No medical life insurance is exactly that: a life insurance policy that doesn’t require a medical. Since so many people are hesitant to get life insurance because of the results from a physical, this policy was created to help people get some coverage without having to head to the doctor’s office. It’s also an insurance plan that’s quick and easy to start, which makes it perfect for people on the go. It may cost a little more than standard life insurance, but it’s perfect for its convenience.
How to opt for no medical life insurance
The first step to getting a no medical life insurance policy actually happens at home, not in an insurance office. You should sit down and assess your insurance needs to determine your coverage expectations. Think about the costs your family or business will incur in the event of your death and determine how much you will need.
The first thing to consider are the costs immediately after your death, including funeral expenses, any income you would like to provide for your family and any money you would like left to charities or important causes. An emergency fund is also recommended, and many people think about education funds for dependent children when they are looking at life insurance policies. After you have thought about these amounts, think about inflation rates to ensure that the money you leave is worth what you want it to be when you go.
If you own a business and are trying to figure out a monetary amount, estimate the value of your portion of the company (assuming you are in a partnership or a shareholder). Determine the fair market value with a professional and put that amount into your policy needs. When you arrive, discuss how inflation and future successes should be considered. Remember that with the right life insurance policy, other shareholders may be able to buy out a portion of the business, which can make transitionary periods after deaths easier and more seamless.
As you can imagine, costing this all out initially may be easy, but the details can get quite complicated. After you have your estimates, head to a professional insurance office to discuss your wants, needs, expectations and options. Determine together if you would like a no medical or standard life insurance policy.
Two Kinds of No Medical Life Insurance Policies
No medical life insurance falls under two categories: guaranteed issue life insurance and simplified issue life insurance.
Simplified issue no-medical life insurance
Simplified issue life insurance does not involve a medical exam, but it may require a medical questionnaire. This questionnaire can include disclosure of any former illnesses or hospitalizations. Bear in mind that people who have been hospitalized due to a disease can still apply for simplified life insurance, whether it is whole life insurance (permanent) or a term policy.
Most questionnaires ask about previous illnesses and if you have been turned down for other life insurance policies. Typically, you need to answer “no” to every question to qualify. In general, these policies are more expensive than traditional underwritten policies but appropriate for those who cannot get regular underwritten insurance or anyone looking for a quick and easy insurance policy. Coverage levels for simplified issue no medical life insurance policies are usually under $500,000, but remember that approval is not guaranteed.
Guaranteed issue policy – life insurance without the medical questions
If you opt for guaranteed issue life insurance, the only two things you need are a cheque and a signature. These policies have no questions about your medical history or status, and you are approved even if you have been declined health insurance in the past two years. Bear in mind that these policies are quite expensive and usually have low face values for incidents like accidental death. While the money may be less than the usual $1,000,000+ policies out there, its purpose is different. These policies are to pay off debts, accrued medical costs, funeral costs and little else. They are also sometimes the only policies available to some people. Remember that not all policies will pay out the full amount for the first two years of coverage, but your coverage usually stays in effect so long as you keep making payments. Most carriers remit the premiums to a beneficiary if the insured dies within the first two years of the policy.
Additional no medical policy options
- Group life insurance: This kind of policy doesn’t usually require medicals or questionnaires and instead is drawn out to cover a workplace and staff. Premiums are based on the policy and employees but is often paid in part or entirely by the employer. You can sometimes apply for additional coverage that will require a medical or questionnaire. Often, coverage is based on your salary, ranging from one to two times your annual salary. You will also no longer receive coverage if you are fired or leave the company.
- Term: Term policies are affordable alternatives that extend to a certain point in time rather than the rest of your life. Always remember that you are only covered for the term in which you buy, and you could come across issues once the policy expires.
- Whole life: Whole life policies include death benefits and a cash value accumulation that grows through the life of the policy. That money is a tax-free supplement to your income that can help during your retirement or act as added income for your beneficiaries. You can also take the money out as a loan.
- Fully underwritten policies: While most underwritten policies require a full application including a medical, some insurance providers have smaller face amount policies that do not require a physical medical test.
- Deferred:Many life insurance policies, including all guaranteed issue policies, have a two-year deferral period where you are only covered for accidental death. Deferred life insurance policies offer a simple, permanent insurance solution for people suffering from serious health concerns. Deferred plans may be available despite being previously declined for a policy. These policies are usually designed to cover final expenses and little else.
Who should have no medical life insurance?
Your current health and physical condition should not preclude you from offering your family and loved ones some financial assistance in the event of your death. The unexpected sometimes happens and, in some cases, your best or most convenient option is no medical life insurance.
No medical life insurance policies are more convenient and help you avoid an exam, but they are often paying out less and covering you in fewer circumstances. The assumption is that those opting out of a medical probably have reason to do so, and are therefore more of a risk. Still, it is better than leaving your family and loved ones with a bill they cannot hope to pay.
There are many reasons why you may want to avoid a medical:
You work in a dangerous occupation. Everything from flying planes to serving our country overseas are considered high-risk occupations and, increasingly, companies do not have life insurance policies for their employees. When left to their own, people in these positions can actually end up paying more for policies because of the increased risk of injury or death compared to other occupations.
Critically ill and disabled. Those with critical illnesses or diseases, such as cancer or diabetes, often have to pay a lot more for life insurance if they can even get a traditional policy. No medical policies can help these people get some coverage.
Seniors. As we age, we become a higher risk and, subsequently, our life insurance policies become more difficult to get and more expensive. Most seniors no longer have dependents like they did when they were raising their children. As a result, they may not require as expensive a payout as younger people, which means the right no-medical policy could help them save money while still covering final expenses.
Drug users. If you use soft or hard drugs, policies may seem completely out of reach, but this is simply not the case. You can still get some coverage through no medical life insurance policies and be covered. Many no medical policies do not ask questions about drugs and drug use, but bear in mind that any policy that knows about drug use will offer little compensation. Don’t lie on your application – look for a no medical policy if you use drugs.
Anyone turned down for standard life insurance coverage. Recent studies show that roughly 5 per cent of all filed life insurance applications are rejected annually, and those rejections can make getting insurance more difficult. Some no medical life insurance policies offer coverage to people who have been declined, giving them an alternative after a rejection.