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If you’ve heard about no exam life insurance but don’t know much about it, you’ve come to the right place. Here we’ll discuss the 4 main types of no exam life insurance, how much they cost, and who they’re best for.
Simplified Issue
Life insurance with no medical exam is just easy for everyone. Gerber life can offer just that.
Simplified issue can be term or whole life insurance and both versions have become popular in recent years. The main difference between simplified issue and traditional life insurance is that it allows applicants to skip the medical exam as part of the application process.
Simplified issue life insurance does include underwriting, but as the name implies, it’s simplified. On the application, you’ll be asked several health-related questions. Additionally, insurers collect the following information from third-party sources:
- Your previous life insurance applications from MIB
- Your prescription records
- Your driving records
In some cases, underwriters can assess your information on the spot and grant immediate approval. In other cases, a phone interview may be requested and approval can take a little longer. Either way, applicants for a simplified issue policy always get a quicker answer than those who apply for traditional policies. Traditional policies can take between 4-8 weeks to be approved, whereas simplified issue can take a few weeks at the most.
Who is it good for? Simplified issue is best for people who have a relatively high quality of life, including physical and mental health. (Read more here to find out what else leads to a high quality of life.) Coverage can go up to $500,000. Depending on the state of your health, premiums can be very similar to those of traditional policies.
Guaranteed Issue
Guaranteed issue life insurance grants approval to anyone who applies, as long as they’re under the age limit. The catch? Coverage is limited to $25,000 and premiums are high. Insurers set these conditions because it’s the only way they can cover their risk when they accept anyone who applies.
With policies that are even partially underwritten, insurers have some idea of the risk they’re taking on. They can adjust premiums accordingly. With guaranteed issue, in which there is no underwriting, insurers have no idea of the person’s health situation. So they make the premiums high across the board to cover themselves. The rate you’re given is based on age, gender, and location.
Another downside of guaranteed issue is that there is a 2-year waiting period, which means that if the policyholder dies within 2 years of policy purchase, the beneficiaries don’t receive the payout. They do, however, get a refund of the premiums plus interest. If the policyholder dies after 2 years, the full death benefit is paid out.
Who is it good for? Guaranteed issue is a good option for people who have serious medical conditions that prevent them from getting any other type of life insurance, traditional or no exam. It’s always considered a last resort.
Graded Death Benefit
This type of no exam life insurance is similar to guaranteed issue, but there are several differences:
- Some health questions are asked – Usually 3 or 4 “knockout” questions. If you answer yes to any of these questions, your application will be denied. Questions usually revolve around AIDS/HIV, hospital and hospice stays, and terminal illnesses.
- They have a graded death benefit – Similar to the waiting period of guaranteed issue, but slightly different. If the policyholder dies within the first year of policy purchase, 25% of the death benefit is paid. If they die in the second year after policy purchase, 50% is paid. If they die in the third year after purchase, the whole death benefit is paid out.
- Less expensive – While graded death benefit policies are more expensive than simplified issue and other traditional policies, they are less expensive than guaranteed issue because some health questions are asked.
- Higher coverage – Coverage can go up to $50,000.
Who is it good for? Graded death benefit insurance is good for people who have serious health issues but can answer “no” to certain health questions.
Final Expense
Final expense life insurance is often referred to as burial life insurance, and it has one purpose: to cover the costs of a person’s final expenses. These can include funeral and burial costs and end-of-life medical bills. This insurance prevents the financial burden of final expenses from falling on your loved ones. These policies are whole, which means there is no expiration date, and premiums remain the same throughout your lifetime.
Final expense comes with no waiting period and no graded death benefit, since these would defeat the entire purpose of the policy. Coverage can range from a few thousand dollars all the way up to $100,000.
Not everyone can be approved for final expense insurance. While there is no medical exam, insurers ask several health questions and review data from previous life insurance applications and pharmacies.
Who is it good for? Final expense no exam life insurance is good for people who need a small amount of coverage to cover final expenses. People who get approved usually have some health issues but nothing major.
Deciding Which Type is Right for You
It’s not always easy deciding which type of no exam life insurance is right for you, but this guide is a good place to start. It’s also a good idea to consult with an insurance advisor who you trust. Bear in mind that guaranteed issue is a last resort. It’s worthwhile applying for any of the other type of no exam life insurance first to see if you can get approved.
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