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Do All Types of Life Insurance Require an Exam?

M Mishra/ D Baier

When you’re online shopping for life insurance, there are going to be several different factors that you’ll need to consider make sure you’re getting the best type of policy, that will ultimately protect your family . As you know, life insurance is a financial safety net that will protect your loved ones at the time of death. It is the most tax efficient way to guarantee your family will have the proper amount of money that they need, regardless of what happens to you.

One of the major draw backs people have when applying for a life insurance policy is the medical exam. This medical exam will provide an insurance company with lab results that are collected from your Blood and Urine. Lots of people may not have time to do this type of exam, or maybe they just don’t want an insurance company looking at their pertinent information. If you are one of these types of people, then you are in luck. Not all companies require this type of underwriting.

Guaranteed Acceptance

As the name suggests guaranteed issue plans are guaranteed acceptance, which means that no matter what your health is, you will get approved for insurance. No health questions are asked on the application, and the complete application is two to three pages long. Insurance companies are going to collect your name, address, phone number, date of birth and social security number. They will also for the same information for your named beneficiary. You simply complete the application and return to your agent. In two days or less the application would be approved.

Now the bad news with these types of plans. The monthly premiums will be higher compared to insurance companies that will ask health questions. Also, since the insurance company doesn’t know any health information about you, they will limit the coverage offered from $25,000 to $50,000. In some situations, this may not be enough coverage for your family.

Also, most guaranteed life insurance plans are going to be what is called a graded death benefit. Meaning that if death occurs to natural causes in the first 2 years of the policy, your family would not get the full death benefit. Rather they would receive back all premiums that were paid into the policy, plus 10% interest. After the first two policies years, then the full death benefit will be paid out at any point.

Simplified Issue

Simplified issue life insurance is an easy way to get coverage without having to go thru full underwriting. Companies will simply have you answer health questions, and provide details to any YES answer. In addition to the health history questions, they are going to look at your prescription drug history, MIB records, and your DMV records. Your answers to the health questions, along with information they collect will determine your rates and eligibility.

Surprisingly, several companies have really lenient underwriting, and can approve you for several conditions that you think wouldn’t be approved. Example, people with diabetes can get life insurance without an exam. However, insurance companies will limit the amount of coverage they offer. In most cases it is limited to $500,000. If a person needs more than this, they can always apply to multiple insurance companies to obtain an amount they see fit.

Life Insurance thru your employer

Most employers offer life insurance at little, to no cost these days. Since it is a “group” policy that is offered to all employees, the costs are generally lower then if you chose to apply outside of your employer. This is a nice “perk” but it may not be wise to have all your coverage thru your work place.

Group coverage does not require a medical exam, and the applications are pretty basic. However, your rates are not guaranteed, and can be raised in the future. Or, if your employer decided to do away with the program, you could lose coverage all together. Also, if you left your employer, or retired, you may not be able to take the insurance with you. Not all plans allow you to convert the coverage into a policy that you would own. These policies are a nice way to get additional coverage, but they shouldn’t be your main source of life insurance.