Medical vs. No Medical Life Insurance

Life insurance is one of the most important purchases that you’ll ever make for your loved ones. Life insurance is one of the only ways that you can ensure that your family has the money that they need, regardless of what happens to you. It can be a confusing process starting to decide which type of coverage that you should buy. There are several types and dozens of terms that can leave you being lost and confused about which direction to head next, but that’s why we are here to help.

As a condition of coverage, most life insurance policies require every potential policyholder to submit to a comprehensive medical exam. This is a simple cost-control measure; medical exams may confirm or refute policy applicants' written answers to health-related survey questions. In practice, they often uncover underlying health conditions that directly contradict this self-reported information.

As such, they exert a powerful influence on most insurers' pricing models. Individuals with pre-existing health conditions or poor habits like tobacco use tend to have significantly lower life expectancies than their healthy counterparts, increasing their likelihood of early death and making them comparatively expensive to insure.

Will a “No Medical Exam” Policy Be a Cheaper Option?

While it is possible to obtain life insurance coverage without submitting to a medical exam, "no-exam" policies are likely to be considerably more expensive than policies that do require an exam. The actuarial models that insurance companies use to calculate these "no-exam" policies' premiums compensate for a lack of pertinent medical information by assuming that the individuals who purchase these policies will have lower-than-average lifespans.

Cost of a “No Medical Exam Policy” for Parties with a Chronic Disease

However, many life insurance shoppers still seek out no-exam policies. Even if they are not considered terminal, certain serious or chronic health conditions cost tremendous amounts of money to manage. Some, like HIV and Type-II diabetes, can quickly cause fatal complications after just a few missed treatments. The cost of a no-exam life insurance policy is often less than the cost of an exam-dependent policy for insured parties with such chronic diseases.

Obtaining no-exam life insurance becomes more difficult with age. Most insurance companies offer no-exam policies for young, healthy individuals with no history of tobacco use. It is standard practice within the industry to offer a healthy applicant under 40 a no-exam policy worth up to $100,000.

After age 40, the maximum no-exam death benefit begins to decline rapidly. At 45, the industry standard is $50,000. After age 50, it may be $10,000 or less. This reflects an aging individual's increasing likelihood of death toward the end of a standard 20-year term. Individuals whose chronic health conditions may make exam-dependent life insurance coverage expensive or difficult to find should opt to take out longer-term life insurance policies before the age-40 cutoff.

Some niche insurers specialize in providing larger no-exam life insurance policies. These plans tend to be even more expensive than their standard-sized counterparts and may come with more caveats. Like discount auto insurers that provide little more than proof of insurance, these cut-rate no-exam life insurance providers may be reticent to pay out death benefits.

For the general population, exam-dependent life insurance policies are more straightforward and cost-effective than no-exam plans, which demand higher premiums and offer smaller death benefits. Most financial planners encourage their clients to purchase life insurance policies at face values of eight to 10 times their annual incomes, making policies valued at $100,000 or less impractical for most families.

Individuals who sign up for no-exam term life insurance policies when they are young may find it difficult to renew their coverage after their term expires. Most insurers simply do not provide no-exam coverage for individuals past age 60.
Worse, they may choose to deny coverage to middle-aged or elderly individuals with pre-existing conditions. While no-exam life insurance may be a clever medium-term solution to an expensive problem, it is rarely a sound long-term investment.

Disadvantages of No Exam Plan

There are several drawbacks of these no exam plans that you should be aware of. It’s important that you get the best plan to meet your needs. There are several advantages and disadvantages that you should consider based on your life insurance needs. No exam plans are an excellent option for coverage, but they are not the best option for everyone.

The biggest disadvantage we have already discussed, the price. No exam life insurance is going to be much more expensive than a plan that requires a medical exam. The purpose of the medical exam is to give the insurance company an idea of how much you are for the life insurance coverage, but without the medical exam, they are taking a much greater risk for coverage. The company is going to offset that risk by charging you much higher premiums. In fact, with a no exam policy, you’re going to pay at least twice as much for your coverage.

The other notable drawback of the plan is the limited amount of coverage that you can buy. As we mentioned, there are a lot of companies that will give you a life insurance plan valued at $100,000, and there are plenty that will offer as much as $250,000, but this still isn’t enough life insurance protection for most families. Not having enough insurance coverage is one of the worst mistakes that you can make for your family members. If you were to pass away, they would be responsible for leftover bills and expenses that they wouldn’t have the money for

Medical or No Medical – Which is Best For You?

It can be a confusing decision deciding between a no medical exam policy or a plan that requires the medical exam. Both of them are great ways to get life insurance protection, but it’s important that you make the best decision for you and your loved ones. If you have any questions or need help deciding between the types of plans, please contact our experienced independent insurance agents today. It’s our mission to ensure that you’re getting the best life insurance coverage to meet your needs.

You never know what’s going to happen tomorrow, which means that you shouldn’t wait any longer to get the insurance protection that your family deserves. Call us today and we can deliver individualized insurance quotes directly to you, for both no exam and traditional life insurance coverage.