Non-Medical Life Insurance Myths

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 $1,000,000 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.

Myth 6. Non-medical life insurance is your only option if you have a medical precondition. This may have been true in the past, but today many insurance providers allow you to apply for a traditional life insurance policy even if you have a medical condition. People with health conditions such as heart disease or diabetes may qualify for a rated policy, which means premiums are higher than traditional policies but cheaper than non-medical insurance.

Myth 7. The premiums for non-medical life insurance are astronomical. Although the premiums are quite a bit higher than those of a standard life insurance policy, they are not necessarily astronomical and can be quite affordable.

Myth 8. You can get the same amount of coverage with a non-medical life insurance policy as you can with a traditional policy. You can increase the amount of your coverage by combining policies from multiple carriers, but in general, policies are capped at $20K-$25K per carrier.

Myth 9. Only people with medical conditions apply for non-medical insurance. This is false. Many people aren’t comfortable divulging all of their own or their family’s medical history or going through a medical exam so they may opt for a quick and easy-to-get policy without the hassle of a complicated policy with a lengthy underwriting process.

Myth 10. Non-medical life insurance policies are all the same. They are not all the same. Different non-medical policies use various questionnaires to assess risks associated with applicants. Also, the cost of the policy, coverage conditions and various other aspects differ across providers. You should always shop around or have your broker shop around for you to find the policy best suited to your needs.

Myth 11. It doesn’t make a difference where I purchase my non-medical life insurance policy. This may be the biggest, most circulated myth of all. Where you purchase a life insurance policy can make a huge difference. An insurance broker is the only one who searches various sources, across many providers for the best options for your particular situation, lifestyle and medical preconditions. Agents or contact center representatives are only able to offer a policy from the insurance company they work for, which can limit your chances of getting a competitive price.

Myth 12. Non-medical insurance can be purchased as soon as I am diagnosed with a terminal illness. This myth is true! Non-medical coverage can be purchased after you are diagnosed, but keep in mind that benefits are not paid if you die within the first two years. Typically, your beneficiaries will only receive a refund of the premiums you have paid. This clause varies from one insurer to another, so make sure you read and understand the fine print.

Myth 13. A non-medical life insurance policy is adequate protection for my family in case of my death. The coverage amount on a non-medical policy is limited to $25K which may or may not be enough coverage for your family, however a simplified issue policy offers benefits between $200K-$250K.

Myth 14. A non-medical life insurance policy can be very complicated and involves a lot of extra paperwork. A non-medical policy is much simpler than a traditional policy and easier to purchase because you don’t need a medical exam and there are no or very few questions to answer.

Myth 15. Once I get a non-medical life insurance policy, I will never be able to qualify for a traditional policy. This is false. Although medical conditions can be terminal, you may fully recover. Once you are declared healthy and your condition is considered stable, you can apply for a traditional policy. The premiums may be higher than for some people, however they will be cheaper than a non-medical policy and comes with more coverage.

For more details you can contact us at 1-866-899-4849. Visit our Non-Medical Life Insurance Quote Page.

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  • Jason
    June 21, 2013 at 9:22 am

    How much would it be for mother. She was just declined for her diabetes she is 62

    • LSM Insurance
      June 21, 2013 at 1:26 pm

      Hi Jason,

      The amount of premium would depend on your mother’s age nearest age, smoking status and the type of plan. Many Simplified Issue plans do not have have a diabetes related question.