In the past, if you wanted to get life insurance, you needed to undergo a medical exam as part of the application process. Today, fortunately, there are policies that don’t require a medical exam. In this article, we are going to examine the impact of having an exam or not having one.
A medical exam for life insurance is usually conducted by a nurse or paraprofessional in the applicant’s home or place of work. It usually takes about 30 minutes and consists of checking vital signs, a blood test, and urinalysis. In some cases, an EKG/ECG is required.
The purpose of the exam is to determine the state of the applicant’s health. Underwriters compare the results against millions of statistics and determine the life expectancy of the applicant.
Some life insurance policies require an exam for all applicants, while others only require for some. Then there are no exam policies that don’t require any medical exam, and from these, some policies don’t require any health information at all.
Why Do Life Insurance Policies Require a Medical Exam?
Life insurance policies require applicants to undergo a medical exam because it’s the best way to assess how much of a risk the applicant poses to the company. In blunt terms, if the applicant has complicated health issues, they may die early and the insurance company will need to pay out the death benefit.
This is why people who are in good health get low premiums — they pose a very low risk to the company. People with health complications get higher premiums. The exact amount of the premiums is determined by underwriters who compare each health detail against millions of statistics. Smokers, for example, always get higher rates than non-smokers, since smoking has been proven to lower life expectancy by at least ten years. Obesity, heart conditions, asthma, and more are other conditions that can raise premiums.
In some cases, an applicant may have such significant health complications that a life insurance company will reject his application altogether.
Before submitting to a life insurance medical exam, it’s important to be aware of the following:
- The exam may reveal a health condition that was previously unknown to you
- If you are denied coverage based on your medical exam, it can affect future life insurance applications
The main benefit of submitting to a medical exam for life insurance is that these policies sometimes offer lower rates than no exam policies. “Sometimes” is the optimal word, and it’s worthwhile getting quotes for each type of policy to see what your premiums would be. If you can get similar premiums from a no exam policy, there’s almost no reason to put yourself through the hassle of a medical exam. You can get free quotes here.
When Are Medical Exams Not Required?
There are different types of no exam policies: Accelerated Underwriting, Simplified Issue, and Guaranteed Issue.
Accelerated Underwriting
Accelerated Underwriting is a type of traditional life insurance policy that allows some applicants to skip the medical exam. Allowing you to skip the exam doesn’t mean that the insurance company won’t have any info on you. Rather, they collect it via various third parties, including pharmacy, credit, and driving records. The underwriting process is then accelerated so you can get approved quickly.
If you don’t qualify to skip the medical exam, the insurer reserves the right to request one. Reasons for not qualified include:
- Age
- Smoking/drinking
- History of serious illness
- Currently taking a prescription drug
- Seeking high coverage
Simplified Issue
Simplified Issue is a type of no exam policy that includes minimal health and lifestyle questions as part of the application. This means there is a little underwriting, but not much. Rates are determined by the answers given by the applicant. These policies tend to be more expensive than Accelerated Underwriting since underwriters have less information about you. However, they are less expensive than Guaranteed Issue policies (see below).
Guaranteed Issue
Guaranteed Issue life insurance can be bought by virtually anyone, regardless of health. No health questions are asked, no medical exam is required, the only caveat is that applicants must be under the age of 85. There is no underwriting involved in these policies, and as the insurers have no way of assessing their risk, the coverage only goes until $50,000 and premiums are very high.
Accuracy is Crucial
No exam policies shouldn’t be viewed as a way to hide health issues from insurers unless you’re applying for a Guaranteed Issue policy, which doesn’t require any health information The other types of no exam policies require full disclosure of any known medical issues, and failure to give accurate answers on an application can result in the insurer refusing to pay out the death benefit. Refusal to pay out the death benefit defeats the entire purpose of getting life insurance in the first place, which is to ensure that your loved ones are protected after you’re gone.