July 2009

Life insurance with no medical questions at all?

Not exactly, but close. Life insurance carriers are not in the business of just giving away insurance. While you might not find an application without any medical nosiness by the insurer, there are many policies that ask only a few health questions and do not require a medical exam.

No Medical Exam Insurance

These types of policies go through much of the same underwriting process as a traditional life insurance policy, except for one major thing- there is no actual physical exam involved. That means there is no blood drawn, no urinalysis, no height and weight check, and no blood pressure or cholesterol readings. The carrier relies on your answers to a set of health questions as well as information available in public databases to decide whether or not to insure you. The health questions can be as little as 4 to 5 questions or as many as 20 or 30. Some companies will want to know anything and everything about you. For example:

- Your health history
- What prescriptions you take
- Your family’s health history
- Your driving history
- Your occupation and activities you participate in
- Your height and weight

Those are just a few examples of information that a life insurance carrier will gather to get an overall picture of your insurability. The application and underwriting standards will vary from company to company.

Simplified Issue Insurance

This means that there is no exam and usually just a short application with a few health questions, hence the name simplified issue. The carrier will verify your answers with information on the Medical Information Bureau and prescription databases. Many carriers will require a phone interview and record your answers.

Guaranteed Issue Insurance

This type of life insurance policy is exactly what it says- guaranteed issue. The application can be as short as 5 to 7 health questions, and the company really just wants to know of any terminal illnesses, recent diagnosis’, and if you’ve had a recent heart attack. This type of policy is good for someone who has major health issues (though not terminal), or someone who has been denied for life insurance elsewhere. The benefits on a guaranteed issue policy will be graded. That means that the death benefit will not pay out 100% until at least two years into the policy. For example, if you die in year one, the carrier might pay your beneficiaries 25% of the death or sometimes only the premiums paid into the policy. If you die in year two, they might pay 50% or just the premiums paid in. This varies from carrier to carrier so be sure to find out the details of your graded payout.

Overall, a life insurance policy without a medical exam can be a convenient way to obtain life insurance. One thing you should know is that the rates for this type of policy are typically higher than a fully underwritten life insurance policy. The reason for that is because of the risk to the carrier. They are not checking your health out and simply relying on your honesty as well as public information that they can gather.