Life Insurance No Medical Exam - The Pros and Cons
Pros:
- Low cost
- Ability to change the policy at any time while being on it
- Lower premiums if you are young
Cons:
- Can only be sold by some companies due to federal law. These are called "exempt" policies. This usually applies to life insurance policies that can be sold online, which is not true for all life insurance policies. Be sure to check for an exemption with your agent before getting a new policy or renewing your existing one.
- The company may use a variety of methods, including blood tests and physical exams, in order to assess how risky it thinks you might be as far as health goes. This could raise your premiums and make the policy a bit more expensive than you were hoping for.
- Unlike term life insurance, if you pass away within the first few years of having it, it will only cover funeral costs.
- Life insurance policies with no medical exam are usually either term life or whole life. This means that they will not produce any cash value that can be used later on in your life. It also means that if you need to exceed the death benefit, then a whole life insurance policy with no medical exam will probably not do so well for you in this regard.
- The policy may have some exclusions like AIDS and cancer, which may make things difficult for anyone who has these conditions.
- Life insurance with no medical exam is not a guaranteed contract. Once you get the policy, it may be possible to change to any agency or company that sells life insurance policies within 2 months of buying one, so be sure to ask if they are going to make a change after you buy the policy. If they say no, then this is probably not an appropriate policy for you.
- As stated earlier, this is usually a life insurance policy that can only be sold online rather than via agents. This means there is no way for the agent to help you with other factors such as mortgage or renters' insurance and how much things like that cost. Having to phone them for information could prove to be expensive.
- Although life insurance with no medical exam covers funeral costs, it does not cover legal or living expenses. That is to say, you need to have enough money in your life insurance policy in order to make sure that the amount of money that you will need for expenses will be covered by the death benefit.
- The only thing this type of insurance can do for you after death is pay some funeral expenses and cover up to $250,000 worth of burial expenses if the person who dies would have needed more than that in their life.
- You can only have one life insurance policy with no medical exam per year because it is a federal law.
- The death benefit payout is usually reduced when you are over the age of 80 so that may not be as helpful for individuals who are older. While this isn't a great reason to get life insurance with no medical exam, it does mean that anyone who decides to do so should plan to use its benefits sooner rather than later.
- If you have small children, then you need to think about what will happen if they die before they reach adulthood. A conventional life insurance policy will give you cash value and the ability to borrow money against it. This is obviously only going to be helpful for small children, but if you have no life insurance for your kids, then you need to think about getting one just like any normal person would need to do.
- If you have been diagnosed with a debilitating illness, then this may make things difficult as far as getting a policy goes. Although there are a lot of companies that do sell life insurance policies with no medical exam, there are some that don't and it may not be easy to find one.
- There is no way to be sure that the premium will not change after you buy the policy. You need to make sure that they are not going to adjust it until you have had a policy for a few years.
- The insurance company may pay out less than what you expect them to, especially since this is mainly an online type of policy. It can be difficult even for companies that do sell online life insurance policies with no medical exam to explain exactly how these things work and how much money they will pay out when someone dies, so there is room for problems with this part of the process as well.
- If you need to buy life insurance in order to pay off a debt that you owe, then you may want to think about getting a part term life insurance policy instead. This type of policy can be adjusted up and down as needed, which could make it easier for people who have debts to pay off.
- Be sure that you look closely at the details of the coverage that comes with this kind of policy because it is not universal, which means there are some plans that are going to exclude certain types of medical expenses and they may also have different benefit options and limits than those who buy life insurance with no medical exam who get coverage from other companies.
- Not all companies take people who have pre-existing conditions, so you may be in a tough position if there is something that you need to get covered right away. This type of insurance is not suitable for those who have existing conditions or who are worried about incurring medical expenses and the costs that go along with them.
- If you plan to use your life insurance money to buy something specific once you die, then there is no guarantee that the policy will still pay for it when you pass away. In most cases, it will be reduced to whatever you need, but for those who are looking at paying down debts, there really is no way to know if you can really do so until you have a policy in place.
- Large investment policies tend to lose money and take time to pay off, so that should be something you keep in mind as well.
- If you die without having the policy paid off, then it will not cover the cost of your funeral. The same is also true of term life insurance policies that have no medical exam and have only a term payout.
Conclusion
While life insurance with no medical exam can be a good choice for some people, it is essential that you understand all of the risks before you open a policy. Be sure to check out all of the other policies available as well and see what they would cover. If you do not have any history with them, then ask around and talk to others who are buying similar policies so you can find out how things work in their case. While there may be a few drawbacks with these types of policies, it is still worth looking into since they are often cheaper than those sold through agents.
The information provided on this website is for informational purposes only and is not a substitute for professional advice.