A typical life insurance application includes a medical professional coming to your home or office and performing an exam of about thirty minutes. While this is not a terrible inconvenience, many people feel uncomfortable with the idea of disclosing personal medical information to a complete stranger. In fact, for some people, the medical exam is a deal-breaker.
For people in this situation, no exam life insurance can help them out. No exam life insurance is a type of non-traditional policy that offers coverage without the need to undergo a medical exam.
Of course, if something veers from the traditional course, there must be a catch. In the case of no exam life insurance, the main catch is that policies can cost more than traditional ones. How much more? You can get a free quote at Sproutt.com to get an idea, but the difference doesn’t need to be sky-high. It doesn’t need to be a deal-breaker.
A traditional life insurance policy is fully-underwritten, which means underwriters at an insurance company review the details of your medical exam and assess what health class you fall into. If you are relatively young and healthy, you get the highest rating and lowest monthly premiums. If you are young and healthy but smoke, you can’t qualify for the highest class and your premiums will be higher. The same is true for varying medical conditions: asthma, high blood pressure, diabetes, etc. Whatever your health situation is, your monthly premiums will be assigned accordingly.
No Exam Life insurance is considered only partially underwritten because underwriters don’t get the same current snapshot of your health as an exam provides. However, they do get some information.
Simplified issue policies require applicants to fill out a few health questions and perhaps have a brief phone interview. In the past, that was the only information underwriters had about you, so insurers hiked up the monthly premiums as a way of protecting themselves from risk.
Today, however, insurers use artificial intelligence to collect information about applicants, ranging from previous life insurance applications stored by the MIB, pharmacy records, driving records, and credit reports.
All of this information is gathered legally and with your permission. This allows underwriters to gain a much more accurate picture of your health so that they can offer you a more competitive premium. Of course, if you have serious health issues, you will likely be given higher premiums. But those who are young and in fairly good health won’t get the same high premiums as they used to.
Insurance companies that use AI to help gather information can often offer an immediate answer once the application is submitted, since all of the info is digital and takes just a few seconds to collect and analyze.
Simplified issue policies are sold in increments of 5 years, and once the term ends, so does the coverage. Coverage can go up to $1 million.
It does bear noting that omitting a medication you take is not in your best interests, since insurance companies can and do have access to pharmacy records. If you die and your beneficiaries want to claim the death benefit, insurers will go over the original application and make sure that all the information was accurate. If it can be proven that you lied on the application, the company has the right to refuse payment. Therefore, in addition to the ethical issues with lying, there are also practical issues that would prevent your loved ones from getting the payout. That defeats the purpose of the policy altogether!
With guaranteed issue no exam life insurance, there is no underwriting at all. Applicants simply provide a few basic details, like age, gender, location, etc. and they can get approved instantly. How does that work?
No, there are no AI algorithms at work with this one, there is simply a policy that offers guaranteed approval. There are, however, certain conditions that allow the insurer to take on such a great risk.
Due to all of these conditions, guaranteed issue policies are usually purchased by people who have serious health issues or have been turned down for other policies. The payout can be used to cover final expenses or passed on to loved ones as a small nest egg.
At the end of the day, if cost is the main deterrent of getting a no exam life insurance, it’s up to you to consider which is more important to you, which is the true deal-breaker: getting a medical exam or paying higher premiums? Only you can answer that question. Fortunately, that may not even be a struggle for some, since simplified issue no exam policies now offer fairly competitive rates for people in good health.