More life insurance companies are now offering simplified issue products that offer a no exam option. It's called simplified issue because, well, its supposed to be simple. While it may be easier, nothing that is new is ever simple and consumers today sometimes don't know which way to go. So let's lift the mystery, let's talk about the difference between simplified issue and traditional standard issue term life.
Underwriting
WIth traditional term life the underwriting has a few steps. First comes the application that will ask you a few questions to asses the risk, make sure to always be honest. Next is the exam which will happen at your connivence at a time and place of your choosing. Then all your information goes to the life insurance companies, along with the exam results and then your paperwork is in underwriting for about 6 to 8 weeks. Sometimes longer depending on the requirements that are needed before you get approved.
With no exam life, you guessed it, you skip the medical exam. Now while there may not be a medical exam there still is underwriting. The life insurance companies still check the Medical Information Bureau, prescription report, and motor vehicle report. With a simplified issues policy you can get approved instantly(if you qualify) all the way to 30 days depending on the life insurance company you choose.
Premium Cost
If you were wondering what the catch is, well its the cost. Because the company is taking a slightly higher risk by giving you coverage without a medical exam, your premiums will be higher than the traditional term life policy. So the connivence of not taking the medical exam is slightly a bit more expensive, around 25% to 50% more than standard term life, depending on the companies and rating factors.
Amount of Coverage
With traditional term life insurance you can get as much coverage as you would reasonably need to protect your financial responsibilities. With a no medical exam life insurance policy the coverage is usually capped at about $400,000 depending on the company. If you need more coverage then you would have to get multiple polices from different no exam life insurance companies.
Conversion or Renewal Options
What most people don't know is that traditional term life insurance policies usually come with a conversion or renewal clause. What this means is at the end of your term, you have an option to convert the policy to a permanent one without proof of insurability. Meaning you wont have to take another exam to prove you are healthy. In fact, even if you contract an illness you are still guaranteed the same health rating that you initially applied for in the beginning of the term. The only thing that will change is the premium according to your new age at the original health rating regardless of actual current health, even if you got cancer in the process. With most no medical exam policies you do not get the conversion option so its important to ask your agent about this.
One Thing to Keep in Mind
Keep in mind that simplified issue no exam life is not the same as guaranteed issue life insurance. The guaranteed issues plans are policies that offer coverage without any kind of underwriting, they are literally guaranteed with their own set of rules. They provide a limited amount of coverage no matter your what your conditions are, with simplified issue no medical exam coverage you have to be fairly healthy to be approved.
All in all, no medical exam life insurance can be a great option if you need coverage fast or are looking for additional coverage and don't want to go through the hassle of taking a medical exam. But in the end you can probably get more bang for your buck going with the traditional term life insurance option. In the end, its all up to you.
Underwriting
WIth traditional term life the underwriting has a few steps. First comes the application that will ask you a few questions to asses the risk, make sure to always be honest. Next is the exam which will happen at your connivence at a time and place of your choosing. Then all your information goes to the life insurance companies, along with the exam results and then your paperwork is in underwriting for about 6 to 8 weeks. Sometimes longer depending on the requirements that are needed before you get approved.
With no exam life, you guessed it, you skip the medical exam. Now while there may not be a medical exam there still is underwriting. The life insurance companies still check the Medical Information Bureau, prescription report, and motor vehicle report. With a simplified issues policy you can get approved instantly(if you qualify) all the way to 30 days depending on the life insurance company you choose.
Premium Cost
If you were wondering what the catch is, well its the cost. Because the company is taking a slightly higher risk by giving you coverage without a medical exam, your premiums will be higher than the traditional term life policy. So the connivence of not taking the medical exam is slightly a bit more expensive, around 25% to 50% more than standard term life, depending on the companies and rating factors.
Amount of Coverage
With traditional term life insurance you can get as much coverage as you would reasonably need to protect your financial responsibilities. With a no medical exam life insurance policy the coverage is usually capped at about $400,000 depending on the company. If you need more coverage then you would have to get multiple polices from different no exam life insurance companies.
Conversion or Renewal Options
What most people don't know is that traditional term life insurance policies usually come with a conversion or renewal clause. What this means is at the end of your term, you have an option to convert the policy to a permanent one without proof of insurability. Meaning you wont have to take another exam to prove you are healthy. In fact, even if you contract an illness you are still guaranteed the same health rating that you initially applied for in the beginning of the term. The only thing that will change is the premium according to your new age at the original health rating regardless of actual current health, even if you got cancer in the process. With most no medical exam policies you do not get the conversion option so its important to ask your agent about this.
One Thing to Keep in Mind
Keep in mind that simplified issue no exam life is not the same as guaranteed issue life insurance. The guaranteed issues plans are policies that offer coverage without any kind of underwriting, they are literally guaranteed with their own set of rules. They provide a limited amount of coverage no matter your what your conditions are, with simplified issue no medical exam coverage you have to be fairly healthy to be approved.
All in all, no medical exam life insurance can be a great option if you need coverage fast or are looking for additional coverage and don't want to go through the hassle of taking a medical exam. But in the end you can probably get more bang for your buck going with the traditional term life insurance option. In the end, its all up to you.
Source...