Should You Buy No Exam Life Insurance?
Buying life insurance might not be as easy as you thought. The insurance company needs to assess your risk. In other words, how quickly might they have to pay out on your insurance? If it’s too soon, they may not approve you for insurance.
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This doesn’t mean anyone with a chronic illness is out of luck. You may be able to buy a no exam life insurance policy and prove that your condition is well managed. Before you do, though, you should understand the pros and cons.
What is No Exam Life Insurance?
First, let’s look at what no exam life insurance is and how it works. As the name suggests, you won’t have to get any type of medical exam. The typical life insurance policy requires at least a short exam that lets the insurance company know of any potential health issues you have.
The no exam policy doesn’t have any exams. You can usually secure coverage in just a matter of days. What’s the tradeoff? You’ll pay a lot more for the policy. Because of the cost, chances are you won’t be able to afford as much coverage, which is something to consider.
The Types of No Exam Life Insurance
There are two types of no exam life insurance: guaranteed and simplified.
Guaranteed life insurance doesn’t require any medical questions or exams. It also doesn’t require the insurance company to view your medical records. You’ll answer some basic questions regarding your lifestyle habits and whether you’ve been told you were terminally ill. From there, the insurance company may offer you coverage. Be careful though, as it could be ‘graded coverage.’ This means your loved ones get a certain percentage of the policy if you die within the first 2 years. It’s usually the premiums paid thus far plus the interest. After the designated period passes, the full coverage amount would be available.
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Simplified life insurance doesn’t require a medical exam, but the insurance company will ask you specific medical questions and may look at your medical records. If approved, you’ll get full coverage as you would with a standard life insurance policy, simplified life insurance usually doesn’t include graded coverage.
The Benefits of No Exam Life Insurance
No exam life insurance has several benefits:
- You can get coverage even if you have health issues – As long as the issues aren’t anything chronic like diabetes or heart disease, you may be able to get coverage despite having an issue. Diabetes and heart disease are two illnesses that you won’t be able to get past any insurance company though.
- You get coverage quick – Because you don’t have to go through the exam, the insurance company can usually underwrite your policy quickly, giving you peace of mind that you have coverage.
- It’s convenient – Sometimes it’s hard enough finding time to sit down with an insurance agent. If you also have to schedule a medical exam and wait for the results, it can really put a delay on your life insurance coverage. When you take out the medical exam, you can make the process more convenient.
The Disadvantages of No Exam Life Insurance
There are a few downsides of no exam life insurance that you should know:
- The cost is high – Hands down no exam life insurance costs much more than insurance with a medical exam. This is because the insurance company takes a much larger risk on your case without a medical exam.
- The coverage is limited – You won’t be able to secure the million-dollar policy you want. You’ll probably be capped at $100,000 to $350,000 depending on the insurance company and the type of insurance you choose.
- The term may be shorter – If you are looking for a 30-year policy, you likely won’t find it with the no exam policy. Insurance companies limit the amount and the term in order to protect themselves.
The no exam life insurance can be good if you are in a crunch. If you have a chronic illness that is well managed, you might be able to get by with the no exam policy. Even if the insurance company finds out about the illness, if you have proof that it’s under control, you could be in good hands. If you have an illness that you don’t manage, though, such as diabetes, it won’t work.
If you don’t have any other way to provide for your loved ones in the face of your death, then this could be the answer. A little coverage is better than nothing, but make sure you read the fine print and know exactly what type of coverage you are getting before you move forward.
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