If you are looking for a life insurance, the first thing that you should know about the insurance policy is that they can be very expensive. Therefore if you would be paying for the risk cover for which the insurer would probably not have to pay. Although in the whole life insurance policies the death claims are far between and few. In such a case the offer of no medical exam life insurance policy can be very beneficial. In such a life insurance policy there will be less information about your and so the insurer would also provide you with less favorable terms. Some other additional expenses might also seem small but the costs can be quite significant over the term of the insurance policy.
Why choose no medical life insurance
The life insurance companies are in the business of offering financial cover against the insurer’s death. However the cost or risk of life will be based on the probability of dying. An individual who is healthy and young and comes from a good family that leads a healthy lifestyle would basically hold lower risk, which means a very low risk. You should know that insurance companies generally want to keep the risks to absolute minimum, which they generally done by conducting a medical exam and by the medical history of the prospective person. When the company finds an increased risk due to some disease in the family history or some pre-existing conditions like high blood pressure, diabetes or history of coronaries or if the person smokes, partake or drinks in narcotics then they would provide a premium that would be accordingly increased. Most often these insurers will ask the prospective client to undertake several medical exams that they need to conduct. If there is a higher sum of risk then there will also be more stringent testing.
Application for no medical life insurance
The application form for a traditional life insurance will basically contain a set of questions regarding family history and medical status and lifestyle. If you opt to answer these questions truthfully then there is not much to gain by opting for this medical exam. However the insurance company might also call to gain additional information of the medical exam if there are a number of conditions being recorded in the application form. In case you lie on this application form then there are chances that you might not get paid during the process of claim. However non disclosure of material information might also lead to sacrifice the claims.
The insurers generally protect themselves against these large claims through reinsurance. The company also carries some portion of the risk with them but only from a few giant international reinsurance companies. These risks are usually managed on the basis of treaties or an agreement which is done between the reinsurer and insurer. Here the reinsurer would provide cover only when they are satisfied that the underwriting procedures are sound of the life insurance company. However in some types of life insurance there is also not need for any medical history or information. These are basically the low cost and high volume types of life insurance policies. Group life cover and funeral cover are some examples of this no medical exam life insurance.
The main reason for the high volume nature of no medical exam life insurance is due to the risk that is spread widely to avoid any anti-selection risks. With funeral cover which has low sum of risk will be coupled with low policy premiums which are easily affordable to the insured, but due to no medical exam nature they are actually expensive because of the risk. On the other hand group life insurance policy schemes are usually put in place for retirement funds. In this type of insurance mostly all the members are covered over the blanket rate without any medical exam or underwriting. This again means that the risk is spread across several people. Generally in most cases medical exam or underwriting might be required for the senior citizens and the high earners to stay out of risk. Therefore the insurer would basically have to cover all the involved risks in terms of the mortality in the general population from falling in the specific category or age group. Here you should know that, this type of group life insurance policy would involve very low or affordable costs.
However if you choose for individual life insurance policy without a medical questionnaire or medical exam then you should be careful as this type of insurance can be offered on a very high volume basis to compensate higher risks for the company. According to funeral life insurance cover the premiums might seem very low but they can actually be very expensive compared to those policies where medical insurance is required. Therefore make sure to get life insurance quotes before applying for any policy and find out about the conditions and the premiums offered by the policy.