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Insurance

Is no-exam life insurance worth it? Here's what you should know

If you want to skip the medical exam, it will likely cost you higher premiums.

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If you plan to purchase a life insurance policy, you should know that insurance companies often want you to get checked out by a medical professional prior to underwriting your policy. But if the thought of submitting to a medical exam stresses you out, you can also opt for a no-exam policy that lets you skip the check-up.

Several of CNBC Select's picks for best life insurance offer no-exam coverage. Mutual of Omaha, one of our top picks for seniors, offers whole life insurance policies without a medical exam. And the top pick for customer satisfaction, State Farm, also offers coverage without a medical exam.

Mutual of Omaha Life Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    No

  • Policy highlights

    Mutual of Omaha offers term, whole, indexed universal life and universal life policies, giving lots of options.

Pros

  • Policies available up to age 85 
  • No medical exam options available

Cons

  • Limited to $25,000 for Guaranteed whole life policies

State Farm Life Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    State Farm offers a variety of term, whole, and universal life insurance products to choose from, alongside other types of insurance. It's rated highly for both financial stability and customer service.

Pros

  • Outstanding customer service
  • Reasonable rates
  • Offers return of premium policy
  • Bundling discount 

Cons

  • Policies must be purchased through a State Farm agent
  • Doesn't sell policies in Rhode Island or Massachusetts
  • Fewer riders than the competition
  • Accelerated death benefit costs extra

However, you'll likely pay a price in higher premiums if you forgo the exam when picking your life insurance policy. Below, we take a look at why life insurance companies charge more for no-exam policies and help you decide whether it's worth it for your situation.

What is no-exam life insurance?

Medical exams are used in underwriting, which is the process of deciding how much a person will pay in premiums based on their risk profile. These exams usually involve measuring your height, weight, and blood pressure. They also likely involve a blood and urine test.

If the exam finds you in relatively good health, you'll often pay less in premiums because the insurance company sees you as less of a risk. But if you don't submit to a medical exam, you're depriving the company of information it would use to determine its pricing. "They're going to go ahead and assume the worst, they're going to assume that you want to hold some information back from them," says Michael Giusti, senior writer and analyst at Insurancequotes.com. "They're going to price the policy higher."

Who is no-exam life insurance for?

People with a medical condition that might disqualify them from a policy stand to gain the most from this type of insurance. While the no-exam option will likely offer a smaller amount of coverage compared to a policy requiring an exam, it's certainly better than no coverage at all.

No-exam insurance also appeals to people who feel a medical exam isn't worth the disruption to their routines and would rather pay the higher premiums. Although the exams usually take less than an hour and the medical professional can even come to your house, you might have to skip going to the gym in the morning, or you may have to fast on the day of the exam. "Time does have value, and maybe you just don't want to take the time to do the evaluation," Giusti says.

Finally, anyone who wants to keep their medical history as private as possible would see the value in no-exam life insurance. "Maybe you have high blood pressure or cholesterol," Giusti says. "You might have some reason you don't want to talk about it, so you're willing to pay that higher rate."

The pros and cons of no-exam life insurance

Here's a quick rundown of the benefits and drawbacks of this kind of insurance:

Pros

  • If you have health issues, it may help you qualify if you wouldn't otherwise qualify for coverage
  • You avoid disclosing any health concerns you'd rather keep private
  • You avoid having to disrupt your schedule

Cons

  • Almost anyone in good health will be paying more in premiums with a no-exam policy compared to a policy where they submitted to a health exam
  • Your coverage amount may be limited without an exam

What are the types of no-exam life insurance?

There are several types of no-exam life insurance you'll come across as you start shopping for coverage. Some of the types you'll find include:

  • Group life insurance: Your employer may offer life insurance coverage, generally in small amounts equaling a multiple of your salary. However, you may be able to purchase additional coverage through this policy. It will generally end if you leave your job.
  • Simplified issue life insurance: Instead of submitting to an exam, you have to answer questions about your health in order to qualify.
  • Guaranteed issue life insurance: No medical information is required, and anyone can be approved. However, these policies tend to provide a small level of coverage.
  • Accelerated underwriting life insurance: A type of life insurance that uses third-party data on your health and habits, like prescription medication history and driving records, in place of a medical exam.

Bottom line

No-exam life insurance may make sense for some people, particularly if they have health issues, but those in relatively good health will find less-expensive coverage with a policy that requires an exam.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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