How Does No-Medical-Exam Life Insurance Work?
Types of policies that do not require a medical exam include simplified issue life insurance, guaranteed issue life insurance, and no-medical-exam term life insurance. But the advantages of no-exam life insurance also come with a price. Underwritten life insurance policies follow guidelines to classify risks; when risk is not evaluated, it must be offset in some way.
A preferred risk is an applicant in excellent health and has a lower premium. A standard risk is an acceptable risk and has a standard premium. A substandard risk is a high-risk applicant with higher premiums. Since there is no underwriting in the application process of a no-exam life insurance policy, most companies classify applicants as a substandard risk.
Some no-exam life insurance policies may have lower coverage amounts than underwritten policies. And some may require a waiting period before the payout of the death benefit to counterbalance the absence of underwriting. Let’s examine the types of no-exam life insurance policies, their characteristics, and the people they are best suited for.
Simplified issue life insurance
A simplified issue life insurance policy is typically available to people 45 and older. Policies do not have a waiting period but have higher premiums, and the amount of coverage is lower. Because the premiums are higher and coverage lower, it is best for people who have medical conditions that preclude them from other policies.
Instead of taking a medical exam, applicants for a simplified issue life insurance policy must answer medical questions, and insurers may check their medical records. Although the application process is easier, applicants may still be turned down. If you don’t mind paying a higher premium and want immediate coverage, consider this type of policy.
Guaranteed issue life insurance
Guaranteed issue life insurance does not require you to take a medical exam or answer health questions. Coverage amounts are typically lower than a simplified issue policy, and the premiums are even higher. Some policies require a waiting period, usually between two and three years. If you pass away before the waiting period ends, beneficiaries will receive the amount of the premiums you paid plus interest.
The age range for a guaranteed issue life insurance policy is usually between 40 and 80 years old. Coverage options usually reach a maximum of $25,000, and almost everyone is accepted. These policies should be used as a last resort. If you are diagnosed with a condition and do not already have a life insurance policy in place, consider this type of policy.
Both simplified issue life insurance and guaranteed issue life insurance are considered final expense insurance. Final expense insurance policies are whole life policies, which are a type of permanent coverage. But there are term life insurance policies that do not require a medical exam, and the pricing is comparable to a traditional term life policy.
