Life insurance can be confusing. With that confusion comes common misconceptions.
In talking with clients, we continually run into a few of the same myths:
- No medical exam means everyone is approved
- The price for non-med policies is really high
- These are not full or “real” life insurance policies
Let’s debunk them and explain….
1) Everyone Is Approved for No Exam Policies – Not True!
Part of this myth stems from the late night TV ads that literally say “everyone is approved“.
Most of these ads are for Guaranteed Issue life insurance. This is a type of no exam insurance and it’s true, everyone is approved for those policies. HOWEVER, these are but a small portion of the larger no exam umbrella of policies.
Guaranteed Issue policies are smaller (usually max $25,000) and much more expensive. They serve a specific need and are normally meant for those who can’t qualify for other types of insurance.
See our comparison of the different types of no exam insurance to figure out what is best for you.
With the exception of these Guaranteed Issue policies, there is still underwriting for no exam life insurance. No exam does NOT = no underwriting.
Yes, you skip the medical exam but there are other things that will be looked at when processing your application. These may include:
- MIB – Medical Information Bureau
- MVR – Motor Vehicle Records
- Rx – Prescription database
- Possible request of your medical records from your doctor
- Possible telephone interview
For coverage amounts over $50,000, you must be in decent health to be approved. The majority of these policies don’t go lower than the Standard health class which is considered average health.
While it’s true that everyone is approved for some of these policies, you’ll need to determine which type is right for you. Most of them do still have underwriting. It is much quicker and does not require undergoing a medical exam.
2) The Price for Non-Med Policies Is Really High – Not True!
This USED to be true, but no longer is.
Lots of the articles and information on this topic are outdated and have not been updated. This continues to perpetuate the myth.
The advancements in underwriting and increased competition among life insurance carriers have brought the price of no exam life insurance coverage down significantly in the past few years.
Yes, certain types of non-med coverage such as Guaranteed Issue, are much more expensive. This is because there is no underwriting and anyone is approved.
However…for no exam policies that are simplified issue term insurance, with underwriting, the cost comparison may surprise you.
To be clear: If the price is your #1 concern, you will still find the cheapest rates by going through the full underwriting process and taking the medical exam.
There are now companies that offer the EXACT same rates for no exam insurance as they do for their traditional, fully underwritten policies. This, however, is only for certain health classes.
The more common comparison now has non-medical life insurance only 5% to 20% more expensive. We have done a detailed breakdown in an earlier section of this guide.
This myth is old news and doesn’t reflect the current state of the industry. Many no medical exam policies are only now a little more expensive. It pays to at least take a look at your options and then decide.
3) These Are Not Full Or “Real” Life Insurance Policies – Not True!
We hear this concern often from clients. A medical exam has been part of life insurance for so long that people have a hard time believing you can skip the exam and still get actual or full life insurance coverage. Yes, you can.
Due to the simplified nature, these policies may not have all the available options, bells, and whistles of some other policies. However, at their core, they are absolutely still life insurance policies that pay a death benefit if the insured dies.
Always consult your trusted life insurance professional and make sure you understand the terms of any coverage you purchase.
Part of the confusion that perpetuates this myth is a type of insurance called Accidental Death and Dismemberment (AD&D). This is life insurance that ONLY pays out if the insured dies in an accident. It will also often pay benefits in the event of a lost limb.
Many life insurance policies have an option to include this as a rider alongside the main policy. This will double or triple the death benefit in the case of accidental death.
However…if you only have an Accidental Death and Dismemberment policy, your beneficiary will NOT receive a dime if you die from natural causes.
You can get true and full life insurance without having to take a medical exam. Please make sure you understand exactly what you are applying for and consult a professional to answer questions.