Companies supplying no medical life insurance
Over the years, life insurance companies have evolved considerably from their original forms in terms of the kinds of products some are offering today. The most noticeable change relates to the creation of the permanent life insurance with a so-called cash surrender value. Life insurance companies that have strayed away from offering traditional no medical term life insurance now function, more or less, like a savings or investment vehicle that needs to collect extra premiums in order to fund their related savings or investing activities in building up a cash value reserve for future surrendering. Moreover, in some cases the death benefit on the insurance part is not guaranteed, depending on what happens to the funds investment performance.
Can you get life insurance with no medical exam?
But as we know, all life insurance started out as term insurance, rather than permanent, that would cover a pure death benefit for a specified period of time, that is, to insure the risk of an unexpected death that might happen during the term insured. It has been argued that the need for a life insurance is more about the assurance of a death benefit on an untimely death of the insured, as offered by traditional life insurance companies, and less about any monetary interest left by someone's eventual, old-aged passing, as promoted by "modern" life insurance companies. In fact, many permanent life insurance policies are cashed out earlier for a cash surrender value, the return of the savings or investments that policy holders have accumulated in the form of their own overpaid premiums, plus growth, if any. And that effectively cancels the life insurance policy and forgoes the base premiums paid for the insurance part, benefiting companies that actually sell investment products in the form of a modified life insurance, namely the permanent type, as opposed to term life insurance serviced by genuine life insurance companies.
Most financial advisors suggest that their clients should separate insurance needs from investment needs, that is, buy the inexpensive term life insurance from a traditional life insurance company and invest the premiums saved with a professional investment management company, such as a mutual fund. Life insurance companies offering permanent life insurance or no medical life insurance mostly the savings-like whole life insurance and the investing-like universal life insurance, are in fact left no choice but to engage in managing savings and investments in order to cover everybody with an eventual death benefit, should the policy holder decide never to cash out, whereas a term life insurance pays out a death benefit only upon the filing of a death claim during the term. As such, not only premiums paid on a permanent life insurance are much higher than those on a term life insurance, but also the premium-funded investments as managed by these life insurance companies likely will not perform as well as those handled by professional investment managers at investment companies.