How can any company offer Life Insurance without any medical exam? Is there a catch?

Question

Say I just found out I have a few months to live. I sign up for 150k life insurance. How much will my family actually get in case of death?

I heard withinn 2 years they have a limit. But what are they? How can a company stay in business unless there is a catch against this. Anyone know?

What checks do they do once you file a claim? Do they interview your doctors, family?

Answer 1

Generally there are a couple of 'catches' that Insurance Companies use to prevent this type of problem.

1. Term limit - Generally there is a HUGE limit on pay out during the first two to three years. Some have a set limit of pay out.. some have a sliding scale that pays more as time progresses.
2. Pre-existing Clause - Most policies have a clause that states if the insured has a pre-existing condition that was know to them and the generally expection is that it to be fatal, then payment would be greatly reduced or declined all together.

Combine these two clauses and in your secenario your family would probably get a percentage of what you've paid in (ie you lose money) or the at the most a very small amount over what you have put in.

These type of companies make a good profit from people who sign up.. pay a month or two... then forget to make a payment or pay late and the company drops them but keeps what they've paid in.

Hope this helps!

Answer 2

The prior answers (esp the first one) are correct.

Think about it. An insurance company is on the line for a large sum of money when someone takes out a life policy. The insurance company wants to know that that person, the insured will live a long time.

If I am applying for insurance, I want to prove to the insurance company that I will live to 200 to get the best rates. If I am overweight, smoke and have a health problem, I am not going to get the cheapest policy.

If you sign up for a policy knowing that you have only a few months to live, the company will likely cancel your policy at your death and refund the premiums paid. READ the application and a sample policy.

Answer 3

when you signed for your life insurance, maybe you did not get a medical exam because your coverage was not too high but, you had to answer few medical questions, if you answer them truthly and they approved you based on your answer they have the responsability of paying the lumpsun; if the insurance company finds any proove of illness or deceise that you did not toll them before they give you the approval of the poliza, what could happen is that they maybe refund you all the monthly primiun that you paid for your poliza only but not the coverage you get.

If you can prove medically that you are about to died, you can request an advance of your coverage, most likelly is a 40% of your coverage.( apply only on Universal or Term life insurance)

there are basecly 3 tipes of life insurance

1. Accidental life insurance.- you have to died in an accident instantly, because if they found you alive and them in a short time you died them it became to be a natural death, not an ancidental. This tipe of insurance has very low premiun for a big coverage, but the catch is that according to the estadistics, about 1% of the peaple died instantly in an accident, therefore they do not have to paid to the others 99%.

2. Universal or whole Life insurance.- It is protection Plus savings in one plan. Covers all tipes or death, but suicide after 2 years, and they manage an investment account for you. Depending on the amount you get coverage they request you a medical exam.
The disadvandages of this plan is that you don't have control of your money, they control it . Ex: let say you had this plan for 10 years and now you need to take money from your Universal life insurance plan(investment account), they only can advance you 80% of what you have on your investment account but the worse part is that you have to pay it back with interest of about 8%, meaning they are loaning you from your own money and the are charging you for it. Now why they do that, it does not make sense, well they will tell you that all the money you are paying are for you; but you will get the money without any condicions or penalties once you reach 95-100 years old which means your whole life.

3. Term life insurance.- insurance your life for the period of time that you decide, I belive there are options up to 35 years, but it depence of your age and health. It also coverage all tipes of death, but suicide after 2 years, and also requirer a medical exam if the coverage is too higth. this type of insurance is

I hope you don't have a accidental life insurance. Best wishes.

Answer 4

1) I believe there is a catch. If there's no medical exam involved, then the company is probably charging you lots of premiums.

2) In case of death, your family will receive $150,000 in coverage minus any miss premiums and any loans borrowed from cash value.

3) They stay in business by charging lots of premiums. I don't know what limits are you talking about. Can I have name of the insurance company?

Answer 5

You can buy "guaranteed issue" life insurance. You pay a very high premium for it and usually there is a significantly reduced benefit if you die within the first 2 years.

For "regular" life insurance, there is a 2-year contestability period. If you die within the first 2 years and you failed to disclose illnesses on the application, the insurance company can contest the death claim and rescind the policy.

Answer 6

some have a waiting period, but some don't. the reason they can do it without a medical exam is because they charge more for premiums. there might be a catch though...some of them ask you medical questions that if you lied about could be easily found out.

Answer 7

It's basically a numbers game. There will be individuals who will be unhealthy or die in a short period of time. However, with a large group they know statistically what percentage are likely to die within 2 years, 4 years, 6 years. etc...

They set their rates based on those averages.

Answer 8

It can vary 100 different ways. You need to read all the fine print in the contract you sign. A better idea would be to take it to a lawyer and have them go over it.

Answer 9

Honey, there is a catch for everything. Just make sure you read, read, read.