What Does No Exam Life Insurance Mean?

Jan 31, 2023 By Susan Kelly

Life insurance companies often need a medical exam to determine how much of a financial risk they are taking on by issuing a policy to a particular person. Whole life insurance policies and other permanent life insurance alternatives are available, but you may also get policies with coverage for as little as a year.

A life insurance company can better assess the risk that a policyholder will die during the policy term if it collects relevant medical history and conducts a comprehensive physical examination of the applicant.

When applying for life insurance, applicants are often subjected to extensive medical history questionnaires, physical tests, and inquiries regarding occupational and lifestyle hazards. According to the Society of Actuaries, you may also have to provide a statement from your attending physician and blood, saliva, and urine samples throughout the underwriting process.

How Does No-Exam Life Insurance Work?

The life Insurance Marketing and Research Association (LIMRA) revealed that 31% of Americans feel motivated to buy life insurance after experiencing the COVID-19 epidemic in its 2022 Insurance Barometer Study.

Policyholders can apply for no-exam coverage in various ways, including by mail, online, or over the phone, depending on the insurer selected. The application takes only a few minutes to fill out and getting approved usually takes a few days. An application with certain life insurance providers can be approved in as little as a day.

Limits on death benefits are typically included in no-exam plans. There are two main types of no-medical-exam life insurance policies: term life and permanent.

What Kinds of Life Insurance Have No Medical Exams?

Group policies, simplified issue policies, and assured issue policies are the most frequent kinds of life insurance that do not need a medical exam.

Life Insurance for Groups

Group life insurance plans are a perk that some companies and groups provide for their employees and members. A new employer could provide health or life insurance when you start working there.

A guaranteed issue insurance is like an employer-sponsored group policy. According to Texas Department of Insurance data, most businesses offer term life insurance. However, some also provide permanent plans like whole life and universal life.

The death benefit from group life insurance is capped at a set level or is salary-based. Companies often cap term life insurance at $100,000, whereas permanent life policies are capped at $50,000.

Concise Explanation

No medical exams or lab tests are needed for simplified issue life insurance. Coverage eligibility is determined by the respondent's answers to several standard health questionnaires.

The likelihood of being approved for coverage depends on how closely your responses fit the company's underwriting requirements. Simplified issue policies typically have higher premiums because of the increased mortality risk assumed by providers.

The Society of Actuaries reports that non-smokers are the only eligible applicants for preferred risk classes in simple issue plans. However, anywhere from 70% to 90% acceptance is considered normal.

A Guaranteed Method of Distribution

The guaranteed issue or guaranteed acceptance kind of whole life insurance does not need a health test or a health questionnaire. Guaranteed acceptance life insurance is often only available to those over fifty or eighty.

Nonetheless, there are a few places where you may get assured group coverage if you're under 50 years old. The cash value of a guaranteed issue policy accumulates over time.

They are intended to give the recipient money to spend for last needs, including debt repayment, burial costs, and medical fees. The death benefit for guaranteed issue plans is typically between $5,000 and $25,000.

No Medical Exam Life Insurance: Pros and Cons?

The underwriting procedure is sped up significantly due to the absence of a test. Medical underwriters' decision-making time might stretch into weeks. However, using the no-exam method, you may receive a response in as little as 24 hours from some life insurance companies.

High-risk individuals may benefit from purchasing no-medical-exam life insurance. If your company offers group life insurance, you can join without answering any health questions or getting a physical, even if you have a pre-existing condition.

Having a no-exam policy also means you may avoid the uncomfortable and dangerous processes involved in getting a medical checkup. Neither will you need to worry about being examined closely by a stranger, nor will you have to deal with the hassle of setting up an appointment.

There are certain downsides to no-exam practices. The insurer has fewer data to determine the applicant's mortality risk. Thus the premium is higher than it would be for a policy that requires a medical exam. In addition, coverage limits are standard in no-exam insurance.

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