If you’ve been shopping for life insurance recently, you’ve probably seen offers for “no medical exam life insurance.” In general, no-exam policies are still relatively new and, for now, available primarily for term life and certain policies designed for seniors. Read on to see if a no-exam life insurance policy is right for you.
In this article:
What is no-exam life insurance?
As the term implies, no-exam life insurance is a life insurance policy that does not require you to undergo a medical exam and lab tests when you apply. This makes the process considerably shorter and more convenient than a traditional life insurance application, which can take up to four weeks, if not longer, to complete.
No-exam life insurance policies have been gaining popularity in recent years, and they are expected to become more widely available in the future. For now, the most common no-exam policies are issued through one of three forms of underwriting:
- Accelerated
- Simplified issue
- Guaranteed acceptance, also called guaranteed issue
Policies issued through accelerated underwriting are similar to traditional life insurance in terms of rates and eligibility guidelines.
Simplified-issue and guaranteed-acceptance life insurance have fewer medical restrictions and cost more, dollar for dollar, than traditional and accelerated-underwriting policies. However, they are also a convenient alternative for those who might not qualify for — or need — traditional life insurance.
How much coverage does no-exam term life insurance offer?
No-exam term life insurance is typically available with benefit amounts up to $1.5 million for young and middle-aged adults with average to above-average health. Older applicants or those with complicated medical histories might see their benefit amounts capped at $250,000 or so.
The variance in benefit caps stem from the different underwriting styles that insurance companies use to review no-exam policy applications.
With accelerated underwriting, the insurance company reviews your prescription, insurance and credit records, along with other data, just like it does for traditional underwriting. It just won’t require the additional steps of a medical exam and lab analyses to determine your eligibility and risk category.
The healthier you are, the better your risk category and rate. If you are considered to be a higher risk, you might be denied coverage, asked to undergo a medical exam or referred to a simplified-issue product.
With a simplified-issue application, the insurance company usually reviews a smaller dataset and places less stringent restrictions on eligibility compared to traditional and accelerated underwriting. The tradeoffs for broader eligibility include lower benefit caps and higher costs per coverage.
What about no medical exam life insurance for seniors?
Several insurance companies offer no medical exam life insurance for seniors, often promoted as final expense insurance. These policies tend to offer benefit amounts up to $50,000, which is usually enough to cover funeral expenses and burial costs, or other similar obligations.
Insurance companies usually offer final expense insurance through either simplified-issue or guaranteed-acceptance underwriting.
- For a simplified-issue final expense policy, you’ll usually need to answer five to 10 questions about your health. If you have not been diagnosed with a terminal illness and are not confined to a nursing home, you’ll probably qualify.
- For guaranteed-acceptance insurance, you usually only need to meet one or two eligibility requirements, such as being in the right age group or belonging to a specified membership organization.
While it’s easy to qualify for a guaranteed-acceptance policy, these tend to cost more per amount of coverage than simplified-issue policies, which come with higher premiums than traditional life insurance. However, the relatively small benefit amounts of final expense insurance tend to keep the premiums affordable, regardless of underwriting style.
What else should I know about final expense insurance?
If you die by non-accidental causes within two years of obtaining a final expense policy, your beneficiary probably won’t receive the full death benefit.
- Simplified-issue policies often come with what’s called a graded death benefit, which only pays your beneficiary a portion of the benefit in the first two years.
- For guaranteed acceptance, the insurance company usually only returns the amount of paid premiums, plus interest, to your beneficiary, if you die from non-accidental reasons within two years of obtaining the policy.
These restrictions usually expire after the policy is in force for two years. Since these death benefit restrictions vary by company and product, it’s best to review them, along with the benefit amount and rate, as you compare quotes.
It’s also important to know that final expense policies sold by insurance companies are different from burial or preneed insurance sold by funeral homes or cemeteries.
When you purchase a final expense policy from an insurance company, you get to choose your beneficiary. Insurance companies also usually offer final expense coverage in the form of whole life, which means the policy lasts for the rest of your life and builds cash value.
How common is no-exam life insurance?
In 2019, the Society of Actuaries published a report on emerging trends in accelerated underwriting, coauthored by actuaries with the consulting firm Milliman. Among other things, the report noted that term life is the most common product offered through accelerated underwriting. It also noted that insurance companies expect to offer a broader range of products through accelerated underwriting in the future.
Here’s a look at the most common types of no-exam life insurance products available today.
| Point of comparison | AU term life | SI whole or term life | GA whole life |
|---|---|---|---|
| Benefit amounts | Up to $1.5 million | Up to $250,000** | Up to $50,000 |
| Policy duration | Typically 10- to 30-year term | Remainder of your life or specified term | Remainder of your life |
| Medical history | Strongly considered | Considered | Not considered |
| Online application | Available | Available | Available |
| Cash value | No | Yes, with whole life | Yes |
| Best for | Adults with average to above-average health | Anyone needing convenient term life, plus final expense shoppers | Seniors seeking a small death benefit to cover final expenses |
| Additional aspects | No-exam policies are rare for permanent life, but insurers expect to offer them in the future** | The insurance company asks five to 10 yes/no questions and reviews some of your insurance records | You usually only need to meet one or two eligibility requirements to qualify |
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AU: accelerated underwriting; SI: simplified issue; GA: guaranteed acceptance. *Data based on most common offerings seen on carrier websites and industry reports. Policies with longer terms or larger benefit amounts are sometimes available. **Emerging Underwriting Methodologies and their Impact on Mortality Experience Delphi Study, published by Society of Actuaries. ***Accelerated Underwriting Practices Survey, published by Society of Actuaries. |
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Are there drawbacks to no-exam life insurance?
With an emphasis on factors including your prescription records and insurance history, accelerated underwriting tends to favor healthier applicants over those with complicated medical histories.
On the other hand, if you have a minor to moderate health issue, a medical exam and lab tests might show the insurer that you are effectively managing your condition. This, in turn, could increase your chances of qualifying for coverage or getting a better rate.
It’s also important to remember that getting a medical exam is not as inconvenient as you might think. The insurance company pays for it and can usually send a medical professional to your home or office to check your vital signs and obtain blood and urine samples.
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