Should I Get No-Medical Insurance?

Mention the words “life insurance underwriting” and the first thought that comes to mind is that of a medical exam. Yeah, we understand, those pesky physicals can be an inconvenience. But did you know you can get life insurance in Canada with no medical exam?

April 1, 2021

We’re talking about no medical life insurance. It lets you skip a medical exam, but this convenience comes at a price. Continue reading to find out if no medical life insurance makes sense for you.

What is No-Medical Life Insurance?

No-medical life insurance is a life insurance product that doesn’t require a medical exam — hence the name.

No one likes to undergo a physical as a part of their life insurance application. Those who are healthy may well find it an inconvenience. Whereas, those with an underlying illness may worry about how the result will impact their insurability.

No-medical life insurance does away with this step. However, it charges you extra for skipping a medical. A no-medical policy invariably costs more than a comparable fully-underwritten policy.

Also, the carrier may still ask you health questions to assess the level of risk you pose to them. You must answer these questions truthfully. If the insurer later discovers you withheld information or lied, they might not pay the entire death benefit amount or anything at all.

Types of No-Medical Life Insurance

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No-medical life insurance comes in two flavours — simplified issue life insurance and guaranteed issue life insurance.

Simplified Issue Life Insurance

Simplified issue life insurance covers you for your entire life. It doesn’t require a medical, but you’ll have to answer health questions. The insurer will assess your risk on the basis of your health history, among other things. Most people who apply get approval, but the coverage isn’t guaranteed.

Simplified issue life insurance is a type of permanent life insurance. However, it differs from conventional policies in two ways. One, it offers only basic coverage. Two, it doesn’t accumulate cash value.

Some of these policies have a waiting period (often two years). Your family won’t get a payout if you pass away before the waiting period is up. However, they will receive the premium amount you have already paid.

This type of life insurance with no medical exam could make sense for people who don’t qualify for a conventional life policy but are otherwise in reasonably good health.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance has neither a physical nor a health questionnaire. Most importantly, coverage is guaranteed to all who apply.

Guaranteed issue policies provide lifetime coverage, but the death benefit amount is rather small. Also, you won’t accumulate any cash value.

Guaranteed issue life insurance is significantly more expensive than fully-underwritten policies. It is also considerably costlier than a comparable simplified issue policy.

Since the coverage amount is not much, most people buy guaranteed issue life insurance to cover funeral or burial expenses. For this reason, it also goes by the names of burial insurance or funeral expense life insurance.

Nearly all guaranteed issue policies have a waiting period, usually two years. Your beneficiaries will receive the payout only if you survive the waiting period. In the event of your death within this period, the insurer will return the policy’s premiums.

How Do I Know if I Should Get No-Medical Life Insurance?

A young lady confused about what to do.

No-medical life insurance could make sense for you if any of the following statements hold true for you.

You need a life insurance policy quickly

Life insurance is not like buying a smartphone. You can’t simply walk into a store and walk out with a policy in hand. Generally speaking, you may have to wait for up to six weeks to get a life insurance policy approved.

If you can’t wait that long, you may consider accelerated issue life insurance. It is a type of no-medical life insurance policy that lets you forgo a medical but doesn’t charge you a pretty penny for skipping it. You can get approval instantly or, at the latest within 48 hours.

You have a serious underlying condition

Certain illnesses can disqualify you from buying traditional life insurance. In that case, consider no-medical life insurance. If you have a severe underlying condition and were denied coverage, try simplified issue life insurance first. That’s because it’s cheaper than guaranteed life insurance. If you can’t get that either, the latter is your only option.

You want a policy for end-of-life expenses

If you are in your advanced years and looking for an insurance policy to cover funeral or burial costs, life insurance with no medical exam could be a good option for you.

What Factors Affect No-Medical Life Insurance Rates?

Money and a calculator beside a laptop

Life insurance companies see us as risks with legs. They put us into groups, and if we are riskier, they quote us higher rates. To accurately assess our risk, insurers ask us to take a medical exam.

However, since no-medical life insurance doesn’t involve a physical, carriers have less information regarding your health and current level of wellness. Insurers compensate for this lack of information by charging higher premiums.

Factors that can impact your no medical rates include the following:

  • Age
  • Sex
  • Any underlying illness
  • Your smoking status
  • How much coverage you want

Should I Get No-Medical Life Insurance If I Have Underlying Health Conditions?

elderly couple having coffee

If you have an underlying condition, no-medical life insurance is certainly an option that you should consider. However, it shouldn’t be the first door on which you should go knocking. Instead, try traditional life insurance first because you may be healthier than you think.

Also, underwriters don’t see your health the way you do. So, you may get the nod even when you think you don’t stand a chance. If you qualify, you’ll get lower rates. And don’t give up if the first carrier you approach turns you down. At least try a few before going the no-medical route.

Within the no-medical category, a simplified issue should be your priority. It is less expensive and offers more options than the guaranteed issue.

To sum it up, just because you have an illness, don’t automatically assume you won’t qualify for traditional life insurance. Let underwriters make that decision. If you don’t make the cut, apply for no-medical life insurance.

The Cost of No-Medical Life Insurance

If there’s one thing insurers don’t like, it’s an early death. When early death occurs it means they will have to pay out before they can collect many premiums. To make wise decisions, carriers gather as much information about your health as possible. Then they feed all of this information into their magical algorithm to find out your insurability and premium rates.

In the case of no-medical life insurance, carriers can’t gather all the information they need. Without it, they have to make an educated guess about your risk of early death. In other words, they take on a greater risk to cover you, which they compensate for by charging you higher premiums.

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