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By Nathan Golden
Updated: May 28, 2020 10:42 AM ET | Originally published: April 30, 2020

Life insurance medical exams take time to schedule. They feel awkward or invasive. They could delay your coverage a few weeks.

You can skip this hassle when you buy life insurance without the medical exam. But there is another catch: these policies almost always cost more than fully underwritten coverage.

Below is Money’s guide to everything you need to know about no-exam life insurance.

Why Does Life Insurance Require a Medical Exam?

At the center of any life insurance policy you’ll find an assessment of risk. Insurance underwriters calculate your risk of mortality and assign premiums to reflect your risk.

Younger and healthier people pay less for new life insurance; older applicants would pay more for the same-sized policy because insurers deem them more likely to have a significant health problem.

To measure your risk, the life insurance industry depends on your health exam. The exam gathers your vital signs, tests your blood and urine, and checks your blood pressure. The exam can even uncover health problems you didn’t yet know about.

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How Does No-Exam Life Insurance Work?

When you skip the medical exam, underwriters rely more on your medical records which tell them about your past medical history. With your permission they will also seek data from:

  • A Questionnaire: Expect to answer a string of health questions — about yourself and about members of your family. You’ll also need to share data points you know — your last blood-pressure reading and your height and weight, for example. And you’ll share whether you smoke — a habit that always drives up premiums.
  • Databases: Usually underwriters can find details about your prescriptions in databases. They can also see results from previous life insurance health exams you’ve taken through the insurance industry’s Medical Information Bureau.
  • Driving Records: Your state’s Department of Motor Vehicles can tell insurers about your speeding tickets and at-fault wrecks. A history of dangerous driving can increase your premiums.
  • Your Doctor: Underwriters may request an attending physician’s statement from your primary care doctor. They’ll ask about your health conditions and any ongoing treatment.

The application process for medical exam life insurance policies also pulls this data because insurers can learn a lot about you from these sources.

But without the medical text they still won’t have raw numbers — an accurate blood pressure or lab results, for example. This lack of knowledge itself becomes an ingredient in the recipe of your risk. Could you be on the verge of developing heart disease? Your insurance company won’t know.

Healthiest applicants have the most to lose by skipping the exam because the exam could prove their good health which leads to lower prices.

If you’re not so healthy — or if you’re getting a smaller policy — you may even be able to save money by skipping the exam.

Types of No Exam Life Insurance

Technically, no-exam isn’t a type of life insurance. It’s an underwriting process insurance companies apply to any kind of policy, including:

  • Term Life: This temporary coverage will expire when your term ends. Term life policies can offer a much larger death benefit for less money.
  • Permanent Life: Permanent coverage — also known as whole life insurance — will never expire unless you cancel the policy or stop paying its premiums.
  • Burial or Final Expense: These small permanent policies provide small coverage amounts for older policyholders who are planning funerals or other final expenses.

Let’s look at these types more closely:

Simplified Issue Life Insurance

Traditional, fully underwritten term coverage with a medical exam could unlock $10 million or more in life insurance coverage. Shoppers often buy $1 million and $2 million term policies.

Term life without the medical exam cannot deliver this much coverage; most companies limit your coverage to $500,000 per policy. They call this kind of coverage simplified issue life insurance.

For a non-traditional insurance product, simplified issue policies paint a detailed picture of your life. You’ll have a phone interview, where you’ll be asked:

  • Questions about your health
  • Questions about your biological family’s health
  • Questions about your job and hobbies
  • Questions about your habits.

Your answers — confirmed at times by data from other sources — will help the insurance company set your premiums.

Your premiums will also vary depending on:

  • Your Policy’s Size: Larger policies cost more.
  • Your Term Length: Longer term lengths — 30 years instead of 20, for example — cost more.
  • Your Age & Sex: All things being equal, women will pay less than men, and premiums for new coverage increase as you age.

Permanent Life Insurance with No Medical Test

Insurance providers can use this same simplified issue process to write permanent life insurance policies. Permanent (also known as whole life insurance) policies can cover you indefinitely. There’s no expiration date on this coverage.

But without a medical exam, it’s hard to find more than $50,000 in permanent life coverage, and this just isn’t enough life insurance for many shoppers.

Non-traditional permanent life has another drawback compared to traditional permanent life: Your policy may not gain cash value. Standard whole life policies with an exam accrue cash value over time. Later in life you could borrow against your policy’s value.

Skipping the exam could cost you this feature, but mainly only if you buy a guaranteed issue policy which also has a low payout.

Burial or Final Expense Coverage

Non-traditional underwriting aligns well with burial insurance because you don’t need more than $50,000 in coverage.

Insurance companies have age requirements for this kind of coverage, too. You’d need to be at least 50 to buy most burial (also known as final expense) policies. Age 85 is normally the maximum age for taking out a policy, although you could still find a burial policy from Aetna if you’re younger than 90.

What if I Get Turned Down for a Life Insurance Policy?

An insurance company could deny your simplified issue no-exam life insurance application. Applicants who have COPD, diabetes, or other medical conditions often struggle to find coverage because insurance carriers worry about their life expectancy.

If you get denied coverage, you can:

Keep Trying With Different Insurers

Every insurance company takes a different approach to underwriting no-exam policies. By finding a company more likely to see your health issues more favorably, you can find coverage.

Ask an independent life insurance agent for help finding the right company for your condition. These agents have access to 10 or 12 companies.

Get Guaranteed Issue Coverage

Guaranteed issue life insurance is aptly named. Almost every person who applies is guaranteed approval because the insurer does not ask many, if any, health questions. But insurance agents call this “last resort” life insurance for a reason:

  • Low Coverage Amounts: You can usually find $25,000 in coverage but not more.
  • Premiums Are High: You’ll pay high premiums for the small amount of coverage you can get.
  • Coverage Is Delayed: Benefits are “graded” which means you’ll need to pay premiums 2 to 3 years before the policy would pay your beneficiary. If you died during this waiting period, your family could claim only a refund of your paid premiums.

What About Coverage from Work?

Many employers offer life insurance as an employee benefit. Sometimes you don’t even have to pay the premiums. You can opt in without the insurer checking your medical history.

It’s a nice perk, but this group life insurance coverage has limits:

  • Low Coverage: These group policies can’t offer the same level of coverage compared to simplified issue or fully underwritten personal life insurance product. If you’re in excellent health, especially, you could get a lot more coverage by taking the physical exam a personal policy requires.
  • Temporary Coverage: You’d lose the coverage if you changed jobs. By then, a personal policy of your own would cost more because new life insurance costs more with each passing birthday.

Measuring the Cost for Skipping the Medical Exam

Life insurance without the health exam almost always costs more than fully underwritten coverage — but not always. And, because every life insurance applicant is unique, the price difference varies widely among different insurance providers.

With so many variables we can’t share a simple percentage increase when you opt for no-exam coverage. We can, however, lay out these guidelines which tend to be true when companies issue policies.

No-Exam Life Costs More When:

  • You’re Young & Healthy: Younger people in perfect or near-perfect health — applicants under 45, especially — can access great life insurance rates, but only if they prove their health by taking a medical exam. No-exam will cost a lot more unless you’re shopping with an InsureTech company such as Haven Life or Bestow Life.
  • You Need a Larger Policy: The more coverage you need, the bigger your cost increase for no-exam coverage. Since you normally can’t find more than $500,000 in coverage without the exam, you should get fully underwritten coverage for large policies.

No-Exam Is a Better Value When:

  • You Need a Smaller Policy: Premium schedules for smaller policies show less increase for no-exam coverage.
  • You Smoke: Smokers already pay higher premiums even with an exam, so skipping the exam won’t inflate them much more. In fact, younger smokers getting a small policy could pay less by skipping the exam.
  • You’re Older: The price hike for non-traditional coverage grows smaller for older applicants, especially when you’re buying final expense coverage.

Is No Exam Enough Life Insurance?

No-exam life insurance won’t offer more than $500,000 in coverage, and this level of coverage will come only from a simplified issue term life insurance policy.

Is $500,000 enough insurance for your loved ones if you died unexpectedly? Most people think so — at least until they give the question some more thought.

How much life insurance do you need? Experts suggest getting enough life insurance to replace your annual income for 10 to 12 years. If you make more than $50,000 a year, $500,000 in coverage wouldn’t meet this level of coverage.

But this guideline applies most to shoppers with families. Your financial dependents — your spouse, children, or maybe even your aging parents — would use your life insurance benefits if you died to continue paying the mortgage, the college tuition bills, and other living expenses.

What coverage amount would they need if they no longer had your regular income? That question is important to figure out.

When No Exam Provides Enough Coverage

Not all policyholders need coverage for income replacement. Coverage without the exam could provide enough coverage if:

  • You’re Getting a Loan: Some loans require life insurance as collateral. Usually, you can skip the exam and still buy enough coverage.
  • You’re Estate Planning: Life insurance could provide much-needed liquidity while your heirs dissolve your estate. Normally, non-traditional underwriting provides enough coverage.
  • You’re an Empty Nester: When the mortgage is paid off and the kids are off on their own, you may want a smaller life insurance policy — you may have no need for a larger, medical exam policy.

What is Accelerated Underwriting?

If you’re an ideal life insurance customer — someone in great health with no complicating factors — you could get accelerated underwriting. As its name implies, you could have coverage within days.

The main benefit: Your coverage could exceed the traditional $500,000 cap on no-exam insurance. If you smoke, have a dangerous job or have a diagnosis such as Parkinson’s or Crohn’s, accelerated underwriting isn’t for you.

Perfect-health applicants can also find larger policies with no exam through companies like Haven Life and Bestow Life which specialize in online policies for younger adults.

Some analysts expect accelerated underwriting processes to grow in the coming years. They look for other leading providers such as Banner Life, New York Life, and Transamerica to improve their accelerated products over the next few years.

When Less (Knowledge) Is More for Life Insurance

You have to tell the truth when you apply for life insurance. You’d commit insurance fraud by submitting false information, or by intentionally omitting known details, about your health. You’d also put your coverage at risk.

But some applicants learn about their health problems during the life insurance medical exam. Which brings up the question: Should I skip the exam just in case I have a health problem I don’t know about?

You could do this, legally, as long as you answered your insurer’s questions with complete honesty. You’d get a smaller policy compared to medically underwritten coverage as we’ve already discussed.

Then, you must get a physical of your own to assess your health. Your well-being is much more important than saving money on life insurance. If your health is good you could then apply for a larger fully underwritten policy. If not, at least you’d still have the no-exam life insurance policy in force while you improve your health.

Recap: Who Should Get No Exam Life Coverage?

No-exam life insurance offers convenience, simplicity, and quick access to coverage. It also costs more most of the time.

If you’re young and healthy and you need a large term life insurance policy to protect your growing family, go with a fully underwritten policy which usually requires a health exam.

If you need a smaller policy or you smoke or have other complicating factors, you’re a better candidate for no-exam coverage.

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