The 2010 Affordable Care Act (ACA) requires health insurance providers to cover preexisting conditions, per the U.S. Department of Health and Human Services (HHS). While this has enabled millions of Americans to access life insurance so far, insurance companies tend to charge higher premiums for those with preexisting conditions due to the high risk involved. The good news is that you can still purchase life insurance without undergoing a medical exam to determine the state of your health. Though this has its benefits, it also comes with some downsides.
Read on to find out more about no-exam life insurance.
Tradeoffs with No-Exam Life Insurance Policies
According to Life Insurance Marketing and Research Association (LIMRA), nearly 50% of Americans prefer purchasing simplified issue life insurance policies. This is mainly due to the no-exam policy, less documentation required, and short approval process. Although you will get to enjoy these benefits, the insurance carrier will most likely charge you more due to the uncertainty involved for the company. For instance, any underlying condition that goes untested may be a burden to the insurance company if it manifests in the future. Therefore, higher premiums are utilized to help counter this added risk. This means that if you are healthy, you should consider purchasing medically underwritten life insurance coverage, which will help lower your premium rates.
Coverage Limit for No-Exam Life Insurance Policies
The Insurance Information Institute (III) recommends purchasing life insurance equal to a multiple of your salary, roughly 20 times your gross salary. However, the amount of coverage you choose should entirely depend on the number of dependents you have, the amount of debt at hand, funeral expenses required, and future expenses such as college fees. Considering the no-exam life insurance exposes the insurance company to a higher risk, there is usually a limit on how much life insurance you can get without an exam. For instance, most insurers limit simplified underwritten life insurance policies to $500,000. This amount can be lower for some insurance companies. Even so, it is still a good deal if the amount offered is enough to cover your needs. In case the coverage limit given does not meet your needs, a medically underwritten life insurance policy will be a better option since it allows you to purchase higher coverage.
Types of No-Exam Life Insurance Policies
A medically underwritten life insurance policy requires you to undergo a medical exam to determine your medical history as well as your present state of health. However, the insurer may allow you to skip the exam in some cases, especially if you are truthful about your health.
On the other hand, the simplified issue life insurance and guaranteed issue life insurance coverages do not require any medical exam. In the simplified issue policy, you only need to fill out a questionnaire on your medical history. It often covers basic questions such as if you were recently sick and what allergies you have.
With guaranteed issue life insurance, the insurance provider assures you of coverage regardless of your health status and age. Nevertheless, the coverage limit is typically low, less than $100,000 depending on your provider. Take note that an insurance provider can deny you life insurance coverage if you are not entirely truthful when answering questions about your health.
These are some of the important facts to know about no-exam life insurance coverage. To find the right life insurance coverage for your needs, contact the experts at Donald Weiss Insurance Services. Our dedicated team is ready to assist you with all your insurance needs.
