What is No Medical Exam Life Insurance and How it Works?

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  | Published: 04 December 2020 | Last Updated On: 08 February 2021

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Regardless of whether you like it or not, life insurance is an absolute must for you as well as your family. Most people purchase a life insurance policy in an attempt to safeguard the future of their near and dear ones. Often these policies mandatorily require one to submit a medical exam as it helps the insurance provider to assess the extent of risk involved in providing insurance to you. Sometimes getting a medical test might seem like a hassle, preventing you from buying a life insurance policy. But did you know? There are some companies that offer life insurance without the requirement of having done a medical examination.

What is No Medical Exam Life Insurance?

Generally, when you try to buy a life insurance policy, there is a sea of paperwork that you are required to fill up and submit. One such paperwork involves getting a medical test done so as to ensure that you are eligible to avail a life insurance cover from your insurance provider. This involves several blood tests, urine samples, and a list of in-depth questions asked by a health practitioner to evaluate the buyer’s health condition.

If it turns out that you have certain health problems, you might have to pay higher premiums or even face rejection from the insurance provider.

A No Medical Exam Life Insurance allows you to skip all of this paperwork and medicals tests. It offers you a small life insurance cover despite some of the health problems you might have. This enables you to have life insurance without taking a physical medical test prior to the approval of your policy. This type of life insurance cover is targeted towards senior citizens who might have several different types of health issues that make it difficult to get any other form of life insurance easily. The No Medical Exam Life Insurance is also popularly known as a guaranteed issue or a simplified issue life insurance.

This type of life insurance is a term life insurance policy, usually having a significantly low face value. A term life insurance policy is an insurance product that assures payout to the beneficiary upon the death of the policyholder. In lieu of this guarantee, a fixed amount is expected to be paid as a premium at specific intervals. However, even though No Medical Exam Life Insurance policy has a low face value, they can be bought for a larger amount. Although such a life insurance policy may seem ideal due to its fast and easy procedures that involve no medical tests, but because the life insurance provider has absolutely no awareness of your health issues, the premium you pay will be much higher than the coverage you buy.

How does a No Medical Exam Life Insurance work?

In most ways, this type of life insurance is similar to a regular life insurance policy. Once your application is approved, all you have to do is pay a monthly premium in lieu of a life insurance cover. In the event of your untimely demise during the active period of the policy, the nominee will be entitled to the coverage amount. The only obvious difference is the absence of a medical exam. This difference however factors in enormously.

The insurance company uses medical examinations as a yardstick to evaluate the risk involved in insuring you. This is just as important as your other documents that are reviewed microscopically. Without this exam, the premiums rise, costing you more.

Different Types of No Medical Exam Life Insurance

There are three major types of this life insurance policy-

Guaranteed Issue Life Insurance

If you have a pre-existing health condition that makes it difficult for you to avail of any other life insurance policy, this might be your last resort. This policy, also known as the Guaranteed acceptance life insurance, is however expensive since the providers don’t bother looking at your medical records. This type of No Medical Exam Life Insurance is not the most ideal as the coverage offered is puny. The death benefits compared to the premiums you pay are fairly minuscule. 

Apart from that, they have a ‘graded death benefit’ feature. This implies that the full death benefit is not paid out until the next few years. Also, you are usually required to answer some simple questions during the application process:

  • Whether you have AIDS/HIV?
  • Are you terminally ill?
  • Whether you are a smoker?
  • Are you hospitalized or in a long-term care facility currently?

Simplified Issue Life Insurance

When opting for a simplified issue life insurance, one need not take a medical examination. However, the insurers will ask a string of detailed medical questions during the application process. These questions are related to a person’s medical conditions and medical history, the basic information regarding height and weight, whether you smoke or drink, or if there were any recent hospitalizations. Sometimes they even dwell on your vehicle records or previous applications for insurance.

Often people choose the simplified issue life insurance as it is quickly available but you also need to realize that these No Medical Exam Life Insurance offer very limited coverage. Also, there is hardly any guaranteed approval and even the premiums you pay are too much as compared to the little cover it offers.

As opposed to the simplified issue life insurance, certain companies have started offering ‘accelerated underwriting’ or the approval express insurance that is very much like a simplified issue as it substitutes the requirement for a medical exam with a medical questionnaire of its own. The insurance providers make use of other records available in the public domain like Criminal records, Property registrations, Bankruptcy declaration documents, licenses, tax records, etc, to get a better picture of your health status without the need for a medical test. Nevertheless, these insurance covers are just as expensive as a simplified issue.

Group Life Insurance

Some employers provide a life insurance policy to their employees that offers a small amount of coverage as an added work benefit. This type of life insurance is called group life insurance. Since this policy does not require the employees to answer any medical questions or take a physical exam, it can be considered a No Medical Exam Life Insurance. The employers pay the premium, if not all then at least most of the premiums.

Regardless of whether your employer provides insurance or not, it is always preferable to get a separate insurance cover for yourself as these policies are non-transferable in case you decide to change jobs. 

When is it best to choose a No Medical Exam Life Insurance?

These no medical exam life insurance policies are advertised as hassle-free, quick, and convenient policies. These points though are true, choosing these policies is not the best choice for all of us. There’s only a certain number of people who will garner an actual benefit from opting for these policies. Here are a few case scenarios for choosing this type of policy:

  • In case you have a chronic illness like diabetes that is beyond control, getting a regular life insurance policy will not be possible for you. Even if an insurance provider approves your application, the premiums charged will be exorbitant. Opting for a guaranteed issue life insurance in such a case is your best option.
  • If you are employed in a volatile industry, or your job profile involves participating in a risky occupation, regular life insurance will be difficult to apply for. These policies have a strict and thorough underwriting process that will lead to your rejection despite the fact that you are perfectly healthy.
  • If you are in a hurry to get a life insurance cover, these no medical exam life insurance will be your saviour as other policies take time for approval due to their underwriting policy.
  • In case your employer does not provide you with a group life insurance and you suffer from some health issues, these policies are meant for you. Usually, a group life insurance cover is available even if you have health problems for affordable premiums. But in the event of losing the job, you also lose the insurance cover. So, devoid of any other option, no medical exam life insurance will be ideal for you.
  • As a senior citizen with health issues, these policies offer you some relief and help take care of your near and dear ones after your death.

If you are a healthy, young individual who has no similarities to the above-mentioned group of individuals, then these policies are not for you. As a thriving individual, you probably need a life insurance policy that offers a generous amount of coverage to help sustain your family when you are gone. You should preferably opt for policies that can help your kids achieve their dreams and offer significant financial support to your spouse.

Things to remember when buying a No Medical Exam Life Insurance

  • Make sure that all the information you provide during the application process is genuine as it is vital while buying any kind of an insurance policy, especially if you want to opt for a no medical exam life insurance. Clearly mention any chronic illness or health issue to your insurance provider. Though it might seem easy to hide such information, you will be caught sooner or later and could end up in causing a financial loss.
  • If you are a smoker or drink often, own up to it in front of your insurance provider. These factors might lead to an increase in the premium but it will not reduce the death benefit.

To Sum It Up

Even if you urgently need life insurance and you don’t have the option of taking a physical medical exam, making No Medical Exam Life Insurance last resort, you have to understand the nitty-gritty details of these policies. Compare different premium and payout rates to choose the one that specifically meets your requirements and budget.