for your funeral, burial, and other costs associated with your death. Some are guaranteed issues, while others have some underwriting.
When you apply for an accelerated underwriting insurance policy, the insurer uses an algorithm or artificial intelligence to evaluate your risk. If you’re in good health, have a solid credit history, and have a good driving record, you could secure coverage with one of these policies in just a few minutes.
Many employers offer group life insurance policies to employees. Companies assess the risk for the group as a whole to determine the premiums for these policies, which your employer pays some or all of. Despite being a hassle-free option, group policies are usually small (the average is $20,000 or a year’s salary) and are less secure since you’ll lose the coverage if you change jobs.
Buying a no-exam policy is a simple and convenient way to secure life insurance coverage, especially if you have pre-existing health issues, are over 60, or have other issues that could affect your rates or cause the company to decline coverage.
However, before choosing this option, you should know a few things about these policies:
For all the advantages of an insurance policy that doesn’t require a medical exam, if you’re in good health, have a relatively healthy lifestyle, and don’t have a poor credit history, you’ll likely qualify for a standard policy and pay less for coverage.
Even if you have certain chronic health conditions, you could qualify for life insurance based on how well you control them. Some insurers will also allow you to reapply for coverage or review your policy if you make changes like losing weight or paying down debt.
LIMRA reports that only about half of Americans carry life insurance, and, of those policyholders, most don’t have enough coverage. Even if you have substantial savings or don’t think you need coverage because you’re unmarried or don’t have children, a life insurance policy will protect your loved ones from having to pay your debts when you die.
Insurdinary can help you find the perfect life insurance policy for your needs and budget. Simply fill out the online quote form and compare side-by-side options for no-medical policies. When you’re ready to submit an insurance application, one of our licensed agents can walk you through the process and enroll you.
Do you have more questions about life insurance? Contact Insurdinary today to get the answers you need and secure your financial future with quality coverage. Compare coverage plans, rates, and benefits in one convenient place.