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During my 16 years as a licensed life insurance agent, I have almost exclusively sold a single type of life insurance.
Only a couple of months ago, if we had spoken about your life insurance needs, I would have told you that my preferred type of life insurance policy would give you the greatest chance to get approved at the best health rating and the best price.
But here’s the thing… I can’t sell this type of policy right now. Almost no one can.
That’s because the type of life insurance I’m talking about is called “fully underwritten” life insurance, which requires a medical examiner to come to your home to conduct a one-on-one exam. An exam allows the insurance company to gain a deeper understanding of your health which reduces their risk and, if you’re healthy, lowers your premium.
But with more than half of the United States on lockdown due to coronavirus, for many would-be life insurance purchasers, a face-to-face medical exam is now impossible. So what are we to do?
Fortunately, Americans have found a work around.
While non-med hasn’t always been my number one choice for my clients, I highly recommend it now.
Non-med life insurance, also known as no exam life insurance, is very similar to regular life insurance that requires an exam. You can buy a 10 or 20 year term or even a whole life insurance policy for amounts up to $1,000,000 (or in some cases, more) without an exam. The biggest difference, of course, is you can do it from the comfort of your own home without seeing an examiner.
“We’re seeing a significant increase in those shopping for coverage and asking about non-medical options,” said insurance agency owner Ryan Pinney, President of Pinney Insurance. “Historically, we would see 20-25% of applications for insurance being done without an exam. Today, that number is closer to 70% and still growing over social distancing concerns.”
Pinney is not alone.
I spoke to Jeff Rose, CFP and founder of Good Financial Cents, who said the overall life insurance traffic to his site had not increased in the past few weeks, but quote requests and application requests for no exam policies had nearly doubled.
Despite the increased demand, there are a couple disadvantages to no exam life insurance that consumers should know.
First, it typically costs 5%-10% more than traditionally underwritten policies. If you’re young and your premium costs only $20 bucks per month, you probably won’t mind paying an extra dollar or two for a non-med option. But as you get older and premiums increase, the luxury of foregoing an exam can cost quite a bit more. Second, no exam policies come with maximum eligible ages. According to True Blue Life Insurance, most companies stop offering no exam policies between the ages of 50 to 60 years old.
But higher rates and age limits aren’t stopping consumers during coronavirus.
Tim Fuller, Executive Vice President of CPS Special Risk Services, a national life insurance agency, has had to create tutorials for some of his older agents who are not used to selling no exam policies and walk them through the process of taking a non-med application.
“We’ve had to adjust quickly to push our agents toward an accelerated underwriting approach,” said Fuller. “We went from taking 35-40% non-med applications to 75% in the past month.”
Even seniors are getting in the act by buying “final expense” life insurance in record numbers. Like no exam policies, final expense policies don’t require an exam, but typically have lower death benefit limits, such as $10,000 to $50,000 and can still be purchased in your 60s, 70s, and 80s.
Jeff Root says they’ve been so busy at his insurance agency, Root Financial, that they’ve had to hire new agents to accommodate the demand.
“During the last two weeks, sales have increased over 43%,” said Root.
How to Get a Non-Med Life Insurance Policy Now
During “normal” times, I would recommend a life insurance buyer to get a policy from an independent insurance agency like Health IQ. They would shop your case around to multiple companies, get you an exam, and after a month or two, you’d end up with a policy from a reputable company at a great price.
But during this crisis, I’d say securing a policy if you don’t have one, and doing it quickly is desirable.
It may cost a bit more, but you can typically get approved for a non-med policy in as little as 1 to 2 days. That means that as long as you’re healthy right now, you should be able to get a policy in place prior to potentially contracting coronavirus, which according to the projections, is a very real possibility for all of us.
Reputable non-med providers that can do this are Haven Life and Policy Genius.
And if you’re worried about pricing, Root argues this is actually the perfect time to buy.
“This is a great time to buy life insurance,” he says. “Because of the near-zero interest rate environment, life insurance rates are at all-time lows right now. We expect them to increase next year.”
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Chris Huntley is a life insurance agent and the founder of insuranceblogbychris. He is currently the President at Credit Knocks and can be reached on LinkedIn. The views in this story are his opinion and do not necessarily represent the views of Money.