When applying for a life insurance policy, some people give up on the process when learning they need to take a medical examination. People have lots of reasons for not wanting to have a medical examination – they are too busy, it is too inconvenient, or they are afraid they will get turned down. A no-medical life insurance policy simplifies the process of acquiring life insurance.
Those who are looking for a life insurance policy should understand what a no-medical life insurance policy is and what the pros and cons are.
What Does No Medical Life Insurance Mean?
If anything is certain in life, it is that we will all pass away in due time. Life would be much easier to plan for if we knew the day and time it would happen. While it is impossible to predict the exact time of death, people can plan for it by buying the right life insurance policy to protect their loved ones.
The right life insurance may be in the form of term life, participating life (also called permanent life), or universal life. No-medical life insurance policies are usually term life policies, which means the life insurance lasts for a term. Terms are usually 10, 20, or 30 years.
Purchasing life insurance is a process that has several steps. With most life insurance policies, the next step after filling out an application and getting a quote is to schedule a basic medical examination.
The reason life insurance companies require medical exams is so they can get a better idea of the applicant’s health and how likely it will be that they will die during the policy term.
Can an applicant be declined for life insurance if they have a pre-existing health condition? Yes, someone could be declined if they have a pre-existing health condition or some other major pre-existing medical condition. Insurance companies may decline an applicant who has cancer, diabetes, obesity, or a previous diagnosis of some other serious disease. Most individuals who are relatively healthy will be approved for life insurance without having a medical exam.
A no-medical life insurance policy does not require a medical exam at all, so an applicant would not be declined on the basis of health. A no-medical life insurance plan is a good choice for anyone who is concerned about being classified as high-risk.
Life insurance applications list many questions, and life insurance companies may also decline applications for reasons that are completely unrelated to health. Insurers may decline applicants based on the following reasons:
- They participate in high-risk hobbies (race car driving, skydiving, etc.)
- They have a DUI or a poor driving record.
- They have a dangerous job (roofing, aircraft pilots, truck drivers, etc.)
- They have a poor financial history.
- They smoke.
- They cannot pass a drug test.
The healthier a person is, and the healthier their lifestyle is, the easier it will be to get life insurance and pay a reasonable rate.
There may be tax advantages for life insurance, depending on the type of policy. A tax accountant is the best resource for understanding complex tax laws related to life insurance.
No-medical life insurance takes the hassle out of getting a life insurance policy. It is simpler and faster to get life insurance than ever before. Individuals can apply for no-medical life insurance online or through a life insurance agent or broker.
What Is Required During a Medical Examination?
A policy that requires a life insurance medical exam can take months before getting approval. Applicants must answer a litany of questions on the application. The insurance company then sets up a medical exam for the applicant. Usually, applicants can go to a local health facility to have the medical exam completed. Alternatively, the insurance company may send a healthcare worker out to the applicant’s home or workplace and do the examination there.
The healthcare worker asks a few additional questions. The worker will also get the applicant’s height and weight and take samples of blood, saliva, and urine.
Once the medical examination has taken place, the application goes to the underwriting department. Underwriters review the answers to the questions on the application and the results of the medical examination. Based on the information they have; they can determine if the applicant meets their guidelines to receive a policy and they will charge a premium accordingly.
While people are increasingly searching online for life quotes, they are not necessarily purchasing life insurance. Many Canadians never follow through on the life insurance application process to the end. Often, that is because they do not want to take the time to complete the application process or go through a medical exam. In some cases, people looking for life insurance feel they cannot afford it.
For some applicants, the process of going through the medical exam and waiting for approval is too much of a hassle. They would rather opt for a simplified underwriting process where the approval will be granted quickly.
Pros and Cons of No Medical Exam Life Insurance
There are pros and cons to every type of life insurance policy. Here are the pros and cons of a no medical exam life insurance policy:
Pros:
- Fast approval
- Covers some individuals with preexisting conditions
- Covers some types of health conditions
Cons:
- Costs more than policies that are medically underwritten
- Death benefit may be limited
The application process for a no-medical insurance policy is streamlined and straightforward. The applicant completes an application and receives approval or denial within a few days. Some applicants find their approval comes in within the first 24 hours if not immediately.
The reason the premiums for no-medical insurance policies are higher is that the insurance company has less information to determine how long the applicant will live. Not having enough specific health and medical information is also the reason no medical life insurance companies place a cap on the amount of insurance an applicant can purchase.
How to Get a No Medical Life Insurance Policy
There are three common types of life insurance policies that do not require a medical examination. They include group, simplified issue, and guaranteed issue.
Group Life Insurance
It is common for employers to offer group life insurance plans to their employees as part of their benefits package. In this case, an employer purchases a group life insurance policy that covers all eligible employees in the company. For example, a group plan may only be offered to full-time employees but not independent contractors or part-time employees.
Employers typically purchase term life insurance plans for their employees, although some offer permanent life insurance plans. In most cases, employees lose their life insurance when they leave the company. In rarer circumstances, life insurance policies are portable, and employees can take them when they leave the employer as long as they pay their own premiums.
With group life insurance plans, the death benefit is usually limited to a specific dollar amount, which may be based on the employee’s salary (for example, twice the employee’s annual salary).
Similarly, certain private organizations and government bodies sometimes also offer no-medical life insurance for their members or employees.
Simplified Issue Life Insurance
Simplified issue life insurance is much as it sounds. Applicants simply fill out the application form and wait for approval. No medical exam is required. Insurance companies that offer this type of plan base their decisions on basic health questions that applicants would know the answers to immediately.
As long as the applicant’s answers meet the insurance company’s underwriting guidelines and do not send up any red flags, the policy will be issued as soon as possible. Smoking is nearly always a red flag that leads to a policy declination.
Insurance carriers typically charge higher premiums for simplified issue policies because they assume a greater risk of the applicant dying before the end of the specified life insurance term.
Guaranteed Issue Life Insurance
Guaranteed issue life insurance policies are sometimes called guaranteed acceptance life insurance. No medical examinations are required. Health questionnaires are very basic or there may not be one at all.
Guaranteed issue life insurance policies are popular with older adults, for example, people between the ages of 50 and 80. Various insurance companies have different limits on the acceptable age of applicants. This is a good choice for life insurance for seniors over 75 with no medical exam as they likely cannot obtain a life insurance policy from an employer.
It is common for insurance companies to limit guaranteed issue life insurance policies to under $25,000. The goal of this type of life insurance is to cover final expenses such as funeral expenses, debts, or medical bills. Over time, guaranteed issue policies build a small amount of cash value which is also a benefit.
Final Thoughts
A no-medical life insurance policy is not for everyone. Life insurance will always be more available and cost-effective when applicants apply while they are young and healthy. Yet, people of all ages need life insurance. Young or old, people benefit by applying for a streamlined, no medical life insurance process.
At Hometown Life Insurance, we want you to have the right life insurance for your family. Our licensed agents will help you understand the different types of life insurance policies, so you have a comfort level with your decision.
Contact us for more information today.
External Links
- https://www.insurancebusinessmag.com/ca/news/breaking-news/how-many-canadians-have-life-insurance-survey-reveals-all-324551.aspx
- https://www.canadalife.com/insurance/life-insurance/main-types-life-insurance.html
- https://www.canadalife.com/insurance/life-insurance/is-life-insurance-tax-deductible.html
