There are many different types of life insurance out there, so if you’re in the market for a policy you may have a hard time deciding which type to get. Term and whole life insurance are two of the most popular forms of traditional life insurance, and they are also the most popular forms of no exam life insurance, a category of life insurance that offers coverage with no medical exam.
No medical exam life insurance offers quick and easy coverage, particularly for people with preexisting health conditions, who don’t have time to get to the doctor, or who need life insurance quickly.
Today, we’re going to look into the difference between term and whole no exam life insurance as they are described on Sproutt.com. While both types offer certain amounts of coverage, they differ in features, duration, and of course, cost.
Traditional Term versus Whole Life Insurance
Before we get into the details about life insurance that doesn’t require a medical exam, it’s important to get a clear idea of what exactly is the difference between traditional term and whole life insurance. Term life insurance is one of the most popular kinds of traditional life insurance because it offers the most affordable coverage.
With term life insurance, policy-holders pay monthly premiums and get coverage for a certain amount of time, the term. When the term is over, premiums are no longer paid and no death benefit will be paid out when the person dies.
Many people buy term life insurance to cover themselves until they reach certain milestones, like paying off a mortgage/debt, hitting a certain income threshold, or when their kids graduate college.
Whole life insurance is a popular type of permanent life insurance, which means that there is no expiration date on the policy. Whole life insurance is more expensive than term, which is why it’s less popular. It also acts as an investment vehicle, and not everybody has the means to make that investment. If needed, you can also take a loan out against your whole life policy. Companies like harborlifesettlements.com offer whole life loan programs, where you can borrow money without losing the death benefit.
For people who can afford it, whole life insurance can be a worthwhile investment. Additional reasons why someone might opt for whole life insurance is if they have a loved one, like a disabled child, who needs continual care even after their primary caretaker has passed. In a situation like that, term life insurance would likely not offer sufficient coverage.
Term No Exam Life Insurance
This version of term life insurance is similar to the traditional kind, but the death benefit is lower. While traditional term life insurance can offer coverage into the millions, term no exam life insurance is capped at $500,000 or $1 million, depending on the carrier.
Whole No Exam Life Insurance
While no exam life insurance is more significantly different than its traditional counterpart. Whereas traditional whole life insurance acts as an investment vehicle and offers high amounts of coverage, the no exam life version coverage is usually capped at $25,000.
There are 3 main types of whole no exam life insurance:
- Guaranteed Issue
- Graded Death Benefit
- Final Expense
Guaranteed Issue means that approval is guaranteed, so people who would otherwise be turned down by traditional life insurance policies are guaranteed to be approved for this type of policy. Applicants will not be asked any questions about their health before the policy is issued. Moreover, approval is granted in a matter of days, not weeks or months like traditional policies.
Of course, guaranteed coverage comes with a price, and Guaranteed Issue is significantly more costly than other types of life insurance.
Graded Death Benefit is similar to Guaranteed Issue, except for three things. First, applicants need to answer some questions about their health. Second, coverage can go up to $50,000. And third, the death benefit is graded, which usually works something like:
- Death in the first year = 25% of the death benefit paid
- Death in the second year = 50% paid
- Death in year 3 and beyond = 100% paid
Then there is Final Expense no exam life insurance, which offers coverage only for funeral expenses. These policies come with fixed premiums, a fixed death benefit (not graded), and no expiration date.
How Much Coverage Can be Bought?
As you can presume, the price of no exam life insurance is much lower than the usual insurance. The maximum amount of money you will be asked to invest in one of these shouldn’t be higher than half a million dollars. The differences between policies are going to have unique features when based on things like income, medical history, and age.
According to some recommendations, people should get a term life insurance equivalent to 10x or 12x of the salary. So, having a $500,000 insurance is not a good option for a person that makes more than $50,000 annually.
What is the Cost of No Medical Exam Life Insurance?
You need to be aware of the intention that every insurance company has. This intention is to make a profit out of their dealings. Therefore, we would highly recommend you to study the deal you are offered before you sign it, even the smallest of letters. Therefore, you shouldn’t be surprised by the amount of information that the company will try to dig up about you.
Because there is a chance that the company will not make any money from you as a client.
After you have filled an application, your medical history will be carefully studied. Only after then, the company will have a say if your application is accepted or not.
When it comes to the price of no medical exam life insurance, we can say that it is slightly higher than medically underwritten term policies. The reason is that without having an insight into your medical background, the company would need to gamble about the applicant’s life expectancy. This is why they will need to increase their rate
You can look at it as their own insurance of sorts. According to the research conducted by Value Penguin, we can see that the amount of monthly premiums differs based on the age of the applicant. People aged between 45 and 49 are expected to pay $119, between 50 and 54 $146, 55 and 59 $194, and last but not least, 60-64 $269.
When you Should Buy No Medical Exam Life Insurance?
No medical exam life insurance is often presented as convenient, fast, and affordable. Even though is true, we don’t believe that this is something eligible for everyone. We truly believe that some people will have reap benefits from buying one of these.
In cases where a person is suffering from a chronic condition that is not entirely under control, acquiring life insurance is nearly impossible. Therefore, this one should be acquired for people that don’t have these kinds of conditions. Moreover, money collected from this kind of insurance can be used for funding other important things in life like a new home, college education, or buying a new vehicle.
If you are required to take a medical exam in order to get the insurance, you shouldn’t be scared of it. A doctor can even visit you at your home, and the exam usually lasts for about half an hour.
Which Kind of No Exam Life Insurance is Best For You?
There is no “better” or “worse” type of no exam life insurance, there is only what’s best for you. If you need a small amount of coverage to make sure your loved ones don’t get stuck with funeral expenses or debt up to $50,000, the whole is a good option. If you need higher coverage up until a certain point in time, the term is your best bet.
The benefit of both types is that you can get life insurance without undergoing a medical exam. This makes no exam life insurance a convenient and efficient option.