Term Life Insurance No Medical Exam
If you've been turned down for life insurance because of your age or health, you may be looking for a policy that does not require a medical exam. There are options available. For certain types of life insurance, such as guaranteed issue and simplified issue life insurance, no medical exam is needed.
Do I have options when buying no medical exam life insurance?
Guaranteed issue life insurance does not require a medical examination, and the application usually does not include questions about health history. However, these policies have smaller face amounts, usually maxing out at $25,000. In addition, you may have to be within a specific age range--generally, 50 to 75 years old. Along with a smaller insurance benefit, guaranteed issue policies have higher premiums than traditional life insurance (policies that require a medical exam).
Simplified issue life insurance is similar in that a medical exam is not required, but the application will likely feature a few questions about your health and medical history. Although traditional life insurance is less expensive, simplified issue is oftentimes more affordable than a guaranteed issue policy.
Is no medical exam life insurance worth the price?
Costs for simplified issue and guaranteed issue policies tend to be higher than traditional life insurance policies. Because of the relatively high premiums and low face values, you could end up paying more to the insurance company than your beneficiaries will receive from the insurer after only a few years, advises the National Association of Insurance Commissioners. If you are considering one of these policies, ask the insurer how long before the cumulative policy premiums pays out in the death benefit.
What are the pitfalls of guaranteed issue and simplified issue policies?
Along with the higher costs of life insurance policies that forgo medical underwriting, beneficiaries may not receive the entire insurance benefit if you die within the first several years of the policy. Some language states that, if you die within the first one or two years of the policy, only the premium will be returned to your beneficiaries. Other policies may have graded benefit provisions or such benefit reduction stipulations as the "age clause" or "term clause."
Graded benefit provisions pay out only a small portion of the insurance benefit if you die within the first several years of the policy issuance, typically within the first one to three years. You should check the policy details for a schedule of how the policy is graded.
Benefit reduction clauses, including the "age clause" or "term clause," allow for the reduction of benefits as policyholders grow older. That means life insurance benefits shrink each year the policyholder grows older.
How can I be sure I am getting the right life insurance policy?
Guaranteed issue and simplified issue policies may not be the best choice for relatively healthy people. In fact, these policies are more expensive than policies that require a medical exam, particularly if you could qualify for a standard risk policy, advises the New York Department of Insurance.
If you've been denied coverage in the past because of your health, try working with a different life insurance company or find an impaired risk specialist--an insurance broker who has experience working with applicants with certain medical conditions.
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