Life insurance for a healthy 27 yo: medical exam or no?
December 1, 2013 12:36 AM   Subscribe

I currently pay $19.90 a month for term life insurance (and had some medical tests done for it, beforehand). But I can get life insurance for cheaper from other equally reputable companies ... but without a medical exam. I want to switch over, but I am worried that it might be the wrong decision.

I currently pay $19.90 a month to USAA for term life insurance. I think it's for $100,000 or something like that. I did it to make sure that my loans and bills get taken care of, if I ever meet an untimely demise. I've been doing this for about a year or so now. There was a medical test beforehand: a contractor came by my house to draw blood, measure my height/weight, etc.

But. My credit union (Logix FCU, fwiw) and also AAA occasionally send me offers for life insurance, that seem ridiculously cheap in comparison. For the same $100,000, it would only cost my age bracket about $5 or $7 a month. No medical exam.

I'm a perfectly healthy 27 yo female. Single, no children or pregnancies. Doesn't smoke, no longer drinks, no medical history, no pre-existing conditions. Pretty much the picture of health.

I totally want to go for the cheaper rate, but I don't know if it's a valid thing to go for, considering the lack of a medical exam. When I signed up for my current insurance, my research told me that the only "good" kind of life insurance was the kind that screened you with a medical exam. But NOW, one year later, my Google-fu tells me there's absolutely no difference.

Argh!! Those who have gone before me: tell me if I can safely end my $19.90 payment to USAA, and open a new policy with a company that doesn't require a medical exam (and for cheaper). My main concern is not bankrupting my family by dying in some freak accident.
posted by Xere to Health & Fitness (5 answers total)
By going with AAA or a credit union, you may be getting a group discount; it sounds like your current policy was purchased individually. A surprisingly large part of your life insurance premium could be going to sales commissions, which are typically negotiated down in a group buy. Also, it's possible the group negotiated for no medical exams.

You should make sure you're comparing apples to apples:
- is your current policy actually for $100,000 (this seems obvious, but you seem unsure...)
- are there any exclusions (sometimes the "no medical exam" comes with no coverage for certain illnesses in the 1st year)
- does the premium go up every year, or is it guaranteed level for some period (term insurance rates go up as you get older; some policies spread this out, offering a higher initial premium but not raising it every year)

FWIW I just plugged some numbers into an on-line quote machine, assuming you're from MA and are in perfect health, and dozens of options came up for $10 a month or less. So maybe you're just helping an insurance salesman with his boat payment.
posted by mr vino at 1:17 AM on December 1, 2013 [1 favorite]

My main concern is not bankrupting my family by dying in some freak accident.

If this is actually your primary concern, unless your parents have cosigned for loans or other debts with you, you have no need for life insurance. (Unless you're worried about the cost of burial/cremation.) Your debts are yours--your creditors can go after your estate, should you have one, but they can't require your parents or other relatives to pay for debts that you incurred. If you were to die with outstanding debt, any assets that you have would be sold and then used to pay towards that debt. Any remaining debt would be written off by the creditor. Some (unscrupulous, almost always third-party) debt collectors might try to convince your parents to pay things off for you, but there's no legal responsibility for your parents to do so, and almost all legitimate companies will just request the documentation about death and assets and call it a day.

That said, twenty bucks a month for life insurance for a young person in good health sounds high to me. When my partner was shopping around for life insurance, they were getting quotes at more like $15--and they're male, older than you, and not in perfect shape. Assuming that the policies are otherwise similar, your current policy sounds like it's ripping you off.
posted by MeghanC at 2:52 AM on December 1, 2013 [5 favorites]

FWIW, your policy sounds very expensive, based on what I (a mid 40s male) pay for a much larger policy. But yeah, if you are single with no dependents, really all you need is enough to cover burial expenses.
posted by COD at 6:21 AM on December 1, 2013

Seconding that your policy sounds expensive. I (an overweight but otherwise reasonably healthy 38-year-old male) just got a ten-year $250k policy for $222 / year for the next ten years. That's about $18.5 / month, but I got a small discount for paying a year at a time. Mine included the same medical exam yours did.

According to the Social Security Administration, I'm almost 3.5 times as likely to die in the next year as you are, so $5 / month for you sounds reasonable if you're in the same general health band as I am.

Also agreeing that unless you have cosigned debts with your family members, you don't need to worry about bankrupting them if you die.
posted by Hatashran at 9:13 AM on December 1, 2013

Anecdotal - I bought my term life (10y/$275k) at about 32. I am overweight but otherwise healthy (woman, no kids, no diseases, had the blood work). I'm paying about $15 a month.
posted by getawaysticks at 11:13 AM on December 2, 2013

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