According to LIMRA’s 2020 Insurance Barometer Study, the percentage of American adults with life insurance has been constantly declining since 2011. In 2020, only 54% of US citizens had coverage, leaving a “needs gap” of 16% – or over 40 million people who don’t have insurance but need it.
Among the top reasons for not investing in life insurance are the expected costs and lengthy medical exams involved. Luckily, today, there is one cheaper, more accessible option you could consider: no-exam term life insurance policies.
Let’s look at what these are and who may benefit from them.
What is a No-Exam Term Life Insurance Policy?
A term life insurance policy is necessary for most people to financially protect their families in the event of their death. But when looking to invest in a life insurance policy, most buyers have to face one significant hurdle: a thorough medical exam.
These medical exams are essential for the life insurance provider to assess the cost of your premium, your coverage eligibility, and the risk involved.
They commonly include tests like:
- Height and weight measurements
- BMI checks
- Pulse and blood pressure checks
- Blood and urine tests
- Thorough reviews of the patient’s medical history
- Specific additional tests
For some, these tests are nothing more than an inconvenience. However, for those with strict timelines or severe medical conditions, they can make a difference between being granted or denied coverage.
That is where a no-exam term life insurance policy can help and is only offered by a handful of companies such as Bowtie Medical Insurance. These policies are not medically underwritten and don’t require a medical exam.
However, during the application process, the applicant will be required to answer questions about their medical history and existing medical conditions.
Term Life Insurance: Exam-Based vs No-Exam Policies
While no-exam life insurance is a viable option for those unable to access traditional policies, they are slightly different from medically underwritten policies.
No-exam policies are undoubtedly faster and easier to access, even for those with a pre-existing medical condition that makes traditional policies off-limits. And, they come with significant benefits:
- Applications can be submitted online
- Approval can come through within a few days – or as little as 24 hours!
- Available as term or permanent life insurance
- Available to older applicants over 60 and those with chronic diseases
Just like in the case of medically underwritten policies, when opting for no-exam term insurance, you’ll be covered in the event of death within the policy’s term.
However, no-exam life insurance policies represent a greater risk for the insurance company. In turn, they come with some downsides worth considering:
- Lower coverage limits (i.e.: coverage limits for medically underwritten insurance can be up to $1-3 million, while no-exam premiums have lower limits, usually $500,000).
- Twice as high premiums
- Lower death benefits
- Higher costs
Types of No-Exam Term Life Insurance Policies
Just in 2020, US life insurance beneficiaries were able to claim over $747 billion from their providers, thus benefitting from financial protection for themselves and their loved ones. And, this is also thanks to more accessible no-exam policies.
These are the three options available.
Simplified Issue Policy
Simplified issue policies are highly convenient, offer quick approval, and provide coverage to those with severe health conditions.
During the application process, you will be required to fill in a detailed questionnaire and answer questions about your medical history and health, as well as produce your medical records.
Your coverage limit will be capped (at $25,000-$300,000) depending on your evaluation and provide term life coverage. But make sure to fill in the questionnaire correctly, as any incorrect or missing information can cause your policy to be voided.
Guaranteed Issue Policy
Guaranteed issue policies are “no-question-asked” policies available to all applicants who can provide general health information. They offer limited death benefits – which are often capped at $25,000 – and come with much higher premiums.
Accelerated Underwriting Policy
Another alternative is accelerated underwriting policies. These are medically underwritten policies that leverage data-driven processes to assess your health risk, and use algorithms, AI, and patient data.
These term insurance policies offer high coverage limits of up to $1 million, and are accessible within hours. However, they might be more suitable for those in good health, with no history of severe medical conditions, and stable finances (since the process involves a credit check).
Who is No-Exam Term Life Insurance For?
Thanks to their accessibility and convenience, no-exam term life insurance policies help thousands of people access life coverage each year.
However, because of the limited health checks involved, they represent a riskier deal for insurance providers. In turn, death benefits and coverage limits are reduced by half and premiums can be twice as high (when compared to traditional term life insurance policies).
In turn, no-exam policies are not suitable for everyone, and you should only consider them if:
- You have a health condition that prevents you from accessing exam-based policies
- Your health rating would cause traditional policies premiums to be inaccessibly high
- You are an adult over 60, looking to provide coverage for your family
- You wish to avoid a medical exam
- You are only after lower coverage limits
- You require a life insurance policy within hours
Ultimately, partnering with a life insurance broker can help you find the right term life insurance policy and premiums for your needs.
Brought to you by Erika Rykun
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