Life Insurance That Doesn’t Require a Medical Exam

Insurance, Life Insurance
Life Insurance That Doesn’t Require a Medical Exam

If you’ve procrastinated about purchasing life insurance, you may be concerned about your rates. After all, the best rates go to the young and healthy. The longer you wait, the higher your premiums might be.

If you have a medical condition that you fear will increase your life insurance rates, or block you from obtaining coverage at all, it’s tempting to buy a “guaranteed issue” or “simplified issue” policy. These policies ask very few medical questions and don’t require a medical exam. This way you won’t be dinged for your age or medical issues, right?

Wrong. Guaranteed issue and simplified issue term life insurance policies have their own downsides, and one of them is cost. Here’s a look at types of life insurance that don’t require a medical exam.

Guaranteed issue life insurance

The application for a guaranteed issue life insurance policy generally has only a few questions, known as “knockout questions.” If you answer yes to any of them, you’ll be denied coverage, but otherwise you’ll be able to walk away with a life insurance policy. The knock-out questions vary by insurer but often include:

  • Do you have AIDS or HIV?
  • Do you currently reside in a nursing home?
  • Have you been diagnosed as terminally ill?

The application might also ask whether you use any nicotine products, including tobacco. While nicotine use won’t result in a denial, it will mean higher rates.

There are some major drawbacks to consider with a guaranteed issue policy.

  • Graded death benefits. The full death benefit typically won’t be paid out unless the policy has been in force for a few years. This is designed to prevent life insurance payouts for terminally ill people who buy a policy shortly before dying.
  • Small benefits. Policy amounts for guaranteed issue policies will be smaller than those for standard term life insurance. Some have a maximum benefit of $10,000. MetLife’s policies top out at $50,000. These policies are generally designed to pay for your final expenses, not leave a legacy for your heirs.
  • High relative cost. Guaranteed issue life insurance is much more expensive than a comparable term life insurance policy that’s underwritten (that is, one in which the insurer takes into account your age, health and other risk factors). At MetLife, for example, a $10,000 guaranteed issue policy costs a 45-year-old woman $426 per year, about $35 less than she would pay for a 20-year term life policy with 25 times as much coverage.

» COMPARE: NerdWallet’s life insurance comparison tool

A guaranteed issue policy should be only a last resort for people who are sure they’ll be denied other types of life insurance. Before you get one, talk to an independent life insurance agent. The agent can run quotes for you, and many work with “impaired risk specialists.” These specialists know exactly which insurers are likely to be more lenient about your medical condition.

Simplified issue term life insurance

Simplified issue term life insurance doesn’t require a medical exam and will have a few more knockout questions than guaranteed issue policies. The additional questions might ask about heart disease, cancer, cognitive impairments, stroke and kidney disease.

Coverage amounts will be higher than guaranteed issue policies. According to a survey by the Society of Actuaries, simplified issue face amounts can range from $25,000 to $2 million.

Unlike guaranteed issue life insurance, simplified issue policies will pay the full death benefit right away. Simplified issue also doesn’t cost as much as guaranteed. Even so, it’s still very expensive for the coverage you get, and should mainly be used as a last resort.

No-exam term life insurance

Some life insurers offer no-exam term life policies. They may require that you fill out a medical history, but they’ll skip the medical exam. Nonetheless, you’ll pay a higher price for the convenience. Contact an independent agent to have him or her research your options.

Group life insurance

If your employer offers group life insurance, max it out. Group life is generally a cost-effective way to secure cheap life insurance without a medical exam. While it’s not a substitute for an individual life insurance policy, it may offer the same amount of coverage as guaranteed issue insurance, and for much lower — if any — premiums.

Alice Holbrook is a staff writer covering insurance and investing for NerdWallet. Follow her on Google+.


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