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No Exam Life Insurance in the Age of COVID-19

By | Bilal Javed

Is No Exam Life Insurance a Good Option During Corona?

No exam life insurance is becoming more and more popular with the American public, especially during the time of COVID-19. Traditional life insurance requires a lengthy application process, including an in-person medical exam. As people are trying to minimize their contact with others, no exam life insurance is becoming a popular alternative.

How is no exam life insurance different from traditional life insurance?

Besides the obvious of allowing you to forego the medical exam, there are several other key differences between no exam life insurance and traditional. 

Whereas traditional life insurance takes between 4-8 weeks to get approved (or not), no exam life insurance can go into effect immediately after you apply. Other types of no exam policies take a few days to let applicants know whether they’ve qualified.

Traditional life insurance policies tend to be less expensive than no exam policies because of the way underwriting works.

Underwriting is the process of assessing the risk of potential clients. With life insurance, people that are healthy are deemed to pose a very low risk to insurers, while those who have health complications pose a greater risk. The way the risk is assessed is through the detailed application and medical exam. The information is sent to underwriters, who compare it against millions of statistics to determine how much of an overall risk the applicant poses. 

With no exam life insurance, not only is there no information from a medical exam, but in general the applications include fewer health questions. Some no exam policies don’t ask any health questions! This means that insurers are hard-pressed to evaluate their risk. How do they know if the person they are insuring is statistically likely to die early? Due to the large risk they take on with each policy, the monthly premiums are usually higher than those of traditional life insurance policies. Get a free quote here to see exactly what kind of premiums you’re looking at. 

The question of cost bring us to the next topic:

What types of no exam policies are available?

There are two main categories of no exam life insurance: guaranteed issue and simplified issue.

Guaranteed issue

Guaranteed issue is the type of no exam policy that doesn’t require any health information. In fact, anyone under the age limit can be approved. This type of no exam insurance is usually reserved for people who have fairly serious health issues and won’t qualify for any other type. There are several reasons for this:

  • The monthly premiums are very high since the insurer knows nothing about you.
  • Coverage only goes up to $50,000.
  • Guaranteed issue often comes with a waiting period of two years, which means that if the person dies within two years of purchase, only a portion of the death benefit is paid out.

Due to the limitations of guaranteed issue, it’s often purchased as a type of final expense insurance to cover funeral costs, which can cost over $10,000.

Simplified issue

Simplified issue is less expensive than guaranteed issue by a long shot. For people who are in good health, the costs can be similar to those of traditional policies. While simplified issue doesn’t require a medical exam, it does include several health questions on the application. This is considered a partially-underwritten policy because underwriters have some health information, just not the whole picture. 

In some cases, insurers can collect information about applicants from third party sources, including pharmacy and DMV records, previous life insurance applications, and credit reports. This helps the insurer form a more complete picture of the applicant’s health and lifestyle.

In many cases, simplified issue is a term policy, which also lowers the cost. Term policies are only in effect for a certain number of years and it’s sold in increments of five. Policies can last for 10, 15, 20 years and more. The cost of the policy is determined by several factors:

  • Length of term
  • Amount of coverage
  • Applicant’s health

Guaranteed issue, on the other hand, is a type of whole insurance, which means it’s in effect for the policyholder’s entire lifetime. These policies are usually more expensive.

People have traditionally applied for simplified issue for several reasons:

  • They need life insurance fast, in some cases, for a divorce or small business loan
  • They’re scared of needles
  • They have moderate health issues and are afraid they’ll be given high rates for traditional life insurance

Today, there’s also the reason of avoiding unnecessary contact with another person. 

Bottom line

During times of a pandemic, having life insurance is more important than ever. It also means that before buying any policy, it’s important to make sure that the insurer covers COVID-19. As always, being completely honest on the application is essential in order for your loved ones to claim the death benefit should it be necessary.


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