Is It Safe to Buy Term Insurance Without a Medical Test?

What are Term Insurance Plans with No Medicals?

The term insurance policies that require no medical checkups are called no medical term insurance policies. Generally, traditional term insurance requires a medical examination, such as an ECG, blood tests and a physical examination. In non-medical term insurance plans, insurance companies issue the policy based on:

1. Existing health records, if any
2. Health declaration signed by the applicant
3. Lifestyle information in the application
4. Occupation and income details

However, insurance companies may not offer a higher sum assured to customers after assessing their risk profile based on the details provided in the application.

How Do No-Medical Term Insurance Plans Work?

Let’s say Amar, a 35-year-old engineer, opts for an instant no-medical term insurance plan with INR 50 lakhs cover. He filled out an application form online that included lifestyle habits, income, occupation details, and a health declaration. The insurance company’s underwriting team evaluates his profile based on occupation, age, income level and health history as declared by him. The policy with an INR 50 lakh cover was instantly issued.

Let us assume he develops a common health problem (lifestyle-related) sometime. What are the hidden risks his family may face if a claim arises?

If the insurer finds earlier signs of undiagnosed conditions in digital health records, old prescriptions, or pharmacy purchase history, they may investigate whether these existed during policy purchase. If the insurer thinks that health information was not disclosed or misrepresented, getting the claim settlement can become difficult. As per IRDAI, a higher percentage of claims are rejected due to misrepresentation or non-disclosure of health information.

Undiagnosed lifestyle-related medical conditions like hypertension and diabetes, specifically in people below 40, are rising. Hence, medical underwriting is extremely important for term insurance to ensure to avoid hidden risks during claims.

Hidden Risks in Term Insurance Plans with No Medical Test

The following are the hidden risks involved in availing the term insurance plans with no medical tests:

Lower coverage:

Most insurance companies issue instant term insurance policies with no medical check-ups for only up to coverage of INR 1 Cr. Higher coverage increases the potential claim risk for the insurance company. Higher coverage policies are issued only after medical check-ups.

High chance of claim rejections:

There are greater chances of rejection of claims in non-medical term insurance policies. The main reason is the insurer’s reliance on self-disclosure and limited information for risk profile evaluation. Minor treatments, lifestyle habits like a sedentary lifestyle, past and existing symptoms, may get misinterpreted or considered as non-disclosure of important information. This may become one of the reasons for claim rejection. Undiagnosed medical conditions like hypertension, fatty liver, thyroid, diabetes, etc, can work against you. Insurance companies may scrutinise your claims on these grounds too.

High premiums:

Insurance companies may charge relatively higher premiums due to the higher risk involved in the no-medical term insurance plans.

Rigid conditions for early claims:

Insurance companies may also include strict terms and conditions for early claims in a term insurance policy with no medical tests.

Important Things to Consider While Buying Term Insurance Plans Without Medical Tests

The following are the key factors and important things to consider while buying non-medical term insurance policies:

Health profile and age:

Health and age are important considerations. If you are below 30 years of age (young age) with no suspected health condition, instant term insurance may be a convenient and safe option for you. However, if you are in your late 30s and 40s, the claim risk increases, and it is good not to skip medical tests while buying term insurance. Non-medical term insurance policies may have restrictions in offering valuable add-ons like critical illness cover.

Coverage:

As most insurance companies do not prefer to take high risk without medical tests, you may not get the desired coverage in instant term insurance policies without medicals. Always consider your coverage requirement while buying a term insurance policy.

Risk of high scrutiny and claim rejections:

When insurance companies depend on the sole declaration without any medical baseline, they may put the claim under high scrutiny. In many cases, non-disclosure of previous hospital visits, occasional blood pressure spikes and other minor health conditions or symptoms can lead to claim rejections.

Lifestyle:

Your lifestyle habits shape your future health. Sedentary lifestyle, chronic stress, drinking alcohol and smoking can affect your policy coverage and cost. Ensure to consider that, especially when you buy term insurance without medical tests, as the insurance company may put you under a higher risk bucket and charge you a higher premium.

So, is a term insurance policy with no medical test a safe one? It is safe in some situations. If you are a young applicant and in good health, requiring a lesser coverage, then it can be a good and safe choice. However, for higher coverage and long-term security, going with term insurance with medicals is good as it removes ambiguity.

At Jio Insurance Broking, you can buy both no-medical term insurance and medical term insurance policies as per your needs and suitability. You can compare term insurance policies from various insurance companies, their features and cost to make the right choice.

Conclusion

To conclude, it is important to consider every key factor when you are making an important financial decision. Convenient instant plans may seem tempting, but it is important to analyse the hidden risks that come with them. Evaluate your needs and understand your future requirements to buy the best term insurance plan that can provide adequate financial security to your family in difficult times.