What is the downside of buying life insurance without a medical exam?

By Compuquotes Team on April 19th, 2010

Q: I like the idea of buying a life insurance policy without taking a medical exam. I'm looking for $25,000 in coverage for final

expenses. Is there any downside to buying a policy like that?

Anna, Washington

A: Yes, in one word: PRICE.

A "no exam" policy will carry a higher price tag than an "underwritten" policy for the same amount. Often substantially more. That's because the life insurance company can't fully assess its risk without the exam, so it has to err on the side of caution. If you are in good health, or even have some health problems, you're betting off getting life insurance quotes for an underwritten policy that requires an exam.

One other major downside: "No exam" policies, also often called guaranteed issue or simplified issue policies, often provide "graded death benefits," which means if you die within the first several years after you buy the policy, your beneficiaries receive only a portion of the policy's face amount.

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