Why a No Medical Exam Life Insurance Policy Isn't Your Best Bet

Be careful with these policies. They may not be the great deal you think they are.

The process of getting life insurance isn't always a quick one. That's because you'll generally need to undergo a medical exam before a policy is approved.

Why do life insurance companies commonly require a medical exam? It's simple. They want to know how much risk they're taking on by insuring you.

The less risk life insurance companies think they're accepting, the lower your life insurance premiums are likely to be. The more risk they think they're accepting, the higher a premium you're likely to get stuck with.

There are some life insurance companies, however, that won't require you to get a medical exam as part of the application process. But while a no medical exam life insurance policy might seem like a good bet for you -- especially if you have underlying health issues -- it's not necessarily going to save you money.

The upside of a no medical exam life insurance policy

When you don't need to go through a medical exam to get life insurance, you can generally get approved more quickly. So if you're eager to put life insurance in place and don't want to face a weeks-long delay, you might consider going this route. Also, if you have a number of underlying health issues, you may find that a no medical exam life insurance policy is more affordable than one that requires a medical exam.

The downside of a no medical exam life insurance policy

Skipping the medical exam on the road to getting life insurance might seem like a good thing. But it could also result in higher premium costs for you.

Life insurance companies that write policies without a medical exam generally make certain assumptions about the state of your health. But if you're a relatively healthy person, you might lose out financially by opting for a no medical exam life insurance policy.

In fact, let's say you're in your 30s, you're a healthy weight, you're a non-smoker, and you have no underlying medical issues whatsoever. In that case, a medical exam might work to your benefit, because it might present you as a less risky applicant. And that means you might qualify for a less-expensive premium.

Generally speaking, no medical exam life insurance is a good bet for applicants who are considered higher-risk, whether due to age, health problems, or a combination of both. But if you're not in that category, a standard policy that requires a medical exam is probably a better bet.

Also, no medical exam life insurance policies will often cap your death benefit -- the amount your beneficiaries stand to receive upon your passing. You may not be able to secure the full amount of coverage you need with one of these policies.

A shortcut not worth taking

A no medical exam life insurance policy might seem like a quick, easy way to put coverage in place. But taking the easy way out could leave you with higher premium costs and not enough insurance. And neither one is a good thing.