What is no medical life insurance and should you buy it?

A quick Google search for “no medical life insurance” will show over 33 million online results but few articles actually break down in plain language (what it is; what it is not), when you might buy it (when you shouldn’t), and things to watch out for regardless.

There is absolutely a market for this product but like any good decision it should be an informed decision.  Get yours about no medical life insurance here.

What it is/what it is not

Here are the nuts and bolts:

What it is What it is not
Means no medical exam. Does not mean there are never any medical questions.
Means it may include some “yes/no” medical questions. Does not mean a thorough investigation of your health status.
Can be:

Guaranteed issue

Or

Simplified issue

Is not a fully underwritten policy.
Benefits may be limited if you die within first two years (deferral period). Benefits are not comparable to an underwritten policy.

Benefits are not payable related to medical reasons.

 There are two main types of no medical life insurance policies:

 

Types What it is
Guaranteed issue No medical questions.

Typically available to everyone (even if denied life insurance recently).

Coverage typically up to $25,000.

Simplified issue Some medical questions.

May not be available to everyone (if denied life insurance recently).

Coverage typically up to $150,000.

Premiums are managed in two key ways based on policy duration:

Types What it is
Term Premiums start off low but increase as you get older.
Permanent Premiums start off higher (than term) but typically do not increase as you get older.

When you might buy it (or shouldn’t)

Here are some considerations for you:

When you should consider it When you shouldn’t
When you have some serious health issues (past or current)

E.g., severe obesity, very high blood pressure, heart disease, cancer, HIV.

When you’re generally healthy.
When you’re hard to insure

E.g., you work in a dangerous job.

When you don’t work in a life-threatening job.
 

When you want coverage, quickly.

 

When you’re taking the preferred long-term, holistic view of your finances.
When you’ve been turned down for other forms of life insurance coverage. When you’ve never asked about life insurance coverage before.

 Things to watch out for

Here are some other considerations and warnings for you:

Watch out! Why?
Demographics and lifestyles matter! Factors that influence your rates include your age, sex, whether you smoke, and how much coverage you choose.
Make sure your premiums are guaranteed! Many plans don’t offer guaranteed premiums, which means they may increase over time.
Beware of accidental death add-ons! Add-ons can be expensive; they may provide little value, since specific accidents are rare making the benefits payout very low.
If you’re a smoker you’re going to pay more! Almost always, non-smokers will pay lower premiums.
Age thresholds! Most plans are not offered past age 75 regardless of your health status
Read the fine print! Understand what you are signing for.  Read everything.  If you don’t understand something – ask!  Get all answers to your questions in writing.

The Summary

Not all no medical life insurance plans are created equal – far from it.  Life insurance can be difficult to obtain and challenging to navigate given the diverse products and services available.

We’ve worked with a life insurance broker in the past to get the appropriate coverage we need, and you should consider doing the same.  Thanks to the team at LSM Insurance (affiliate) for sharing these finer details about no-medical life insurance with me.

Further Reading:

What’s your take on no medical life insurance?  Do you have or prefer a fully underwritten policy instead?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

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