Traditionally, life insurance requires a medical exam in order to qualify for a policy.
However, there is a type of policy that can be purchased called No Exam.
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As the name implies, no medical exam is required for this type of policy.
There are Pros and Cons to getting No Exam Life Insurance.
Let’s dive in to why somebody would buy no exam life insurance and whether or not that makes sense for them.
Pros of No Exam Life Insurance
The biggest benefit in getting a policy that does not require a physical is usually speed.
No Exam Life Insurance Gets Faster Approval
The companies I use for no exam policies typically issue a policy either immediately as in same day as is the case with my one click coverage or the policy is issued within a few days.
This can be a tremendous benefit for somebody who is in a hurry to secure coverage.
I frequently get calls from people who need coverage in force to protect a business loan such as an SBA loan. Many lenders require that by a lot of people going through the lending process don’t have four to six weeks to get a traditional underwritten policy in place so they choose no exam life insurance.
That’s a great reason to take out a policy without an exam.
Legal Reasons for No Exam Life Insurance
Another reason these people get life insurance that need it quickly is to cover some legal obligation such as what might be mandated in a divorce decree. In many divorce settlements, one spouse owes alimony payments to the other which would cease upon his or her death. This creates a need for the alimony payment recipient for life insurance on the ex-spouse making the payments.
It’s Easier to Qualify for No Exam Life Insurance
One of the other benefits of a life insurance policy that does not require a physical is that it may be easier qualifying for coverage.
For example, if you are currently in good health to the best of your knowledge, and have never had anything detrimental found in any medical exam regarding your health, and apply for a no exam policy, you will most likely be approved right there on the spot.
Since the insurance company does not perform an examination, they may have no idea if you actually have a medical problem that you may not even know about.
As you might understand, people apply for life insurance all the time thinking they’re in terrific health. But, then the lab results come back and it turns out that they actually have a kidney problem or their cholesterol is way out of whack, or a multitude of other problems that can be encountered.
By purchasing life insurance with no physical exam, you’re taking the risk away from what the medical exam might reveal. You’re not being dishonest because the insurance company understands they’re taking on a higher risk as well, and they charge an additional premium for it. We’ll get into that here in a minute when we talk about procuring no exam life insurance.
I like it that most of the same policies that you can take out with an exam can also be purchased without an exam. So, many of the no medical test companies that I use offer a 10-year term, 15-year term, 20-year term, and 30-year term policies as well as a whole life insurance policy which offers guaranteed coverage and cash value for the rest of your life.
When I first began in the industry 8 years ago, there weren’t as many no exam options as there are today. For example, in my North American Company Review, you’ll see North American Company for Life and Health Insurance offers several types of term life insurance, but does not have a no exam option. Many other companies, don’t offer this, but now we do have several other carriers we can quote, probably close to 10.
We’ve looked at the pros of no exam life insurance which again involve removing the risk of getting declined for an unknown health impairment and product availability.
Now let’s examine some of the cons.
Cons of No Exam Life Insurance
No Exam Life Insurance Policies Are More Costly
Probably the biggest problem with life insurance without a medical exam is the cost. That’s often the biggest factor for people weighing the Pros and Cons of No Exam Life Insurance. For example, I just ran a quote for myself today for 20-year term, $250,000, for a healthy male age 33, nonsmoker. I could go through the exam process and buy a traditionally underwritten policy for as little as $13 per month; however, that same policy would cost him right around $40 per month with the no exam variety.
Nothing has changed about his health but again, you have to understand the insurance company is taking on a huge amount of risk by knowing so little about his health history meaning – he would encounter more difficulty in getting approved.
Companies Like Select Quote and Intelliquote Push Them
Let’s take a look at online insurance agency giants like Select Quote or Intelliquote. You may have heard me talk about them before. I think these started off as great agencies, but as they’ve gotten bigger, the problem is their sales people have quotas. They need to sell x number of policies in a week.
So what do you think happens? The agents go for the easy sell more often than not. So if you’re a Select Quote agent, and you have a 40 year old with no medical issues, do you think they would rather quote the client a traditional policy, which will take 4 to 6 weeks to get approved (but is much cheaper in some cases), or sell them a policy that they can qualify for today?
You guessed it. They oversell the no exam option. This is one of my chief Select Quote complaints, and the same goes for Intelliquote, which was highlighted in my recent Review and Complaints for Intelliquote article written here on IBBC.
Medical Investigations Used to Approve a Life Insurance Policy
People mistakenly think that because there’s no exam, they’re easily going to be approved for that policy.
What they don’t know is just because there’s no exam, it doesn’t mean the insurance company doesn’t perform due diligence.
They have four ways that they can find information out about you which could possibly lead to a decline.
MIB’s Are Used By Life Insurance Companies
The first and most important is they will pull an MIB report on you. That stands for Medical Information Bureau report.
Life insurance companies report to the Medical Information Bureau whenever one of their applicants has any type of health impairment, tobacco use, hazardous travel or activities, and so on. This means that basically anything that could be detriment to your life expectancy could show up on this medical report.
All the life insurance companies are members of this Medical Information Bureau and they all report to it, and they all share with each other.
They perform this search to prevent fraud.
This way you can’t get denied for a policy today due to cocaine use and then tomorrow go take out a policy with a no exam company and just tell them that you’ve never used drugs. The MIB search can get you declined if you have a hit on the MIB.
How Life Insurance Companies Use the Rx Report
The second way life insurance companies will assess your risk class and consider you for approval is through what’s called a pharmacy report, or Rx Report.
This is basically a list of all the medications that you take and have taken. The insurance company can see which medications you take, how often you fill the prescriptions. This information can usually tell a lot about what type of medical condition you have.
For example, if you take Metformin or insulin, they’re going to know you’re a diabetic. If you take Coumadin, they’re going to know you probably have had a problem such as a stroke or blood clotting.
The point is they’re going to find out about serious medical conditions simply by pulling this pharmacy report. So, don’t think that you can apply for a no-exam policy and hide a pre-existing condition.
How Medical records Are Used When Applying for Life Insurance
The third thing they may pull, but not usually, is your medical records.
Earlier in the article, I said that most of my no-exam carriers will approve a policy in a matter of days. I said that that was in most cases.
The other case is if they find a reason to look deeper into your medical history, they may order your medical records from your attending physician.
In that case, the process that you hoped would be completed in less than a week or, it could take several weeks to several months. The reason is because getting medical records is mostly about how quickly your doctor’s office sends them out, and has less to do with the company ordering them.
Some doctor’s offices are able to send them out quickly, in a week or two I’ve seen, but some of them can take several weeks.
This can be a con in two ways. The first is that it may take longer than expected to get you approved. The second is that you may not get approved at all once they see your complete medical record.
Life Insurance Companies Review Your Motor Vehicle Records
The fourth item of consideration is your motor vehicle report, abbreviated MVR. This will indicate if you’ve had any DUIs in the past few years, reckless driving violations, speeding tickets, and so on.
Now, just because you’ve had a couple of tickets does not mean you’ll get declined, but if you’ve had a recent DUI it could lead to a decline. Or, if you’ve had multiple speeding tickets, that could also lead to a decline.
Put yourself in the insurance company’s shoes. Most insurance policies that pay out are due to accidental death, and most accidental deaths happen in vehicles. So, if you have an extremely dangerous driver’s record as indicated by multiple speeding infractions, you’d better believe that you’re at risk of getting your policy declined.
The Fraudulent Use of No Exam Life Insurance
On another note, it should be mentioned that no-exam life insurance is used all too frequently to try to commit fraud.
In other words, you may know something is wrong with your health and apply for a no-exam policy to try to dupe the insurance company into approving you.
First of all, as mentioned, this is fraud.
Second of all, you need to understand that life insurance companies have the right and the ability to deny a claim for life insurance within the first two years after it is issued.
This is called the two-year contestability period. This means, if you die within the first two years after your policy is issued, the life insurance company will probably reopen your case, as if they were issuing a brand new policy to you.
But, they’ll go deeper into their due diligence than they did when they first issued the policy, in an attempt to uncover fraudulent answers on your original application.
Let it be known, if they find discrepancies, and if the discrepancy is what you might call a material misrepresentation, they have the right to withhold payment from your beneficiaries.
Find Out More about Non Exam Life Insurance
In summary, not only is it illegal to make such misrepresentations to life insurance companies, it’s just wrong; don’t do it. Even worse, they could potentially deny your claim.
The better alternative, if you’re not in good health, is to call us at 877-443-9467 and discuss your health history with us. We can probably get you insured, even if you’re not in the best of health, or if you have a health history that is not so great.
We have insured everybody from diabetics to people with a history of heart disease, organ transplants, multiple sclerosis, epilepsy, and we even got one client insured who had had a heart transplant, and another who had Stage III kidney disease.
Don’t risk your family’s financial future by lying on an application. Give us a shot to get you a policy the legitimate way; don’t try to weasel your way through the no-exam life insurance process.
That sums up the pros and cons to no-exam life insurance.
2 Ways to Get a Quote
- For an instant quote and to apply, please visit this link.
- or simply call us at 877-443-9467.
Sorry. Our quote form on the right ONLY shows quotes for policies that require an exam. However, you may want to get a quote there too to compare the cost of exam vs. no exam.
*Written by Chris Huntley. Huntley Wealth Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.