Life Insurance With No Medical Exam - Deal or No Deal?

You see the ad’s online — “Get Up To $300,000 of life insurance with no medical exam”, “…..Quick and Easy”, “…..Automatically Issued”, and so on. It’s an appealing idea. No one likes medical exams and long delays while waiting for an insurance company decision on their eligibility for life insurance.

The idea of answering a few questions, getting approved, paying your initial premium and printing your policy online in only minutes has lots of appeal. So what are the drawbacks?

No one will object to the speed and efficiency of this approach. Some might argue that the maximum life insurance available ($250,000 to $300,000) is too low or that the ages at which coverage is available are too restrictive. However, my biggest concern is the pricing of the coverage that available for no medical exam, instant issue coverage.

Let’s assume a 40 year old male is considering $250,000 of coverage with the premium guaranteed for 20 years. If he searches online, finds a company he likes and answers the medical questions successfully he can purchase a no medical exam, instant issue life insurance policy for $900.00 per year.

If, on the other hand, he completes an application, undergoes a medical exam and detailed underwriting he can buy $250,000 of 20 year guaranteed coverage as follows.

• If he qualifies for standard rates his annual outlay would be $388.00
• If he qualifies for preferred rates his annual outlay would be $252.00
• and, if he qualifies for super preferred rates his annual outlay would be $205.00

Yikes! Even if this individual was issued traditional term life insurance at standard rates, his annual savings would be $512.00 per year and $10,024.00 over the full 20 year period (We won’t even talk about investing the difference).

When there is no medical exam and no underwriting — life insurance companies assume greater potential claims risk. Consequently, the companies must price their policies so that expenses, commissions and future claims can be paid and the company can make a reasonable profit.

1stQuote.com has this no exam life insurance available — but we do not recommend it! If you are considering no medical exam life insurance, please get some fully underwritten term life insurance quotes and make an informed decision about the real price of not taking a medical exam.