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Note from Kalen: Ironically, I’m going in for a life insurance exam today, so I thought this article would be appropriate. This is an interesting option.
With a traditional life insurance policy its typical for the entire process to take between 6 to 8 weeks from the point of the application to approval. However, recently there have been a rise in simplified issue life insurance policies that speed up the process substantially. Life insurance policies with no medical exam can offer approvals within a few hours or a few days, but what’s the catch for this type of convenience? Let’s talk about the pro’s and con’s of acquiring life insurance with no medical exam.
The upsides to simplified issue products are easy to see. The first obviously being the speed. Companies like Sagicor and Fidelity offer approvals within hours or a few days max. That’s more than a month sooner in comparison to traditional term life insurance coverage. The other pro is getting to skip the medical exam. Whether you’re just too busy or just scared of needles, you won’t have to have a nurse come out to your home. A good place to compare rates with all the no exam carriers is an online marketplace like InsureChance. You can do so without giving out your personal info.
Usually this is a great option for those that need life insurance fast. Whether you need a small coverage in place to cover a loan or a a settlement, no exam can be a great option. It may seem like a tempting option but it does come with it’s share of cons.
The biggest downside to no exam products is the cap on coverage. Depending on the company, you can expect a cap of $250,000 to $400,000 in coverage. In rare cases for super healthy individuals, you may be able to lock in $1,000,000 with a select carrier. This is due to the fact that no exam life insurance companies are taking on a bigger risk by allowing you to forgo the medical exam. Because of that risk the rates also tend to be a little higher than a traditional exam plan for the same coverage amounts. So cost is another downfall of skipping out on the nurse.
It’s Not for High Risk Individuals
While there are guaranteed issue plans out there for those that are declined for life insurance, simplified issue is not for those that are considered a high risk. Even though you are able to skip the medical exam, you do not get to skip the underwriting portion of the application process. The life insurance company’s underwriters will still look into your medical records and background history to determine your eligibility. So to get good rates or approved for coverage, you have to be a favorable risk to the company. So if you’re unhealthy, you’re better off going the traditional route.
Overall no exam life insurance is for those that that are in fairly good health and don’t have a need for a lot of coverage. So if you’re looking to add on to an existing policy or just secure life insurance for a loan, life insurance with no exam is your best bet. But if you are in bad health or have a need for a lot of life insurance coverage, then you are better off going the traditional route for now. As advances in technology take place, no exam life insurance will eventually be the standard for all life insurance, but until then, we have to pick carefully. Make sure to always work with a professional who can shop around with all the companies and recommend a best option for you.