No exam life insurance is one of the fastest growing types of life insurance on the market. Whereas traditional life insurance policies require applicants to undergo a medical exam, no exam policies let you skip the hassle, and approval can be granted immediately or in up to just a few weeks.
The two main types of no exam policies are: simplified issue and guaranteed issue.
Simplified issue is a type of term life insurance, which means that the policy is only in effect for the duration of the term. You must decide on the duration at the time of purchase, and they usually come in increments of five: five, 10, 15, 20 years, etc.
Term life insurance is usually a more popular option than whole life insurance, which has no expiration date, simply because it’s more affordable. (You can get a free quote here.) Many people determine the length of their terms by predicting when they’ll reach a certain milestone, such as paying off a mortgage, the last child graduating from college, retirement, etc.
Simplified issue no exam life insurance operates on a similar basis as traditional term, but the main difference is that you get to skip the medical exam. Insurance companies still ask questions about your health, and in some cases, they ask your permission to collect information about you from third-party sources, like MIB, a database of previous life insurance applications, your pharmacy records, and your driving records.
Underwriters use all the information to determine whether to approve or reject your application. If approved, underwriters further assess how high your monthly premiums should be. Generally, the younger and healthier you are, the lower your rates will be. People who smoke, however, always get higher rates than non-smokers, even if they are relatively young.
Since there is some level of underwriting involved in simplified issue policies, approval can take anywhere from a few days to a few weeks. It’s still much quicker than a traditional life insurance policy, which takes 4-6 weeks to grant approval. People who need quick approval for an SBA loan or for a divorce settlement often choose simplified issue.
Guaranteed issue is type of whole no exam life insurance, so you know off the bat that you’ll be paying more than for a term policy. The difference between guaranteed issue and simplified issue is that no health questions are asked for the former. In fact, it’s called guaranteed issue because approval is guaranteed, as long as you are under the age limit, which is usually 80 or 85.
When applying for guaranteed issue life insurance, you don’t need to answer any health or lifestyle questions. You just need to give your name, age, gender, weight, and smoking status. There is no underwriting and approval can be granted immediately or within 24 hours.
As you can imagine, a policy that offers the ultimate convenience and guaranteed approval comes with a high price tag. Guaranteed issue is the most expensive kind of no exam life insurance, and is usually considered a last resort by older people who want some coverage but have been denied a traditional life insurance policy.
No Exam Life Insurance Riders
Each type of policy has its pros and cons, so people often consider various factors like coverage, cost of premiums, and speed of approval to help decide which one to get.
One thing that many potential life insurers buyers don’t consider are the riders that come along with each policy.
What is a Rider?
A rider is a provision that comes with a life insurance policy that can include benefits or slight changes to the terms of the basic policy.
There are several popular riders that come with no exam life insurance.
- Accidental death benefit – In addition to basic life insurance coverage, this rider includes an additional amount that beneficiaries will receive if you die in an accident
- Accelerated death benefit – This rider allows your beneficiaries to receive the death benefit payout while you are still alive
- Waiver of premium – If you become disabled within the duration of your policy, this rider allows you to keep the policy without paying the monthly premiums
- Child rider – Allows you to add a child to your life insurance policy
When deciding which type of no exam life insurance to get, it’s important to ask about what riders come with it. As you can see, some of these riders are extremely worthwhile and can elevate the value of your policy. The riders that come with a no exam policy can help give you some insight as to what type is best for you.