Beware of 'No-Exam' Life Insurance

Today's consumers value convenience. Ours is an economy of drive-through meals, online shopping, and groceries brought straight to our doorsteps.

Insurance carriers are also offering "simplified issue" policies and even life insurance without an exam. That may be convenient, but it may not be a great deal for you — especially if you're in less-than-perfect health.

Traditionally, life insurance underwriters have required a medical exam for all but the smallest life policies. In addition to reviewing your medical records and history, life insurance carriers want to get a current snapshot of your health.

But going with a policy that doesn't require you to get an exam may come at a steep cost in the long run — in the form of higher life insurance premiums, less protection for your family, or even outright rejection. 

Tougher standards

Generally, no-exam life insurance underwriting is much stricter than traditional underwriting.

Many health conditions that carriers will consider if they can get a current medical exam are outright disqualifications for no-exam underwriting. Examples include:

• Diabetes

• History of drug abuse

• High cholesterol

• Hypertension

• Asthma

• Tobacco or nicotine use

• DUI convictions

• Death of a parent before age 60 from certain conditions.

Furthermore, height and weight standards for a no-exam life policy can be extremely strict. Where a traditionally underwritten policy with an exam is no problem for someone with "a few extra pounds," even a bit of extra weight is often enough to trigger an automatic rejection for a no-exam policy.

No-exam underwriting may also be more likely to turn you down for non-medically related reasons, such as a poor driving record, an arrest record, and even a bad credit score.

Most successful applicants for no-exam life insurance fit a very limited profile: Under 45 years of age, excellent health, physically fit, non-smoking, good credit, and a relatively low death benefit of $250,000 or less.

Even then, many of these applicants may qualify for a lower premium by submitting to an exam. Industry sources say premiums tend to be about 20% higher for simplified-issue no-exam policies than for fully underwritten policies. That's a steep price for skipping a 30-minute medical exam.

What to do if you have pre-existing medical conditions

Every insurance carrier views risk a little differently. Some carriers are more willing to take on people with controlled diabetes, for example, or a history of cancer. Some are more smoker-friendly than others.

If you have a negative medical history, you may want to work us. We can "shop" your application to several different insurance companies.

The bottom line: Be honest. Above all, do not attempt to conceal negative health information by avoiding an exam or lying on an application.

Underwriters carefully compare your application against your medical records. Any discrepancies will raise a red flag. In some cases, if you committed fraud on your application, they may even refuse to pay a claim.