Non-Medical Life Insurance Myths

Myths permeate non-medical life.

Non-medical life insurance policies are often misunderstood. The following are five of the most common non-medical life insurance myths:

Myth 1. Non-medical life insurance means that there are no medical tests or health questions. Non-medical life insurance policies are broken down into two categories, guaranteed issue life insurance, which has no medical tests and no health questions, and simplified issue plans, which have non-medical tests and three to 12 health questions.

Myth 2. All no medical life insurance plans are priced the same or very similar. Guaranteed issue policies are generally much more expensive than simplified issue policies, and even among simplified issue policies, there can be sharp differences in premiums -- often up to 50% or 60%.

Myth 3. All no medical life insurance policies have a two year waiting period on the death benefit. All guaranteed issue policies have a two year waiting period on the death benefit -- meaning that the death benefit is limited to a return-of-premium plus interest for non-accidental death in the first two years. Some simplified issue policies pay out immediately. Both Assumption Life and Canada Protection Plan offer immediate pay out on their simplified issue, non-medical life insurance plans.

Myth 4. The base amount on non-medical life insurance policies is very small. While the face amounts available on non-medical life insurance policies are less than traditional life insurance policies, the issue limits have increased in recent years and it is possible for the insured to get up to $250,000 in coverage by combining coverage with multiple carriers.

Myth 5. Females and males, along with smokers and non-smokers, all pay the same rate on non-medical life insurance policies. While some companies price males and females and smokers and non-smokers at the same rate, most companies now distinguish between male and female rates and between smoker and non-smoker rates. If you are a non-smoker, it's very important that you get an insurance company that distinguishes between the smoker and non-smoker rates, otherwise you will be paying a higher premium than you normally would.

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