No-exam life insurance: how it works and what they ask

What “no medical exam” really means

With traditional life insurance, the insurance company may ask you for an exam: blood pressure, weight, blood or urine tests. With no-exam coverage there are no needles and no nurse visit, but the insurance company still needs to know about your health to decide.

That is why there is almost always an application with questions. The exact questions change by insurance company and plan, and they usually cover diagnoses, treatments and medications. These are the three main types:

• Accelerated underwriting: health questions plus data from outside sources, like your prescription history. If everything lines up, the insurance company decides without an exam.
• Simplified issue: no exam, with a few yes-or-no health questions.
• Guaranteed issue: no exam and no health questions, in exchange for lower amounts and a graded period.

Accelerated underwriting: what the insurance company checks

The National Association of Insurance Commissioners (NAIC) explains that accelerated underwriting skips the physical exam and adds data from outside sources and analytic models to the application. That way, a decision that used to take weeks can take hours.

According to the NAIC, the sources insurance companies use include:

• Prescription drug history.
• Motor vehicle records (tickets, accidents, suspended license).
• Credit reports.
• MIB, a database shared by life insurance companies.
• Predictive models and machine learning.

Not everyone qualifies for the accelerated path. The NAIC notes that when there is not enough information, the insurance company may require traditional underwriting with an exam. The ages and amounts each program accepts depend on the insurance company.

What MIB is and how to see your file

MIB is an organization of North American life insurance companies. It keeps information of underwriting significance that member companies find when someone applies for coverage. That lets an insurance company compare what you answer today with what was found in earlier applications.

Not everyone has a file. According to MIB, you only have one if you applied for life insurance with a member company in the last 7 years and something of underwriting significance was found. MIB also says insurance companies cannot make a decision based on your file alone, without further investigation.

You can request your MIB file for free once a year at mib.com. If you find a mistake, you can ask for it to be corrected.

Simplified issue and guaranteed issue

With simplified issue, you answer some health questions and there is no exam. Based on your answers, the insurance company offers you a plan with full coverage from the start or a graded one. It is common in final expense insurance.

With guaranteed issue, there are no health questions. In exchange, amounts are usually small and there is a graded period, often 2 years: if death is from natural causes during that time, the insurance company returns the premiums paid plus a percentage, and if death is accidental, it pays the full benefit.

For example, Gerber Life’s public page describes its guaranteed life insurance for people ages 50 to 80, for amounts from $5,000 to $25,000, with a 2-year graded period in which, for natural death, it pays 110% of premiums. Other insurance companies have different rules.

If you qualify for a plan with full coverage from the start, you avoid the waiting period. That is why it pays to compare before going straight to guaranteed issue.

Why you should always answer truthfully

Without an exam, your answers matter even more. During the first 2 years of the policy, the insurance company can review what you said on the application. If it finds something that was not true, it can deny payment to your family or cancel the policy.

This is set by each state’s law. For example, in Florida a life insurance policy becomes incontestable after it has been in force for 2 years during the insured’s lifetime, counted from the date of issue, except for nonpayment of premiums (statute 627.455). The South Carolina Department of Insurance explains the same thing: the insurance company may contest the policy during the first 2 years.

Be careful if you plan to switch policies: according to that same department, every time you switch, a new 2-year period starts.

An answer that seems small, like a medication you stopped taking, can show up in your prescription history. Answer everything truthfully: that is what protects your family on the day they need it most.

When it still makes sense to take the exam

An exam is not a bad thing. It gives the insurance company the information it is missing, and sometimes it is what makes it possible to offer the amount your family needs.

• If you need a large amount and the insurance company does not have enough data to decide through the accelerated path.
• If a no-exam option only offers you a graded plan or a smaller amount than you need.
• If you have a controlled condition and want the insurance company to see your current results, not just your history.

A benefits consultant compares several insurance companies and tells you which path makes sense for your health and the amount you are looking for.

If you have an ITIN

Some insurance companies accept an ITIN instead of a Social Security number. If they do, the health review works the same way: with or without an exam, depending on the insurance company, the plan and the amount.

Frequently asked questions