As you consider your life insurance needs in retirement, you may wonder whether your health could become a hindrance to accessing coverage as you get older. Fortunately, you can find life insurance with no medical exam required.
To decide whether buying one of these policies makes sense for you, learn more about what types of insurance plans waive the need for medical exams and how they differ from traditional life insurance.
Types of No-Exam Life Insurance Plans
There are three types of life insurance with no medical exam needed:
- Group life insurance may be offered as an employee benefit or perhaps as a benefit of membership in an organization.
- Simplified issue life insurance includes a brief health questionnaire in its application in lieu of a physical exam.
- Guaranteed issue life insurance, also known as guaranteed acceptance life insurance, is often used to cover end-of-life expenses.
How No-Exam Policies Differ From Traditional Life Insurance
Life insurance plans that forgo medical exams typically offer lower levels of coverage and charge higher premiums than you would pay for the same amount of coverage in a traditional life insurance plan. Another key difference between traditional life insurance and policies you can buy without undergoing a medical exam lies in the way insurers handle medical underwriting.
What Is Medical Underwriting?
Underwriting is the method insurance companies use to assess the risk of insuring an applicant. This, in turn, influences the rate they charge the ones they accept. Along with requiring a medical exam, the traditional underwriting process would have you complete a lengthy questionnaire about your health, work, lifestyle and family medical history. The insurer may also check with third-party sources to verify the information. The entire process can take several months.
Which Life Insurers Use Underwriting?
Sellers of simplified issue life insurance use some underwriting, but they streamline the process considerably. They ask only a handful of questions, and in some cases you'll learn immediately whether your application has been accepted or rejected.
Providers of group life insurance typically forgo any risk assessment for individual members of the group. Unlike traditional individual life insurance policies, which have varying rates depending on factors such as age and health, group policies charge everyone in the group the same premium.
Guaranteed issue life insurance involves an even lower level of underwriting than simplified issue life insurance: If you fit within the insurance company's imposed age limits, your acceptance is automatic. However, sellers of guaranteed issue life insurance do typically charge higher premiums the older you are.
Pros and Cons of Guaranteed Issue Life Insurance
Among the categories of life insurance with no medical exam, guaranteed issue is the one most commonly sold to retirees. Before you decide whether to purchase such a policy, it's important to weigh the potential benefits and drawbacks.
- Simple application forms with no medical questions.
- Guaranteed acceptance.
- The ability to build cash value that's accessible through a loan, in some policies.
- More expensive rates compared with traditional life insurance — up to twice the amount for the same coverage.
- Lower coverage amounts, typically covering between $10,000 and $25,000.
- Longer wait times before benefits apply — sometimes as much as two years for death benefits.
- Age restrictions, generally requiring that applicants be at least 40 and no older than 85.
When Is Guaranteed Life Insurance a Good Option?
Guaranteed life insurance could be a good option if you have one or more health conditions that a medical exam would identify, making it difficult or impossible for you to obtain traditional life insurance. It may also make sense for people who only need enough life insurance to cover final expenses and for those who previously purchased a term life insurance policy but have outlived the coverage period.
Guaranteed issue life insurance and other types of life insurance with no medical exam required are much easier to obtain than traditional life insurance. However, because insurers waive medical exams for these policies, they take on unknown risks. That's why they offer lower benefits and charge higher premiums compared with traditional life insurance policies.
Weighing all of these factors will help you decide what type of retirement life insurance is best in order to financially protect yourself and your family.