How secure are No Medical life insurance policies?

Submitted by Insurance Maze on Sat, 03/01/2008 - 17:38

Someone placed an article on this subject in the "Advertise" section of the forum, but I think this subject is much more important.

How can an insurance company issue a $250,000 life insurance policy on your life if they know exactly nothing about the current condition of your health? What exactly are the terms and conditions of these life insurance policies?

Sure they may check the Medical Information Bureau (MIB), but what if you were diagnosed with cancer yesterday?

Don't you think that these web sites that advertise "No life insurance-medical exam" are attracting people with health problems who are trying to put one over on the insurance company?

A traditional life insurance exam is not really an exam at all. A para-med asks you a lot of health questions, obtains a mouth swab, and possibly a urine specimen, that's it. I really don't see the big deal.

Just how secure are these "No Medical" life insurance policies?

Are they actually underwritten at the death of the insured?

Posted: 03 Mar 2008 07:00 Post Subject:

Just how secure are these "No Medical" life insurance policies?
Are they actually underwritten at the death of the insured?



Care to divulge which way your are pointing! :) I seriously don't think that a life insurance policy can be written without proper medical investigation. The medical condition of the applicant is an important underwriting issue and can't be overlooked.

Posted: 03 Mar 2008 07:05 Post Subject:

I know of an insurer who denied my uncle a coverage because he was diagnosed with high blood sugar at the time of medical check-up while applying for a life plan. I'm really interested to know more about the plans that require No life insurance medical exam. Hope to see some good responses here.

Posted: 03 Mar 2008 07:11 Post Subject:

How can an insurance company issue a $250,000 life insurance policy on your life if they know exactly nothing about the current condition of your health? What exactly are the terms and conditions of these life insurance policies?



  • Is it just a gimmick? or there is some truth behind the claim?
  • Is the applicant required to pay more as premium to avoid life insurance medical exam?
  • How they determine the premium and also the coverage level?
  • If some insurers can write policies without medical report then why the other require it?


It really doesn't sound right to me.

Posted: 03 Mar 2008 01:49 Post Subject:

Is it just a gimmick? or there is some truth behind the claim?

Is the applicant required to pay more as premium to get an insurance without medical check?

How they determine the premium and also the coverage level?

If some insurers can write policies without medical report then why the other require it?



These are very good questions.

I have not gone through the "application process" on these web sites that advertise "Life Insurance-No Medical Exam" for the simple reason I did not want to buy the insurance, but I have looked at one of these life insurance policies.

The policy I examined was advertised as a "20 Year Term", but after reading the "Terms and Conditions" of the policy, I discovered that the policy would actually renew every "5 years", with an increase in premium every 5 years. The premium increase is significant.

I certainly don't know whether or not all of these policies that do not require any life insurance medical exam work this way, but you can rest assured, there are "limits" somewhere in the actual policy.

Once again, a life insurance exam is no big deal and I, personally, had rather be safe and buy my life insurance from a professional insurance agent.

Maze

Posted: 03 Mar 2008 03:11 Post Subject:

Life insurance with no medical exam policies are more and more prevalent on the internet with each month passing it seems.

I believe the reason for this is several factors converging:

1. Increased competition.
2. Efficiency of technology making it possibly.
3. Centralized medical information bureau availability.
4. Increased Longevity of consumers.
5. Better returns on life insurer investment portfolios - This is until AIG took a 5.3 Billion Loss in the last quarter, and now more insurers will be taking losses as a result of Credit Default Swaps, or so it seems.

It seems the insurers are more interested in giving the consumer what they think they want - That is faster, easier life insurance products.

You know the tide is turning if Prudential has even gotten into the game of no life insurance medical exam plans. No, this is not a scam, but a way of the future, at least for now, until they discover this may not be prudent from an ROI point-of-view. Or, until we see negative results on the end of the consumers buying the policies.

Yes, some policies offer 5 year increases in rates. Other may be level term life insurance plans offering level rates for longer periods of time.

As always recommended - it is important to understand how the policy works, what changes will take place in the premiums charged at the end of the policy term, are there conversion privileges, can you renew the policy without evidence of insurability, and what is the financial rating of the firm, not to mention how good is the customer service?

The point being, this type of policy may be good for some who accept the fact that the rates may be higher than for fully underwritten policies, but they want the quicker and easier route in starting a policy today, if they qualify.

That being said, if you don't understand the critical factors involved in a term life insurance policy, you may end up paying more in the long run.

Posted: 03 Mar 2008 09:47 Post Subject:

Hello Maze,
Underwriting a $250,000 life insurance policyt without at least a para-med, blood, and spec is a joke - and we should all know that. God help the poor consumers who get sucked into this diabolical scam and get financially hurt by it. I feel sorry for them.

You know it must be some sort of renewable term plan with requalification due every year or so and/or the policy is underwritten on the back-end.

Really though, how could a company ever afford to issue large policies without complete underwriting? Maybe they'll hire the Tooth Fairy to head their compliance department.

Posted: 03 Mar 2008 11:30 Post Subject:

This is in reply to InsInvestigator:

Please refer to this url to review the offer made on a policy that discourages life insurance medical exam as issued by Pruco Life Insurance Company.

http://www.agstar.com/uploads/MyTermFastFacts.pdf

It clearly states that the Level Premium Period is 10, 20, or 30 years, as selected by the policyowner.

I hope this makes clear it is not a scam. I do not believe Prudential would be involved in a scam.

Also, this is not annual renewable plan that requires requalification every year.

I sincerely believe that these types of policies will become more prevalent, and in time, will provide more competitive rates, and guaranteed level premiums for extended terms.

Having been a life insurance agent, and an underwriter, manager, s.v.p. and partner, I do completely understand the ethical questions which arise as a result of these types of policies.

Also, I do hold 8 professional insurance designations, and do understand both sides of this debate. Actually, I completely understand your position, most importantly being the concern for the consumer, and their well-being.

However, in time, these types of policies may become as common as getting term life insurance quotes online using a quoting service.

Maybe, this is just a sign of the times. A change in the way business will be done as relates to various types of term life insurance plans.

As you mention, there is room for abuse in this type of offer, if the consumer does not understand how the plan actually works, how premiums may change, when those premium increases may take place, as well as, the options for renewability and conversion - if they do exist with these policies.

Finally, in reference to the underwriting question, you bring up a very good point. What will the long-term impact be on losses, and change in ROI for life insurance companies offering these plans.

I would expect that the online application would become more extensive, the rates will be adjusted in time, based on loss experience (as always), and in time, the insurers will get it right - or lose money big time.

Posted: 04 Mar 2008 02:26 Post Subject:

No medical life insurance is definitely out there, is available from many very reputable carriers, cannot vary from state law in any sense as to protections given to the consumer, and normally contain certain subtle differences and a few not-so-subtle differences.

For instance, you can generally only get term coverage. Not many carriers are willing to issue perm coverage without medical, unless you are talking "Gerber Grow-Up" plans or something similar. Once in a while you'll see mailers from banks that are working in tandem with insurers to offer their depositors quasi-group coverage with no medical. Limits there are low...never seen anything with a face amount more than about $25,000.

Back to the term insurance. The usual kind of things you'll see are
* Lien Periods, which restrict payment of the death benefit in full until the policy has been in force for a certain period of time, commonly 2-3 years. Death during the "lien period" normally constitutes a pro-rata death benefit or a simple refund of premiums paid, maybe plus interest.
* No-medical doesn't mean NO MEDICAL. They do generally ask medical questions that are very limited in nature and only cover basic stuff. You will, of course, authorize MIB etc. so the insurer can check what they can check.
* The premiums can be horrendous (gee.....I wonder why???) I recently checked out a few and they wanted almost SEVEN TIMES the annual premium amount that I'm currently paying for my term coverage. So, simple underwriting equates to really high premiums!

On tbe other hand, I would definitely check out the carrier prior to any purchase, and I would absolutely stick with the proven horses. Don't go anywhere to purchase this stuff, because as many of you are pointing out, there could be problems. But when I see Prudential, PEMCO, Ohio, etc. offering the product.....

InsTeacher 8)

Posted: 04 Mar 2008 03:31 Post Subject: medical

Of course, if someone has a serious medical condition (ie.....Lupis, Diabetic) they can't join the military. I know someone who wanted to join the Army. he passed BasicTraining, with flying colors. Was excited to go to his 'permenent duty station.' He find out, when he arrived at his 'duty station', that he some kind of blood disorder. He NEVER knew he had this. The military gave him a 'Honerable Discharge.' The military couldn't 'keep' him.....the insurance (in the military) wouldn't cover him with a 'pre-existing' issue. Needless to say, he was disappointed.

Posted: 04 Mar 2008 03:47 Post Subject:

That brings up a good point.

No exam life insurance plans are usually only approved for people in good health. Pre-existing health problems would generally be a decline situation, in most instances.

Also, what if the health questions asked, and medical information bureau report show no health problems? But then it is discovered you had a health problem that would have created a decline situation on the application?

Posted: 04 Mar 2008 07:29 Post Subject:

I will NEVER, EVER forego the responsibility of standing up in front of everyone saying that I might have been wrong.

Hadley, I had no idea you were so well-qualified within the industry.

Also, I do hold 8 professional insurance designations, and do understand both sides of this debate. Actually, I completely understand your position, most importantly being the concern for the consumer, and their well-being.




I hope this makes clear it is not a scam. I do not believe Prudential would be involved in a scam.



If you don't count the $2.3 billion churning, twisting, breach of contract and/or fiduciary duty, etc., lawsuit they lost in 1996, I think, (the largest in the history of the insurance industry) Prudential would probably be clean as a whistle.

Here's an interesting bit of insurance trivia: If you are an insurance company sued for abusing your elderly policy holders and you are ordered by the court to send each one of your victims notice of the impending action and, let's say you somehow lose the addresses for 1.4 million potential victims, thereby stripping them of their ability to be made whole in the future; do you know what that's called? Getting Pru'd. I kid you not.

You know; if I were to look at this "no-medical life insurance" gig from a more analytical standpoint, it does "kinda" make sense.

First of all, InsTeacher was right. I think we can all agree that some form of medical background check will [probably] be done - even if its just a para-med.

Secondly, I think we can all agree that if anything more serious than a hangnail is noted on the application, a more thorough background check/med will be required.

I really don't know if there would be any sort of "lien period." Why would there be? I mean, you're an insurance company who's just issued a policy on someone who's represented themself to be Preferred Non-smoker or better) and you have a 2-year contingency period to fall back on? Doesn't that sound like a bit of a numbers game from that point? Just like with any other term-type policy? Remember that less than 2% of all term insurance ever results in a death claim.

If you're a 35 year-old, preferred non-smoker, with no medical history; statistically speaking, what are the chances of you kicking the bucket in 5, 10, or 20 years? With the theory of probability on my side, I think you would be a safe bet.

By the way; if you lied on your application, all your beneficiary gets is a return of premiums - maybe.

From the standpoint of a Consumer Advocate, I don't like it. But that's just me.

Posted: 04 Mar 2008 07:58 Post Subject:

I just attempted to apply for a Pruco non-med policy and was advised that: We're sorry, MyTerm Life Insurance is available only to customers of AgStar.

Oh and the, "Not Insured by FDIC, NCUSIF or any Federal Government Agency" disclaimer jumps right out at me too.

If I lie about my relationship with Agstar, then they want to know;

Do you currently have any product(s) with AgStar? Yes No


Which product(s) do you currently have with AgStar? Operating Loan
Equipment Loan
Preferred Capital Line
Facility Loan
Real Estate Loan
Home Mortgage Loan
Home Equity Loan
Equipment Lease
Facility Lease
Other Loan or Lease

And when I lie about a Home Equity Loan, I get this reply:

"We're very sorry. MyTerm is not available in your state at this time."

The link that Hadley showed me said that policies were being issued in CA with one product only available until age 64.

In short; if it walks like a duck, and quacks like a duck.......................

Posted: 04 Mar 2008 12:56 Post Subject: inurance

What about children, who have had medical problems, since birth??/ I would assume, this 'situation', would be pre-existing. Gosh...seems like a 'catch 22' either way you look at it.

Posted: 04 Mar 2008 01:32 Post Subject:

Wow!! When I opened "Latest Posts", nine of the ten topics related to auto accidents. Do all the bad drivers come here?

It's that "full moon" thing"! 8)

Investigator and Teach, you two are really getting into this one aren't you?

This topic gets under my skin just a little, because I just can't understand why anyone - "good health", "bad health" or what - would go online and buy $250,000 of life insurance without knowing anything about the policy.

Just as an experiment, I took a 15 minute tour of "Life Insurance-No Medical Exam" sites all around the internet and I found some interesting stuff. None of these articles came from the same place:

One thing is for certain and that is to get life insurance and no medical exam, you do need to be young and in prefect health.



If they don't check it, how do they know? Not everything makes it to the MIB and on rare occasions, the MIB is wrong.

This no medical exam term life insurance is generally known as guaranteed issue or simplified life insurance. And because it is life insurance with no medical exam, it is an excellent alternative for people who have some health problems or who may be older and wouldn't qualify for regular term life insurance.



So, now we are talking about an entirely different type of life insurance policy. How does the average consumer know the difference?

Depending upon the severity of your health problems, we might be able to offer you term life insurance no medical exam or whole life insurance no medical exam. In some cases, the death benefit is limited for the first two years of coverage.



Does the consumer realize that during the first two years, the death benefit of their $250,000 policy will be under $1,000?

No medical exam, no blood tests or other tests are required for either type of life insurance. Our independent insurance agents can fit the right policy from the right company to your needs.



Oh, so now we are bringing in the agent. How does this part work?

You answer some brief questions (around seven) to get an instant quote online. If you like your quote you answer some additional questions about your health to apply online. If the insurer accepts your application, you may start your policy the same day using a credit card, in most cases. Full coverage may or may not begin on that day, subject to the carrier and terms of the policy.



"May" or "May Not", are we going to place the security of our family on this?

If you do not tell the truth regarding the state of your health, this will result in cancellation of your life insurance no medical exam.



Again, if they don't check it out, how will they know? Could this be full underwriting that will take place at the death of the insured?

AIG, one of the largest insurers in the world, just lost over $5 Billion dollars. MetLife went through a scandal with retirement plans for nurses. I don't care how big the insurance company is, there is a "skeleton" somewhere, so I would not base the reliability of these "No Medical" life insurance policies on the "size" of the insurance company.

All I can say is, buy your life insurance from an agent. When you get the policy, read it. If you don't understand it, go back to the agent and tell him/her that you have an hour for the policy to be thoroughly explained to you.

Please don't buy life insurance through an internet quote engine.

Posted: 05 Mar 2008 01:45 Post Subject: insurance

I appriciate the replies. Now..I've learned a bit more. Lots of 'area', concerning insurance.

Posted: 05 Mar 2008 04:08 Post Subject:

Underwriting a $250,000 life insurance policyt without at least a para-med, blood, and spec is a joke - and we should all know that. God help the poor consumers who get sucked into this diabolical scam and get financially hurt by it. I feel sorry for them.



How exactly is it a joke? Insurance carriers have very accurate statistics and it's a common fact that most term policies lapse. In addition, when you factor in the 2 year incontestability period, carriers have an easy out in case they missed something, but it's not indefinite.

Really though, how could a company ever afford to issue large policies without complete underwriting? Maybe they'll hire the Tooth Fairy to head their compliance department.



I'll send you over a legal document for you to sign and you can write me a check for $50. I'll use that money to find out about your medical history. That's how insurance carriers operate, although I'm being facetious.

We're not to a point yet we're medical records are online and accessible (Thanks to lovely HIPAA), but you would be amazed the type of medical information that can (should) be obtained. In reality, non-paramed has it's place, just like traditional term. There are a few companies that are very competitive with the traditional term products. An ethical agent will know when to use what type of product.

You have an interesting site.

Posted: 15 Jun 2008 04:10 Post Subject:

In our country, we offer non medical life insurance policies but within the age limit and based on what kind of occupation the client is engaged in. I think the non-medical insurance policy can be issued up to the age of 50 (I'm not really sure about this). There is a reason why insurance companies can offer this kind of life insurance policy. There is what we call contestability period of 2 years. If the policy owner died within 2 years time upon approval of life insurance application, the company has the right to investigate about the cause of the client's death. If they found out that the policy owner died with cancer (for example) and the client did not state it upon application that he or she has cancer, the company can contest it and may not pay the life insurance premiums because of misrepresentation. But given fact that the policy owner died after 2 years upon application, the company cannot contest it so they would pay for the insurance proceeds.

I don't really know what is the real score about online life insurance application. When applying for life insurance online, just be careful. There are many websites that are not legitimate. Be sure to choose the right company.

Posted: 16 Jun 2008 09:48 Post Subject:

Joven222; if I may ask, which country are you referring to in this message? Here in America, there are a number of companies which offer life insurance policies without much more than an MIB inquiry. Blood, spec, and a paramed are usually required on the majority of other plans. As you obviously know, as the face values increase, so do the requirements.

I guess I'm a bit confused by the way you referred to the Contestability Period. This is an industry standard that I'm pretty sure applies to every policy I've ever seen - or investigated.

Are you active in the life insurance industry? Are you a licensed rep?

Posted: 17 Jun 2008 03:31 Post Subject:

Blood, spec, and a paramed are usually required on the majority of other plans.



I am from the Philippines and I have a life insurance policy but I have not undergone blood, spec, and paramed as you have stated as a usual requirement. I got it in an early age so all I need is to fill out the form and state may physical conditions.

I guess I'm a bit confused by the way you referred to the Contestability Period. This is an industry standard that I'm pretty sure applies to every policy I've ever seen - or investigated.



What made you confused about the contestability period? Am I wrong in stating the nature of it? I believe that there is a 2-yr contestability period on every plan, right?

I was an agent but now I am not. I have stopped for 2 yrs already. If I'm wrong with what I have said, please correct me. I will review my insurance policy to confirm about this. ;)[/quote]

Posted: 18 Jun 2008 09:17 Post Subject:

Hello Joven222,
Then quite possibly, the requirements for life insurance policies sold in the Philippines are different than those of policies sold in the U.S.

No, you were not wrong in your explanation of the contestibility period.
This provision applies to life insurance sold in the U.S. as well as, I now understand, life insurance sold in the Philippines

Posted: 05 Aug 2008 05:06 Post Subject:

Probably some people have valid reasons not to go for medical examinations when applying for insurance.

I always believe going for medical examination is one of the most important things we should do twice a year. I wonder if anyone out there would disagree with me that medical examination is important.

Many of us just take lame excuses for not going for a health check quoting reasons such as no time, too afraid to know the findings of the health check etc.

When applying for insurance, you have another good reason to go for health check. Besides, some insurance companies are willing to bear the examination fees.

Essentially there are only two possible outcomes at the end of a health check, i.e. you are still in perfect good health or your health is in questionable conditions.

If you remain in good health, very likely the insurance companies will accept your application at standard rate. If you health condition is not favorable, you need insuance more than other people do, you only hope your insurance application does not come too late and the insurance company would still accept your application.

Posted: 06 Aug 2008 03:27 Post Subject:

This is an interesting topic. I worked at two "captive agency" (career) life insurers before becoming independent. Both had Guaranteed to issue products available for sale. There were a few (less than ten) medical questions to answer and qualify.

I remember training sessions where the concerns raised in this thread were raised to the trainers (sales managers and product specialists). After being pressed by concerned agents we were told that it was possible that some underwriting could be done at death. We were also told that we could not give ANY advice on how to answer the questions (which were open to some interpretation). For example - what is a heart condition? What is a lung condition? Have you ever had ....?

Anyone buying these products are well advised to read the terms and conditions carefully, and ask their Doctor to help them fill out the form.

The easiest way to buy may be the most costly in the long run.

Just my 2 cents

Posted: 10 Nov 2009 07:16 Post Subject: No Exam Life Insurance

Already been there..done that. They will make you authorize a query to the MIB, which is a clearinghouse of medical info. If you were ever denied inurance or have one little tiny issue on a blood test, it will show up.
You will be denied. Dont get suckered into no exam policies. Just a waste of time.

Posted: 22 Feb 2013 10:09 Post Subject: life insurance no medical

Really no medical life insurance is the best way to get affordable insurance protection. This plan will help us to get insurance protection quickly and peoples who have some health related issues they all people find this very comfortable.

Posted: 14 Mar 2013 09:57 Post Subject:

Currently lots of life insurance policy available online and no one online policy required any health certificate.

Posted: 14 Mar 2013 12:37 Post Subject:

no one online policy required any health certificate.



Are you sure?

Posted: 15 Mar 2013 01:34 Post Subject:

No exam life insurance is not the same as guaranteed issue life insurance.

It is a terrible choice for most people. If one has serious health issues, they most likely will still get turned down. If they don't have serious health issues, individually underwritten policies are much cheaper.

In general, these policies only make sense for a person who is unwilling to get examined for one reason or another. Often these policies are used by people who are planning on not being honest on the application. For this reason, the assumption is that the person buying the coverage is not healthy. Therefore, the price is much higher.

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