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October 22, 2021 | 6 Minute Read
If you’ve been shopping for life insurance, you’ve probably seen ads or offers for “no medical exam life insurance.” Thanks to advances in communications technology and predictive analytics, insurance companies are finding ways to streamline the application process for some of their products. In general, no-exam policies are still relatively new, and not yet available for every type of life insurance customer. Read on to see if no-exam life insurance might be right for you.
As the term implies, no-exam life insurance is a life insurance policy that does not require a medical exam during the application. This makes the process considerably shorter and more convenient than a traditional life insurance application, which can take up to four weeks or more.
No-exam life insurance policies have been gaining popularity in recent years, and they are expected to become more widely available in the future. For now, the most common no-exam policies are issued through one of three forms of underwriting:
Policies issued through accelerated underwriting are the closest match to traditional, or fully underwritten, life insurance, in terms of rates and eligibility guidelines.
Simplified issue and guaranteed life insurance have fewer medical restrictions than policies written through accelerated and traditional underwriting. Even though simplified- and guaranteed-issue policies do not offer the best dollar-for-dollar value, they can be a convenient alternative for those who might not qualify for—or need—traditional life insurance.
In most cases, accelerated underwriting attempts to give a life insurance application the same level of scrutiny as it would receive through full underwriting, without a medical exam or lab tests.
In 2019, the Society of Actuaries published a report on emerging trends in accelerated underwriting, authored by actuaries with the consulting firm Milliman Inc. Among other things, the report notes that term life is the most common product offered through accelerated underwriting and that insurance companies expect to offer more products through accelerated underwriting in the future.
Common no-exam life insurance policy types*
| AU Term Life | SI Whole or Term Life | GI Whole Life | |
| Benefit amounts | Up to $1.5 million | Up to $250,000** | Up to $40,000 |
| Policy duration | 10- to 30-year terms | Whole life or term | Usually whole life |
| Medical history | Strongly considered | Considered | Not considered |
| Online application | Available | Available | Available |
| Cash value | No | Yes | Yes |
| Additional aspects | Insurers expect to increase AU in the future. For now, it’s rare to find no-exam policies for permanent life.** | Applications usually consist of five to 10 yes/no questions, plus checks on your prescription history and other records. | This is typically the shortest application process. You usually just need to meet one or two requirements to qualify. |
Simplified issue and guaranteed issue life insurance are no-exam policies that are similar to each other, but both processes are much different than accelerated underwriting.
With simplified issue life insurance, an applicant only needs to answer a short series of questions, usually between five and 10, to qualify for coverage. If you are not living in a nursing home and have not been diagnosed with a terminal illness, you will probably qualify for a simplified issue policy.
Guaranteed issue life insurance tends to have the least restrictive eligibility guidelines. You usually only need to meet one or two basic guidelines to qualify, such as falling into a certain age group or belonging to a specific organization.
Typical characteristics of simplified and guaranteed issue life insurance
| Simplified issue | Guaranteed issue | |
| Application questions | Five to 10 | Less than five |
| Medical records | Reviewed | Not reviewed |
| Term policies available | Yes | No |
| Whole life available | Yes | Yes |
| Cash Value | Yes (whole life) | Yes |
| Max death benefit | $250,000 (term) | $40,000 |
Since simplified issue and guaranteed issue are usually issued as whole life, they will accumulate cash value and remain in effect for the remainder of your life, as long as you keep up with your premiums.
However, the tradeoff for fewer (or no) health requirements is higher rates than traditional life for the same amount of coverage. It’s also rare to find a simplified issue policy with a benefit amount exceeding $250,000. The benefit amounts for guaranteed issue policies typically cap out at $40,000 or less.
The upside of these lower benefit amounts is that it helps keep the premiums reasonable. This appeals to those who might not qualify for traditional life insurance, due to age or a medical condition, as well as those seeking a convenient application process.
Several carriers market $5,000 to $30,000 whole life policies, written through simplified issue or guaranteed issue underwriting, as final-expense insurance.
With an emphasis on things such as your prescription records and insurance history, accelerated underwriting tends to favor healthier applicants over those with complicated medical histories.
If you have a minor to moderate health issue, the medical exam and lab tests for a fully underwritten policy could show the insurer that you are effectively managing your condition. And this, in turn, could increase your chances of qualifying for coverage or getting a better rate.
One of the key things to note if you are considering a simplified issue or guaranteed issue policy is the manner in which the death benefit is paid during the first two years.
Simplified-issue policies often come with what’s known as a graded death benefit. With a graded death benefit, your beneficiary receives a portion of the death benefit, such as 25% or 30%, if you die during the first year of the policy. If you die during the second year, your beneficiary receives a larger share, such as 50% or 75%.
WIth guaranteed issue life, the policy usually only provides the beneficiary with a refund of the premiums you’ve paid, plus interest, if you die before the policy is in force for two full years.
For both simplified and guaranteed issue life, your beneficiary normally receives the full death benefit, minus any policy loans and unpaid premiums, if you die after the policy is in effect for two full years.
AU: Accelerated Underwriting; SI: simplified issue; GI: guaranteed issue.
* Data based on most common offerings seen on carrier websites and industry reports. Policies with longer terms or larger benefit amounts are sometimes available.
**Emerging Underwriting Methodologies and their Impact on Mortality Experience Delphi Study, published by Society of Actuaries.
***Accelerated Underwriting Practices Survey, published by Society of Actuaries.
As is the case with full underwriting, an accelerated underwriting application requests personal information and your consent to pull records from third-party databases on things such as your prescription, insurance, driving and credit history. (These soft-pulls don’t affect your credit score.)
The insurance company then enters the information it has gathered about you into its algorithm, or multiple algorithms, to determine if you are eligible for coverage and, if so, your rate.
Accelerated underwriting practices vary by company. Several established mainstream insurers offer it, as do newer, online life insurance agencies. Among the latter, some offer fully online applications that only take minutes to complete. Others combine an initial online questionnaire with a lengthier application, to complete online or by phone.
Accelerated underwriting is still relatively new, and insurance companies have not made exam waivers available on all their products, at least not yet. For now, it’s most common to see no medical exam policies offered on term life, with benefit amounts up to $1.5 million.