What Is No-Exam Life Insurance?

This can be a great option if you’re worried about a medical exam—or don’t want to take one

PHOTO: iStockphoto/Buy Side from WSJ Photo Illustration.

A no-exam policy may be a low-hassle way to get life insurance. 

By Choncé Maddox

There’s a lot to consider when you’re buying life insurance, not to mention the hassle of getting a medical exam, which most policies require. If you’re looking for a simpler, quicker alternative, no-exam life insurance may be a good fit.

A traditional life insurance policy typically involves a battery of tests and may take more than a month to come into place. If you’re one of the 6 in 10 Americans that have a chronic condition like diabetes or heart disease, you may end up paying thousands extra—if you can find a policy at all. 

By contrast, no-exam policies can be done online usually in just a few days. “Medical exams can be off-putting,” says Mark Scafaro, co-founder of Efficiency, an insurance technology company. “No-exam life insurance is a great alternative for customers who aren’t interested in completing a medical exam—or waiting weeks for an underwriting decision.”

To be sure, no-exam policies have their drawbacks. While it’s generally easier to get approved, there is no guarantee you will be. Coverage limits also tend to be far lower. And because the insurance company has less insight into your health, you will almost certainly pay more. 

Still, it’s no secret these have become more popular. Here is what you need to know.

Types of no-exam life insurance 

No-exam life insurance is usually a term policy, which means you typically pay a premium to be covered for a specific term such as 10, 20, or 30 years. Afterward, the insurance ends. But there are whole-life policies, which stay in place as long as you maintain premiums, available as well.

Here are several common types:

Simplified Issue

You can be approved for this type of life insurance policy with minimal medical questions and no exams. Coverage starts as soon as your application is submitted and you’ve selected a premium.  

Guaranteed Issue

As its name suggests, guaranteed issue life insurance is a type of whole-life policy that guarantees you won’t get denied when you apply. You’ll skip all the health-related questions as well as a medical exam. However, these policies tend to have a long waiting period of around two to three years and a lower death benefit ranging from $2,000 to $25,000. 

Accelerated Underwriting

Accelerated underwriting relates to the process underwriters use to approve your application for insurance more quicker. This is commonly used with no-exam life insurance and involves using third-party data and algorithms to determine a person’s approval rate and premium. Accelerated underwriting policies tend to have a coverage limit of $1 million and for anything higher, you’d need a medical exam. 

When no-exam life insurance makes sense 

No-exam life insurance may be a good choice if you are:

• Healthy but you don’t want to see a doctor and be examined
• Not in the best of health but you still want to get life insurance 

Traditional life insurance typically requires an in-person medical exam that involves drawing blood and collecting other samples, along with a review of your body-mass index, medical conditions, and whether you smoke or drink alcohol. “It can be a rigorous process,” says Susana Zinn, an independent life insurance agent based in Miami. “Even an inch or two in your height could impact your BMI and premium rate during the medical exam,” she adds.

With no-exam life insurance, you’ll still need to answer a few basic questions and disclose any medical conditions you have. No-exam life insurance doesn’t guarantee coverage, but it’s more forgiving. “Having some major health issues or risk factors in your history such as nicotine use, high blood pressure, or high cholesterol, can make you a strong candidate for no-exam,” says Zinn.

No-exam life insurance can also make sense if you are young and healthy–and simply looking for a hassle-free way to get insured quickly. While you may pay slightly more, your premiums are likely to be low regardless of what kind of insurance you pick, so the convenience may be worth the trade-off. Keep in mind that no-exam life insurance policies tend to have smaller coverage limits than traditional policies, so the option works best if you are looking for a policy that pays less than $500,000

ow much does no exam life insurance cost?

With a term insurance policy—which is far more common for no-exam life insurance, your premium is often lower and fixed for the duration of the term length. With a permanent or whole life insurance policy, your premiums will be higher but stay the same so long as you keep the policy. 

The cost of life insurance depends on several factors including your:

• Age and gender
• Medical and family history
• Height and weight
• Smoking and tobacco use
• Where you live
• Job and hobbies 

Because life insurance pricing is based on so many individual factors, it’s difficult to find data about average prices. However, here are some representative quotes provided by Quotacy through Bestow Life Insurance.

How to get no-exam life insurance

There are a few ways to shop for individual no-exam life insurance:

Online 

Online is a great place to start, and you can quickly find quotes from well-known national brands.

To get a quote, you’ll have to submit a form that includes some basic information about yourself including your name, ZIP Code, height and weight, and gender.

After receiving a quote, a representative from the insurer’s site may call you or you’ll be directed to continue completing an application form online. 

Life Insurance Agent 

A life insurance agent sells policies for a living, so they can be some of the most knowledgeable professionals out there. 

Like many financial advisors, insurance agents typically work on commission which means they might have the incentive to recommend products that pay the highest commissions. They earn a commission that can range from 40% to 100% of the first year’s annual premium, along with a 2% to 5% commission each additional year when the policy renews. 

In addition, some life insurance agents work with only one insurer or a handful of insurers, meaning they may only present you with a narrow slate of options. Other agents are “independent” meaning they have a broader reach and can help you get a policy with any life insurance company. 

Your employer

You may already have free no-exam life insurance through your employer. Check with your human resource department to see if life insurance is an employee benefit and what your coverage is. 

Usually, your policy amount is equivalent to one year’s salary and your policy is only active so long as you remain an employee of the company. So keep in mind, if you need a higher coverage amount or don’t plan to stay at your job forever, this is when you should consider a policy from a private company. 

Steps to sign up for no-exam life insurance

Once you pick a company and policy that you’re happy with, it’s time to move forward and sign up for life insurance. All in all, signing up for a no-exam life insurance policy should take one to three days at most. Here is how the process works in four steps.

1. This process starts with an application that you can submit either online or in person depending on the company. 
2. You’ll need to enter your basic information such as your name, address, workplace, and so on. You will also need to verify your identity by uploading a copy of your ID or driver’s license. During the application process, you may also be asked a few basic medical questions. 
3. Once your application is submitted, it will go into underwriting. Remember, with a no-exam life insurance policy, underwriting is often accelerated or may even be automated.
4. When underwriting is complete and your application is approved, you’ll sign papers to confirm the policy so it will go into effect. At this time, you may make your first premium payment as well.