Buying life insurance usually works something like this: you contact an agent or company who then gives you a basic quote after asking you some pertinent health related questions. You fill out an application and give the agent a deposit (usually the first month’s premium) for the insurance. Next, your application is sent off to the underwriting team who begins to look into your health matters and decide what kind of risk you are, and therefore decide how much they really want to charge you for coverage. In the meantime, they may request some blood tests; a physical exam or the release of your medical records. After a few weeks, you hear back. This is where it can get really hairy. The underwriter’s may offer one of these options:
Congratulations! The underwriter accepts your application as –is and stands by the initial quote offered by your agent.
They refuse to accept your application at all and you they return your good faith deposit. You are now considered uninsurable; which by the way, you will have to disclose to other insurance companies when you approach them for coverage.
The insurer accepts your application, but upgrades your risk level, thus charging you more for the same policy.
Depending on your situation, nay of the scenarios may unfold, leaving you either with insurance at a good rate; higher priced insurance or no life insurance at all.
If you are one of the thousands who fall under the umbrella of “insurability” you may be wondering what to do. After all, you need life insurance, right? Absolutely.
What Makes You Uninsurable?
Before we look into the options for the uninsurable, let’s first figure out what made you that way in the first place. In the vast majority of cases it is a chronic health condition (or history of one) like diabetes, high blood pressure, cancer, etc., that makes an insurer nervous about giving you coverage. If you have any uncontrolled health issue, they are going to consider you too much of a risk to insure. But, even if you have controlled your condition, some insurance companies will not accept your application. This can be a difficult position to be in.
In some cases, you may be able to get control of your condition or even find ways to reverse it and then reapply. But, some insurers wills till consider your history and may make you pay more for the coverage anyway.
The No Medical Background Life Insurance Option
There is an option though, for those who can not find a company to accept their life insurance application any other way. It is called no medical or physical examination insurance. What that means is that the company offering the insurance does not require its applicant’s to submit any medical information or undergo any medical testing in order to get insurance coverage with their company.
This is a bit unusual for an insurance company since most companies work under the premise that they insure low risk consumers so that they will not have to pay out as many claims. The no medical or physical exam coverage offered by some companies accepts high risk consumers (thus pay out more claims), but still make a profit. How? Simple: they charge a lot more for their coverage.
It can be quite pricey for consumers to purchase no medical information insurance. Usually the policies are limited to less than $100,000, with many only offering small amounts of coverage in the $10,000-25,000 range. And the price of a $10,000 policy with some of these companies can be as much (or more) than a $100,000 policy with another company.
Still, consumers are wiling to pay the high price for this type of insurance simply because they have to. Unable to secure a policy any other way, consumers are forced to apply for coverage that does not require a medical background check and charges higher premiums.
In addition to paying a higher rate for the privilege of not having their medical history scrutinized, age can also play a factor in the price that must be paid for this kind of insurance. In general, the older the applicant, the more the life insurance policy being sought will cost.
Although the benefits may seem minimal for healthy applicants who do not understand how difficult it can be just to get life insurance, those who have been trying to land a policy for some time know that a no medical exam application can be the best option for getting the coverage needed to protect your family in the event of a tragedy.