Although many people who apply for life insurance are easily able to qualify for the coverage that they need, there are others who, for one reason or another need a no medical exam life insurance policy because they may not be able to obtain the insurance protection that they are applying for and must instead consider other options.
In some cases, a group life insurance plan could be the way to go – however, not everyone has that choice available to them – and, in many instances, group coverage may not always provide the type or the amount of coverage that a person needs.
Oftentimes, a better solution can be to consider a no medical exam life insurance policy. With this type of a plan, the applicant will be guaranteed approval for the coverage they are applying for.
One reason for this is because a no medical exam life insurance policy – as its name implies – does not require that an applicant to go through a medical examination as a part of its underwriting process.
This means that there is no need to meet with a medical professional for the purpose of obtaining a blood pressure or a heart rate reading, nor does the applicant need to provide a blood or a urine sample.
Because of this, those who have certain types of medical conditions can still oftentimes qualify for no medical exam life insurance coverage. This also means that, because there are no medical exams to contend with, these types of policies can also be approved much faster than “traditional” or medically underwritten coverage.
Therefore, an applicant may have the coverage that he or she needs within just a matter of days as versus weeks (or possibly even months) when compared with some other types of life insurance. In some instances, no medical exam life insurance policies can even be approved the very same day that they are applied for.
How No Medical Exam Life Insurance Works
In many ways, no medical exam life insurance works like regular life insurance coverage in that, in return for the payment of a premium, an insured is covered with death benefit protection for a named beneficiary (or beneficiaries).
A no medical exam life insurance policy can be either term or permanent coverage. Term coverage will consist of just death benefit protection, with no cash value or investment component linked to the policy. These policies may provide coverage for a certain number of years such as 5, 10, 15, 20, or 30.
However, once the term period has expired, the policy holder will need to apply again for coverage, at his or her then-current age. Because they are older at that time, it is likely that their new premium will be higher, because it will be classified as a high risk life insurance policy.
With a permanent no medical exam life insurance policy, the insured will have both death benefit protection, along with a cash value component.
Permanent policies will usually provide a premium amount that is locked in, and will not increase over time – even as the insured gets older, and even if he or she contracts an adverse health condition.
A permanent no medical exam policy will also build up a cash savings within the policy that is tax deferred in nature. This means that there is no tax due on the amount of the growth of these funds until the policyholder withdraws them – if he or she even decides to do so.
These funds are allowed to be borrowed or withdrawn for any reason – such as supplementing retirement income, paying off a mortgage or other debts, paying college costs for a child or a grandchild, or even for going on vacation.
In addition, the funds are not required to be paid back into the policy. It is important to note, though, that should there be an unpaid balance in the cash component of the policy at the time of the insured’s death, this amount will be charged against the amount of the death benefit that is paid out to the policy’s beneficiary.
This will be important as the beneficiary on a no medical exam policy – or any type of policy – may be counting on a certain amount of proceeds for paying a decedent’s final expenses and / or other debts.
How to Qualify for a Life Insurance Policy with No Physical
While there is no medical exam to contend with on these types of policies, there can be certain questions that an applicant needs to answer in order to be qualified for the coverage. For instance, if an individual is applying for a simplified issue insurance policy, there will be some general health related questions that are asked in order to determine the applicant’s overall insurability. The answers will also help the life insurance underwriters in coming up with an appropriate amount to charge the insured for the policy’s premium.
The questions that may be asked of an applicant for a simplified issue life insurance policy may include some or all of the following:
- Are you a smoker?
- Have you been diagnosed with HIV / AIDS?
- Do you currently reside in a skilled nursing home facility?
If an applicant is instead applying for a guaranteed issue life insurance policy, there are typically no health related questions to answer on the application for coverage. In this case, provided that the premium continues to be paid, then this type of policy will stay in force. Likewise, provided that the premium is paid, the no exam life insurance company generally cannot cancel the coverage.
How the Benefit Proceeds Are Paid Out on No Exam Policies
When applying for a no medical exam life insurance policy, there are some important considerations to be aware of prior to purchasing coverage. This is because the way that a policy has been worded or written could have an effect on how the benefits will be paid out.
In some cases, the full amount of the stated death benefit will be paid out. However, if a no medical exam life insurance policy pays graded death benefits, then it could be that the full amount of the policy’s stated death benefit won’t be available to the beneficiary if the insured should die within the first two or three years of owning the life insurance policy.
With these policies, the beneficiary may instead only be able to receive a certain percentage of the stated death benefit, or receive back the amount of the premiums that were paid in – plus possibly a small amount of additional interest.
If, however, the insured were to live past the second or third year – even on a no medical exam life insurance policy that pays graded death benefits – then the beneficiary would still be able to receive 100% of the stated death benefit from the policy.
The reason that even the top life insurance companies will oftentimes limit the death benefit payout on a no medical exam policy is because typically, those who apply for this type of coverage will be more risky applicants (i.e., those who may have adverse health conditions and are not able to qualify for traditionally underwritten life insurance coverage).
How Much Will a Policy Cost?
Because there are no medical exams to review with a no medical exam life insurance policy, the life insurance carrier that takes on an applicant for this type of coverage is typically accepting what would be considered a higher amount of risk than they are with a medically underwritten policy. This is because the insurer has no way of knowing the true health condition of the insured – and because of this, the insurance carrier will oftentimes have to counterbalance the risk it is taking on by charging a higher amount of premium for the coverage.
In some cases, the amount of premium that is charged for no medical exam life insurance can be two or three times higher than that of traditionally underwritten coverage. With that in mind, those who may be able to qualify for a regular plan should typically consider going that route first.
Who Should Consider the Purchase of a No Medical Exam Life Insurance Policy
Even with the higher premium cost of no medical exam life insurance, however, there are certain individuals who may be good candidates for this type of coverage. These individuals may include those who are not able to qualify for a traditionally, or medically, underwritten life insurance policy due to an adverse health issue.
There are also individuals who work in what are considered to be risky or dangerous occupations. These may include window washers, race car drivers, and firefighters. Because of the danger that these people face in their jobs, they oftentimes have difficulty qualifying for traditional life insurance coverage. Therefore, these individuals may also wish to consider applying for no medical exam life insurance.
Also, there are many people who may have a fear of needles. Because of this, although they may be healthy, they may not want to undergo the blood draw that is required for underwriting purposes on a traditional life insurance plan. Here, too, these individuals could consider going with a no medical exam life insurance policy as an alternative. It is important to note, however, that there will likely be a considerable difference in the amount of the premium that is charged for their coverage.
What to Consider Regarding Life Insurance Coverage
When contemplating the purchase of a no medical exam life insurance policy, there are a number of factors to consider. These will typically include ensuring that you will have enough protection for your loved ones and survivors, and also that you will be purchasing the right type of coverage with regard to term or permanent.
In addition, it is important that you know how the benefits are paid out – and that your intended beneficiary is aware that he or she may not be able to obtain the full amount of the benefits should the policy pay them out on a graded basis.
Also, if you have other coverage options available to you such as a group or association plan, it is important that you also factor that into your overall decision regarding your life insurance coverage.
