“No exam” life insurance
Lonnie Brooks
Lonnie Brooks helps high net worth individuals accumulate, maintain and pass on wealth.
I’ve received three offers for “no exam” life insurance recently. Here’s why I shred them immediately.
Rates for life insurance policies are based on actuarial studies. These studies can forecast with great accuracy how many policy holders will die in any given year and how much the insurance company will have to pay out in death claims. The company can then calculate how much each policy holder should pay in premiums.
The actuarial studies come up with different results for people who have health issues. Death claims will be higher for people who have heart conditions, diabetes or any number of medical conditions. Therefore, premiums will need to be higher for these people.
Companies have set up “rate tables” for people who have certain types of medical conditions or are healthier than the average person. They start with “standard” for the person who has an average health profile. People with medical conditions fall into Table A through H depending on the severity of the condition. They pay higher rates. People with better than average health – a clean physical, ideal blood pressure readings, no family history of medical issues, marathoners, etc. get preferred or preferred plus rates.
When you see a “no exam” offer, the company knows that a certain percentage of those applicants will not qualify for standard rates. Therefore, they charge everyone who applies Table B or C rates. Unless you’ve already applied for life insurance and been told that you are uninsurable, don’t go for the “no exam” offer.
If you need life insurance, find an independent broker and shop for a competitive policy. If you are buying term insurance, I suggest an online broker - Policygenius.com. Permanent insurance is much more complex and life insurance agents may be conflicted because they are paid commissions. I recommend that you use an independent insurance consultant to work with your agent.
Contact me if you have any questions.
Lonnie Brooks CFP?, AEP?, ChFC
Disciplined Equity Management, Inc.
200 First Street, Suite 204
Neptune Beach, FL 32266
(904) 222-0280 Office