Can you get life insurance with no health questions or medical exam?
There is a product called guaranteed issue life insurance which does not require a physical or health questions in order to get issued. This may concern some people who wonder how insurers can make any money. After all, what is to stop a terminally ill person from taking out a huge policy so there family can inherit millions of dollars?
Well, you should not spend a lot of time worrying about how insurers make money. They seem to have this figured out. They reason they can offer policies without any health underwriting requirements is because they have a waiting period. You can find term and whole life policies like this.i In other words, the insured person has to live for a specific length of time after the policy is issued in order for any beneficiaries to collect the full amount of the death benefit. Sometimes these are called graded benefits.
How Long Are Waiting Periods?
The length of the waiting period will vary by the policy. A 24 to 36 month period may be typical though. Before the term, the beneficiary can not collect the entire face value of the policy. Some may be structured to pay out a portion of the benefit if the insured person dies before this. Some may just refund the premiums, but sometimes they will even pay interest on the premiums.
Let us look at an example. Let us say you find a policy with a 3 year waiting period before full benefits are paid. It may refund premiums, with interest, if the insured person passes away in the first 12 months. From 12 to 24 months, it may pay out one quarter of the full face value Between 24 and 36 months, it may pay our half of the full value. Then, at 36 months, the beneficiaries are entited to get the entire value of the policy.
Keep in mind that this was just an example, and it was not meant to illustrate any particular company or product on the market right now.
Should You Buy Guaranteed Issue Life Insurance?
This is an individual question. There are some disadvantages to most of these policies, but they may be a good option for some people.
Advantages To Guaranteed Issue Policies
- There are no health or lifestyle questions. Privacy is protected.
- There is no required medical exam.
- They are usually fast and easy to apply for.
- People who have been declined for other types of life insurance may get a policy issued.
- If the policy will refund premiums if the person does not survive, there is little risk.
Disadvantages To Guaranteed Policies
- The premiums are usually slightly higher than those of other types of policies.
- There is not an immediate death benefit on most policies. If the insured person does not survive the waiting period, there may be little gain.
I would urge anybody to compare premiums and types of policies before they make a purchase. It is not usually a good idea to just buy the first one that is advertised on TV.