Here's a little secret: you may not have to take a medical exam to get life insurance. Some life insurance companies may rely on information provided and data from third party sources to decide whether to offer you coverage and what rate to charge, without you having to be hit and paced. There is also a type of policy that has no questions.
But before choosing to skip a life insurance medical exam when applying for coverage, you need to understand how these policies work. They can offer a quick and easy way to get life insurance, but they can also come with compromises.
Because insurers typically require a medical examination
Life insurance companies use a process called subscription to collect information about applicants and calculate a rate to be charged. The process typically involves a long question with questions about personal information, medical history, lifestyle and family medical history.
Insurers typically also obtain medical records from doctors and use third-party sources to learn the history of prescriptions, driving documentation and past questions related to life and health insurance.
Life insurers began adding medical tests to the underwriting process in the 1980s to get more information on applicants' health, says Laura Boylan, underwriting solutions manager for Haven Life, a life insurance provider at term issued by MassMutual.
A life insurance medical exam typically lasts about 30 minutes and usually involves recording height, weight, pulse and blood pressure and taking blood and urine samples. Some tests for older adults or those requiring multi-million dollar coverage require an ECG and / or stress test on the treadmill. And some insurers want a cognitive test for older candidates.
The exams "really provide a data source that has significant protective value for life insurance writers," says Boylan. The exams can confirm the information provided on the application or reveal health problems that candidates are unaware of or may not have disclosed.
The whole medical underwriting process can help group applicants into health classes, which determines what their rates will be. Those who are healthier pay lower rates for coverage.
Because insurers offer policies without an exam
Over the past decade, more and more insurers have started offering life insurance policies that don't require medical tests. The move may seem strange, considering that eliminating the medical exam would seem to limit the amount of information that insurers are getting about your health. There are several reasons, however, that insurers are moving away from medical tests.
"The main reason is convenience for the consumer," says Adam Erlebacher, co-founder and CEO of Fabric, an online life insurance platform. Haven Life's Boylan agrees that the move to policies without an exam came from a desire to make the life insurance process easier and faster.
Eliminating the life insurance medical exam can also save insurers money and generate more business. Insurance companies cover the costs of medical tests for applicants. So removing the exams reduces the cost of the subscription process. Additionally, a Society of Actuaries study found that insurers can reach customers who may not have requested coverage because they didn't want to go through the exam process. In other words, it helps insurers to sell multiple policies.
Life insurance companies are able to eliminate medical tests from the underwriting process by using data modeling to predict a person's risk of mortality, i.e. their life expectancy.
"Health exams are important, but now all available data often provides a more complete picture of who you are than an instant medical exam," says Erlebacher.
Types of life insurance policies without exam
There are three main types of life insurance policies that do not require a medical examination. There are some key differences between them, including the price. So, if you are considering a policy without an exam, keep in mind the advantages and disadvantages of each type.
Accelerated underwriting policies
The accelerated subscription process closely resembles the entire subscription process. You will answer several questions about health, family history, financial situation and lifestyle. Insurers use several third-party data sources to collect information about applicants, as they would do with a fully subscribed policy.
They then use data modeling to assess applicants' risk and determine whether to offer coverage.
Some providers using accelerated subscription, such as Bestow, Fabric, Haven Life and Jenny Life, may offer immediate approval of life insurance without medical examination, especially for younger and healthier applicants.
If there are questions about your health, you are older (like over 50 or 60 years old) or you are looking for a very high amount of coverage (in millions), you may be sent through a more traditional underwriting process with a medical exam. See these options for fast life insurance.
The cost may be comparable to that of a fully subscribed life insurance policy. For example, Boylan says that Haven Life's InstantTerm policy rates are the same as those signed by a doctor. "Everyone pays the same for a certain rate class," he says.
Even if you are eventually asked to do a medical examination, the process can be rapid. For example, candidates for Fabric's term life insurance can schedule an exam online and a medical professional will come to their home to conduct the exam. Results will be ready within a few days and Fabric will make a coverage decision within days of getting the results, says Erlebacher.
Disadvantages with Accelerated Subscription: A limitation with an accelerated subscription policy without exam is the amount of coverage that can be obtained. Without a medical examination, coverage is typically limited to $ 1 million. This may be sufficient, however, to meet life insurance needs.
Life insurance with simplified issuance
Simplified life insurance policies do not require a medical examination. Applicants usually only need to answer a handful of questions, which could include:
Are you currently in a hospital, a nursing home, an assisted living facility or a prison?
Have you ever been HIV positive or have you been diagnosed with AIDS?
Have you ever been positive or diagnosed with Alzheimer's or dementia, emphysema or chronic obstructive pulmonary disease (COPD)?
In the past 24 months, have you been diagnosed or asked to receive treatment for cancer (except basal cell carcinoma), heart attack, stroke or TIA (transient ischemic attack) or treatment with alcohol or drugs?
Has the driving license been suspended or revoked in the past 24 months? Have you been convicted of two or more moving violations, or have you been convicted of intoxicated driving or under the influence, or convicted of driving in a state of compromise because of the use of alcohol and / or drugs?
Fewer third-party data sources are used to collect information about applicants for simplified life insurance. This helps keep underwriting costs down for insurers, says Erlebacher.
You can be rejected for a simplified problem policy. Insurers use data modeling to determine whether to issue a policy based on information provided and information from third party sources. If you are requesting coverage with an online application, the decision may be instantaneous or you may need to check the answers to your question with a follow-up phone call before making a coverage decision.
Disadvantages with a simplified issue: a simplified emission insurance is more expensive than a fully subscribed life insurance, even for healthy candidates. Since insurers have less information about applicants to make good judgments, rates are higher, says Boylan. Expect to pay at least 20% more for a simplified issuance policy than a fully subscribed policy, he says.
The hedging amounts available for simplified issuance policies also tend to be lower than the amount that could be obtained with a fully subscribed policy. Boylan says Haven Life limits coverage of the simplified issuance policy to $ 500,000 or less. Most insurers limit simplified emissions coverage to $ 100,000, according to the Society of Actuaries.
Life insurance with guaranteed emissions
Life insurance with guaranteed issues requires no medical tests or questions and you can't refuse, so the name is a guaranteed problem.
Often age is the only limitation for getting coverage.
The guaranteed emissions insurance is aimed at older adults to help cover the cost of final expenses such as burial. For example, applicants for AIG's AIG Guaranteed Issue Insurance Policy must be between 50 and 85 years old.
Disadvantages with a guaranteed life insurance: since anyone can get a guaranteed life insurance regardless of health, the coverage amounts tend to be limited to $ 25,000 or less. And the cost is much more expensive for every thousand dollars of coverage, says Erlebacher. These policies also have what are called classified death benefits. Indemnity in the event of death will be limited if an insured dies within two years of obtaining coverage (except for accidental deaths, such as a car accident). Often, the insurer will reimburse 110% to 120% of the premiums paid, essentially refunding the beneficiaries what the insured has paid, with some interest.
Classified death benefits protect insurers from people who purchase policies that already have health problems.
Pros and cons of life insurance policies without exam
The application process can be quick if no exam is required, the rates are comparable to those for fully subscribed policies
Coverage can be limited to $ 1 million without an exam
No medical exam, quick application procedure
More expensive than policies with a medical exam, the coverage amount is generally limited to $ 500,000 or less
It is not possible to refuse medical tests or health questions, rapid approval procedures
Minimum coverage amount, more expensive, waiting periods for full payments
Reasons to get a life insurance policy without exam
Skipping the life insurance medical exam can make sense for several reasons. Healthy adults who wish to get coverage quickly or are reluctant to undergo a medical exam may be able to get an expedited underwriting policy without paying more than they would for a medical exam with an exam.
A simplified problem policy might make sense for those who don't need as much coverage and are willing to pay more for the convenience of an unexamined policy. And a guaranteed problems policy can be a way for seniors with health problems to get a small coverage that will help loved ones cover the costs of their final expenses.
"In the end it's up to the product to get the coverage you need," says Boylan.