What is no medical exam life insurance and how is it underwritten?
Updated: Jun 2
For purposes of this article, we will be focusing on term life insurance since Life Assurance Company of America offers a unique, fully digital term life insurance policy and all the buzz in the marketplace is term life insurance offered on-line by companies like Haven Life, Bestow, Ethos, and Ladder Life.
No medical exam life insurance, quite logically, means that you can apply for and get life insurance without a medical exam. What is meant by a medical exam? Generally, a medical exam includes a physical, a blood test, and/or a urine test. So when you are thinking about getting a no medical exam life insurance quote or policy, you are skipping the “medical” aspects of underwriting.
Why would you consider a no medical exam life insurance policy? This is a personal preference, but for most people they do not like strangers touching them, sticking them with needles, taking a urine sample, or taking the time to schedule a medical exam, even if it can be done at their own home (which is typically known as a paramed exam). In addition, there is a general notion that this process invades your privacy.
Does no medical exam life insurance mean there is no underwriting done or that a life insurance company will not check my medical history in the absence of a medical exam? The answer is that most life insurance companies will conduct some type of underwriting or “check” on your health and lifestyle.
For example, many life insurance companies will get a copy of your driving history, known as an MVR (motor vehicle record). Your driving history may reveal something about the risk of insuring your life.
Similarly, most life insurance companies will look at your prescription history or RX scripts or medical information bureaus (called MIBs) for you. They can obtain this information for a fee from third-party databases that collect, sell, and track this type of information. These third-party reports may also tell them about your health and whether you have been truthful on your application.
What kinds of limits can I get when I apply of no medical exam life insurance? As you might expect, the limits offered by life insurance companies for no medical exam life insurance are lower than for fully underwritten life insurance. At many life insurance companies, you are capped. What are the caps? This varies. Some life insurance companies cap at $100,000, some at $250,000, some at $500,000, and there are a few that can go higher.
Are there minimum coverage limits? Yes, some life insurance companies prefer to avoid lower limits because they are not as popular or there is a cost to underwriting and issuing a policy that may not make sense from a profitability standpoint. What would be a typical minimum limit for a term life insurance policy? There is no rule set in stone, but in some of the on-line literature, we have found references to minimum limits of $50,000.
What term periods are available? Most life insurance companies offer term life insurance policies for periods of 10, 15, 20, 25, and 30 years. This means that you will get a limit or death benefit for the same premium over the period of time selected as long as you continue to pay your premium over that time period. For example, if you select a 10-year term life insurance policy with a death benefit of $100,000, as long as you pay your premium, let’s say $1,000, each year (and you can pay this monthly, quarterly, in one lump sum, etc.), you will have life insurance coverage for $100,000 in place over that 10-year period at a total cost of $10,000. If you fail to make your payments, your policy will lapse or cancel. In fact, this is a hidden industry secret – term life insurance policies are extremely profitable because almost all of them lapse or reach term before you die. By some estimates, only 3% of term life insurance policies pay out.
Is there a fresh alternative? Yes, Life Assurance Company of America offers a 1-year no medical exam term life insurance policy based on your health representations. Currently, limits of $5,000, $10,000, and $15,000 are offered. However, in the near future, Life Assurance Company of America plans to offer additional limits of $20,000, $25,000, $50,000, and $100,000. In order to qualify for coverage with Life Assurance Company of America, you have to be at least 18 and not older than 65 and generally healthy.
Life Assurance Company of America does not need any of the following:
medical information bureau (“MIB”)
prescription or RX history or script
attending physician statement (“APS”)
motor vehicle record (“MVR”)
What information is needed? The application will take one minute and is all done on-line. We will need your first name, last name, email, phone number, date of birth, whether you are male or female, beneficiary information, and zip code, in addition to basic payment processing information. You will also need to review and accept our terms and conditions, which include your health representations. For more information about the company or our one-year term life insurance product, visit our website at www.lifeassurancecoa.com.
Here is a sample link to our checkout page for the $10,000 policy which has an annual premium of $150:
If you are interested, all you have to do is click, provide the information, agree to the terms and conditions, and pay.
We want you to trust us. Therefore, we are providing you with a few helpful links. If you want some general background about no medical exam insurance, here’s a link to a bankrate article:
For more information how your prescription history is used by life insurance companies, here are some interesting and informative links: