What Is No-Exam Life Insurance?

Health visitor and a senior woman during nursing home visit

Life insurance can help ensure the financial well-being of your family after you pass away. Poor physical health can sometimes be a barrier to securing a policy, and it may mean you'll pay more if you are approved for one. In some cases, you may be able to qualify for life insurance that doesn't require a physical medical exam for your policy application to be approved. Read on to learn more about no-exam life insurance and if it may be right for you.

How Does Life Insurance Work?

When you purchase a life insurance policy, you're typically purchasing protection for your family or other loved ones. Your policy names a beneficiary or beneficiaries who receive the policy's payout after you die, as long as the policy remains in effect.

Two basic types of life insurance are available:

  • Term life insurance: A term life policy covers a certain stretch of time, such as 10, 20 or 30 years. If the policy is in effect when you pass away and your payments are up to date, the beneficiaries get the death benefit (such as $25,000) that you selected when you bought the policy. If you're still alive when the policy's term expires, the policy no longer stays in effect unless you renew the coverage on an annual basis at a higher cost.
  • Permanent life insurance: As its name suggests, permanent life insurance can offer coverage for as long as you're alive. Types of permanent life insurance include whole life and universal life. These types of insurance offer a death benefit, as well as cash value, which acts similarly to a savings account. The cash value of a permanent life policy grows over time on a tax-deferred basis and may be used while you are still alive. Permanent life insurance is significantly more expensive than term life.

Before extending coverage to you, life insurers typically ask questions about your health, including your medical history and your family's medical history.

The insurer will also often require a medical exam. Among other things, the person administering the exam likely will record your height and weight, check your blood pressure, take blood and urine samples for lab tests, and conduct other screenings. You'll probably be checked for use of recreational drugs and cigarettes or other products with nicotine.

If a life insurance medical exam determines you're in good health, the insurer will deem you a relatively low risk and you'll likely enjoy lower premiums. But if the exam turns up serious medical issues, such as high blood pressure or hepatitis, you're considered higher-risk and may be hit with high premiums or even be rejected for coverage.

What can you do if your health is not so great and you don't want to submit to a medical exam? You may be able to purchase a no-exam life insurance policy.

What Is No-Exam Life Insurance?

No-exam life insurance generally comes in two forms: simplified issue and guaranteed issue. Normally, you can expect coverage amounts of $25,000 to $1 million for a no-exam policy.

To qualify for a simplified issue policy, you'll answer questions about your current health, your medical history and your family medical history. An insurer will also want to review your medical records; however, you won't be required to get a medical exam.

Simplified issue coverage may be a term life policy or a permanent life policy, with coverage often limited to anywhere from $25,000 to $300,000.

Guaranteed issue life insurance also requires no medical exam. To qualify for this coverage, you'll answer some questions about your health and your medical history.

Premiums for this coverage typically are higher than for simplified issue coverage. Furthermore, the death benefit may be under $25,000, and the amount of the benefit may be reduced if you pass away within two or three years of the policy being issued.

Aside from simplified issue and guaranteed issue policies, there's "instant approval" coverage. A number of online insurers provide instant approval of no-exam coverage based on answering questions online about your health, family medical history and lifestyle. They also consider your credit history (where allowed), driving history and other non-medical information.

Keep in mind that you might not qualify for no-exam life insurance if you're older than 60 or 70, depending on the insurer.

How Much Does No-Exam Life Insurance Cost?

The cost of a no-exam life insurance policy varies based on the insurance company, your age and other factors. Premiums for a policy with no medical exam typically are at least twice as much as premiums for a policy requiring a medical exam.

A woman in her late 60s might pay $122 a month for $25,000 worth of coverage, according to insurance marketplace Breeze, while a woman in her mid-30s might pay around $12 a month for $30,000 worth of coverage. In other words, the older woman in this scenario pays more money for less coverage.

A check of online quotes for traditional and no-exam life insurance found a difference that could add up to hundreds of dollars per year between premiums for these two types of coverage purchased by the same policyholder. A price comparison revealed premiums of approximately $29 to $45 a month for a $500,000, 20-year policy purchased by a 30-year-old man in California who's in excellent health and doesn't use tobacco. Meanwhile, a quote for the same man supplied by a provider of no-exam coverage showed a monthly premium of $44 to $69.

Should You Get a No-Exam Life Insurance Policy?

If you can't qualify for a typical life insurance policy requiring a medical exam because of your health or you just don't want to bother with a medical exam, a no-exam policy might be a good option. It also might be a smart choice for someone who's young, in good health and wants to skip a medical exam, or for somebody who simply wants to leave enough money for beneficiaries to cover funeral costs and other final expenses.

But if you're in great health and willing to undergo a medical exam, a traditional life insurance policy typically makes more sense because you'll likely pay lower rates.

Why Should You Buy Life Insurance?

Regardless of whether you obtain a traditional policy or a no-exam policy, life insurance can be a wise investment. For instance, life insurance can:

  • Replace your income. A policy's death benefit can provide much-needed money to help survivors, such as a spouse or young children, ease the financial burden of your loss.
  • Pay final expenses. Money from your life insurance payout can cover "final" costs like your funeral and burial.
  • Pass along wealth. Life insurance can create a pool of money that can be inherited by your heirs.
  • Cover estate taxes. Your life insurance payout can help pick up the bill for estate taxes that your beneficiaries may need to pay after they've inherited your estate.