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12 Things You Need to Know Before Buying No Exam Term Life Insurance
Before You Buy No Exam Term Life Insurance…
The cost of no exam term life insurance appears to be somewhat of a mystery to many life insurance shoppers. How do you know if you’re really getting the best deal? How can you even be sure you qualify? Here are the 12 things you need to know before buying term life insurance with no exam:
It’s Actually Very Affordable, Contrary to Popular Belief
Though you may have heard otherwise, a no exam term life insurance policy may not actually be more expensive than fully underwritten life insurance policies. The key is to compare rates across different insurance companies. For companies that do offer no medical exam term life insurance, quoted rates are almost identical to rates for their policies requiring an exam. However, if you compare those no exam term rates to those of a few other different companies, chances are you’ll find more options that are less expensive. However, every company offers no exam policies so the ones that do may charge higher rates in general.
Is this true?
Let’s have a look at sample quotes for a term life insurance policy with an exam and no exam:
Sample Quotes: Exam Vs. No Exam Life Insurance
| Exam (Annual Premium) | No Exam (Annual Premium) | |
|---|---|---|
| Lincoln Financial
(35-year-old Male, Non-Smoker, 20 yr premium, $500,000 face value) | $503 | $503 |
| Phoenix Life Insurance
(35-year-old Male, Non-Smoker, 20 yr premium, $500,000 face value) | $892 | $892 |
| Lincoln Financial
(40-year-old Female, Non-Smoker, 20 yr premium, $500,000 face value) | $604 | $604 |
| Phoenix Life Insurance
(40-year-old Female, Non-Smoker, 20 yr premium, $500,000 face value) | $1017 | $1017 |
You’ll Get Your Policy Faster
A typical life insurance policy takes an average of six to eight weeks to process. With no exam term life insurance, eliminating the medical exam saves you valuable time since you don’t have to go through the hassle of scheduling an appointment and waiting on the doctor’s report that follows. This is great news especially if an individual is in the middle of divorce proceedings and has a court order to get a life insurance policy to cover alimony and child support. Instead of a couple of months, no exam term life insurance can sometimes get you covered in a matter of days.
Cases where it takes longer or might result in a rejection include
If an individual has,
- Long prescription history
- A criminal background
- Chronic medical conditions
- Recent or frequent foreign travel.
In these cases, the insurance company interviewers might turn down an applicant, or send your application in for a fully underwritten policy, which would require the medical exam.
It’s not a way to “cheat the system” to get lower rates.
Some people hear “no exam life insurance” and think “Great! I can get a better rate because my medical condition won’t be revealed by an exam!” Wrong.
A no exam life insurance policy is not a good way to try and “hide” your poor health in order to get approved at a better rate. There’s still a health questionnaire (detailed later in this article), as well as a Medical Investigations Bureau (MIB) check, a prescription history check, and a driving history check. Should anything come up in these background checks that look inconsistent with the way you answered the health questionnaire, you run the risk of getting denied approval, which can make it harder to get approved in the future.
If you do have any serious health concerns or conditions, such as diabetes, high cholesterol, or cancer, you might actually be more likely to get approved with a medical exam (a fully underwritten insurance policy), because the insurance companies will be able to better assess your health risk (albeit with potentially higher premiums than someone in good health). This leads us to the fourth point:
Pre-existing Conditions Matter
A pre-existing condition is a medical condition that started before a person’s health insurance benefits (or life insurance) went into effect. This includes things like diabetes, high cholesterol, etc. Insurance companies will carefully evaluate if these conditions are being monitored and maintained to the point where their status is considered “stable.”
>> Learn More: Life insurance with pre-existing conditions
In the case of diabetes, for example, an insurance company will want to know when you were diagnosed, how high your A1C is, and how much insulin you take. Usually, those in control of their blood sugar, with an A1C of 7.0 or less, will get approved.
About that Health Questionnaire
Because you won’t be seeing a doctor who can assess your health history and condition, life insurance companies issue a health questionnaire to their no exam life insurance applicants. Some common questions you’ll be asked will have to do with any history of substance use (smoking, alcohol consumption, etc.), your family health history, your personal health history, and any medications you take. You may also be asked about any criminal background or foreign travel.
Pro-tip: Don’t lie. Just don’t do it. Remember, there’s also the MIB and other background checks we talked about, so it’s worth reiterating that this is not an opportunity to hide ANYTHING in your history just for the sake of getting a lower rate. You only increase your chances of getting denied coverage by doing so. Intentionally putting misleading or fraudulent information on a life insurance application is grounds for rejection.
>> Find out: What happens when you lie on your life insurance application
No Exam Term Life Insurance May be More Limited
If you can’t see all the cards on the table, chances are you’ll place a lower bet. Life insurance companies are risking more by insuring someone without a medical exam because it’s harder to fully assess their actual health status and risk. Therefore, the face amount you’re able to receive on a no exam term life insurance policy (the full amount of coverage you’re purchasing) may be lower than if you had opted for a policy requiring a medical exam.
This is especially true of guaranteed issue life insurance. The death benefit amount on these policies is typically quite low, really only meant to cover funeral and burial costs. Additionally, guaranteed issue policies have what’s called a “Graded Death Benefit,” which means the death benefit usually won’t kick in until a couple of years after the policy is purchased. Those who apply cannot be denied, regardless of health status. However, you will pay a higher price for coverage without immediate access to it.
Term Life Insurance Comes With an Expiration Date
Carefully consider what term you’ll choose on your policy before you buy. Under or overestimating how long you’ll need coverage could cost you thousands due to renewal or conversion costs down the road when that policy expires. If you renew or extend a life insurance policy when the term is up, your premiums are going to increase simply because time has passed and you’ve aged…the older you are, the higher your premiums. If you’re converting the policy to a permanent or whole life insurance policy, your rates are definitely going to increase. This is because permanent life insurance can be up to 10 times the cost of term life insurance. Interesting right?
Be sure to carefully assess how long you’ll need coverage before you buy, so you don’t end up wasting money by extending or converting the policy later.
It’s always a good idea to calculate your needs and then decide your coverage length. Don’t forget to check out our free life insurance needs calculator:
Don’t Buy More Than You Need!
Much like choosing the right term for your policy, it is equally important to select the right coverage amount for your needs. Ask yourself a couple of questions:
- How many people depend on you for income?
- How much money do those people need to cover the cost of living?
- How long would it take for them to become financially independent after you die?
Think about things like college tuition, child care, and continuing support for a disabled or aging family member. If you own a business, consider how your death will affect business partners. All these factors will contribute to how much life insurance coverage you actually need.
A good tip for parents: When deciding how much coverage to buy, calculate 10x your income, plus any potential college expenses, per child.
If you’re not sure where to start, many companies have an online needs assessment tool you can use before you start looking for quotes. Try out our free life insurance needs calculator here.
The Time to Buy is When You’re Young and Healthy
With life insurance, the expectation is that the lower your health risks are, the better rates and coverage you will get. If you’re below the age of fifty and in relatively good health, no exam term life insurance may actually be ideal for you. If there are not any serious health concerns that would come up in a medical exam, a simple health questionnaire and background check may be all that is necessary to get someone in your condition approved quickly.
>> Read: What does life insurance medical exam test for?
Traditionally, it was thought that for people with high-risk health concerns, occupations or hobbies, or who were rejected by other insurance companies after a medical exam, it might be worth looking into a no exam term life insurance policy. These days, however, it’s actually more likely a candidate will qualify for a no medical exam policy if they’re in excellent health, and therefore pose a much lower risk for insurance companies to provide coverage without an exam.
There Are Other Ways to Cut Costs
The best way to ensure you will get the best rates possible and lower the cost of your term life insurance is to make sure you’re in good health. If you smoke, now is a great time to quit smoking. If you’re overweight or have diabetes or high cholesterol, make diet and exercise part of your daily routine.
Another tip to lower the cost of term life insurance with no medical exam is to opt for annual premiums instead of monthly. This will save you the cost of any additional administrative or convenience fees tacked on to a monthly payment plan for your insurance policy.
Do Your Research
Comparing life insurance quotes online shopping online is the best way to find the best deal possible. Don’t settle for the first quote you get. Be sure to compare rates across a variety of different companies, especially when applying for life insurance without a medical exam. You can compare free life insurance quotes online at LifeQuote.
Talk to An Agent
Don’t assume you don’t qualify for no exam term life insurance coverage just based on your own research. Take that research to a licensed, independent life insurance agent who can assess your needs on a human level and help you search for the right policy for you. You can ask all your questions and be walked through the process from initial quote to final placement. You can contact one of our agents today by calling us at (800) 521-7873.