No-Exam Life Insurance: How It Works and How Much It Costs

Getting life insurance is an essential part of most financial plans.

The life insurance death benefit can provide for your family when you don’t have enough money saved up yet.

Unfortunately, most life insurance policies require you to get a medical exam when you apply for coverage. 

There’s good news for people who don’t like or even outright fear medical exams and needles.

You might be able to get life insurance without a medical exam. 

The caveat:

It’s usually more expensive.

Here’s what you need to know about no-exam life insurance policies.

Medical Exams and Life Insurance

Collecting and analyzing data and medical exam results are part of the underwriting process.

The reality is:

Insurers are looking for health issues and medical conditions that could cause you to die prematurely.

A life insurance company will want to check your blood pressure, other vital statistics and take blood and urine samples to test.

This exam, along with answers to health questions, your medical history and other data, helps determine your premiums in traditional life insurance plans.

Completing a medical exam, as well as behind the scenes work that life insurance companies perform, results in a fully medically underwritten policy. 

This offers the potential for the lowest rates if you’re in good health.

On the other hand:

If they find issues, it generally increases the risk to insurers and your premiums, as well. 

During this process, you’re held in a waiting period where you don’t yet have life insurance coverage. 

Coverage only kicks in once the results come back, you’re approved and you make your premium payments.

Types of No-Exam Life Insurance Policies

No-exam life insurance policies can vary depending on which type you get.

Many types of life insurance do not require a medical exam. 

There are three general types of underwriting and a few kinds of insurance policy types to choose from.

Accelerated underwriting

Accelerated underwriting life insurance is faster than traditional life insurance because it may not require a medical exam.

The no-medical-exam component isn’t guaranteed, though. 

Life insurance companies still gather information about you from databases and medical records. They ask detailed questions about your health, family and more. 

Based on the data and information they gather, they decide whether to offer you insurance without a medical exam.

If you don’t qualify, you may be required to get a medical exam to get coverage.

Accelerated underwriting insurance policies don’t provide as much certainty for insurers. Because of this, you’re typically limited to $1,000,000 or less in coverage. 

If you want more coverage, you would have to get a medical exam.

Simplified issue underwriting

The simplified issue underwriting is what it sounds like.

It’s a less intensive underwriting process. 

Regardless of the results, this type of underwriting doesn’t normally require a medical exam. You’re either accepted or denied.

Rather than dive deep into your history, life insurers with this type of insurance are looking at the bigger picture. 

They generally ask questions about your recent health and about some more significant medical issues.

The data insurers gather from other sources may not be as detailed or exhaustive, either. 

Now:

While this is less invasive than other types of insurance underwriting, you pay the price. 

Life insurers will have less certainty of your current medical health. This results in higher premiums in the vast majority of cases.

Additionally, you won’t be able to get as much coverage. Coverage limits for this type of insurance often hover around $300,000 to $500,000.

Guaranteed issue underwriting

Guaranteed issue underwriting is life insurance that’s guaranteed to be issued regardless of your circumstances.

It works differently than other types of insurance. 

First, the amount of insurance you can get is drastically smaller. Don’t expect to find a policy for more than $25,000 or $50,000 -- at most. 

Next, premiums aren’t going to be cheap. 

Insurance companies know the people purchasing this type of insurance are likely going to be high risk. To make the product financially viable, higher premiums are the result.

Finally, you won’t likely get full coverage right away. To offset the high risk associated with these policies, there is usually a waiting period where you won’t get the full death benefit.

If you die during the waiting period, there may be no death benefit or a much smaller death benefit. The waiting period may vary, but is often a couple of years.

Look at the policy specifics to see how much you’d get paid if you die during the first few years of the policy.

Term life insurance

Term life insurance is normally the most inexpensive. This type of life insurance is in effect for a set period of time, called the term.

If you don’t die during the term, you get nothing. If you do, your beneficiaries get the death benefit.

Term life insurance is an affordable way to insure your family while you build enough assets to cover them in the future.

Whole or permanent life Insurance

Whole or permanent life insurance typically lasts your entire life, as long as you pay the premiums required.

There is no term like with term life insurance. This means insurers will have to pay out the death benefit as long as you follow the policy rules.

Because of this, whole or permanent life insurance is much more expensive than term life insurance. 

The company has to cover their costs plus set aside enough money to pay out your death benefit.

Funeral expense or burial life Insurance

Funeral expense or burial life insurance isn’t actually a type of life insurance. Instead, it’s a marketing term for guaranteed issue permanent life insurance.

This type of insurance is often limited to $25,000 or $50,000. The idea is it will cover your final expenses so your family doesn’t have to pay out of pocket.

Work-connected life insurance policies

Another option most people don’t think much about is work-connected life insurance policies. Some employers offer group life insurance as a benefit. 

Because the insurer is insuring a large group, its risk is lower than insuring an individual. This can allow insurers to issue insurance without a medical exam. 

Those that want insurance coverage of more than a few times their annual salary normally have to submit to a medical exam.

Another downside of this type of insurance is it is connected to your employer. If you leave your job or get fired, you probably won’t be able to keep it under the same terms. 

Benefits of Skipping the Medical Exam

Opting for no-exam life insurance can have benefits.

Faster application

The application process may not be as in depth depending on which type of insurance you choose. 

This can make the barrier to applying smaller, making it more likely for you to get insurance versus putting it off.

Faster underwriting process

Skipping the medical exam could get you approved for a life insurance policy faster.

This may mean getting coverage faster, too.

No needles

If you hate needles and medical exams, you won’t have to suffer through one.

Drawbacks of Skipping the Medical Exam

Avoiding the medical exam isn’t always a good thing.

Premiums could be higher

Without a full medical history, insurance prices are usually higher. 

For someone young and healthy, this could result in much higher prices.

Coverage may be limited

Due to the higher risk insurers are taking, your coverage amounts could be limited. 

If you need more insurance than you can get with no medical exam, you may end up underinsured.

May include a waiting period

Some types of life insurance, such as guaranteed issue, could result in a waiting period before the full death benefit is paid out. 

If you die during this time, your family won’t have the money they need.

Still may consider health information

No medical exam doesn’t mean no underwriting. Insurers may still check databases of medical records. 

This often results in them finding out about any documented health conditions you have.

Can I Still Get Denied For a No-Exam Life Insurance Policy?

Yes.

No-exam life insurance doesn’t mean you’re guaranteed to be approved. 

Life insurers still have to protect their financial position. It doesn’t make sense to take on high-risk individuals unless the premiums offset the risk. 

For instance, people age 50 and older with significant health conditions will have a hard time getting some types of life insurance.

The exception where you won’t get denied is opting for guaranteed issue life insurance. 

What to do if you’re denied

Just because you’re denied with one life insurance company doesn’t mean you’ll be denied with all of them. 

Life insurance companies view risk differently. Another insurer may be willing to take the risk for the right premium. 

Consider applying with other insurers to see if you can get a policy elsewhere. 

Don’t try to lie to get coverage, though. Life insurance companies will likely still be checking your medical records. 

They even look at results from previous life insurance medical exams logged in databases.

If life insurers find out you lied on your application, they can deny your death benefit. This is true even if you’ve been paying your premiums as promised. 

Lying isn’t ethical and it simply isn’t worth the risk. 

Consult a Professional

As with any major financial decision, it’s best to consult a professional.

A fiduciary financial advisor can provide advice for your specific situation. 

Since commissions can be hefty for some life insurance products, having an honest opinion could save you money. A fiduciary must keep your best interests in mind.

In particular, this type of advisor can help you decide which type of policy to buy without being influenced by the commission the policy will pay the salesperson.

Based on their recommendations, you can apply for the life insurance coverage you need.