How Buying Term Life Insurance in Massachusetts is different than other states
Buying Term Life Insurance in Massachusetts is much like buying in many other states except for a couple of minor quirks.
The majority of smaller life insurance companies do not operate in MA.
Though this may sound like a bummer at first, for term insurance it’s not much of a big deal. Smaller Life Insurance companies tend to offer term coverage with smaller death benefits. Though their underwriting process tend to be more lenient and less of hassle, they are usually more expensive.
Disability Riders are not offered.
A disability rider is an added benefit to a term life insurance policy, that pays a set monthly income should the insured become disabled (short or long term). The state of Massachusetts prefers that the insured buy a separate disability policy. While that be more expensive, it’s usually a more comprehensive coverage.
Some companies do not offer electronic applications
Paper applications will soon be history within the life insurance industry. However, companies who offer electronic applications, sometimes have to wait for an approval from the state of MA. We expect this issue to be solved within the next few years as e-applications will soon be the norm.
What this means to you
None of these factors should stop you from obtaining Life insurance for yourself. These are minor nuances that come from doing business in the state of Massachusetts. It’s more of an obstacle to the insurance agent than it is to the consumer. It means that your insurance agent must work that much more to make sure you get the correct coverage. Below is a mini guide to help you in your search for Term Life Insurance.
The 3 types of Term Life Insurance
At Boston Life Group , we typically work with Massachusetts residents with moderate to severe medical conditions. These type of clients need more assistance from life insurance agents like us. However, for the healthy folks with mild conditions, the key is to know the three different types of term life insurance and find out which one will best suits you.
- Fully Underwritten
- No Exam Term life insurance
- Simplified Issue Term life
If you understand the purpose of these types of coverage, you will know how to shop for the best price. Each of the types mentioned above, have their pros and cons. Without further adieu, here’s how to take advantage of each of these policies.
Monthly Premium for a female in average health seeking a 20 year term insurance for $250,000
|No Exam Term||
Simplified Issue (the easiest and quickest)
Simplified issue as the name implies will result in the smoothest buying experience for life insurance coverage. The questions are minimal compared to other types. The insurance carrier will check for your prescription history, and their shared medical information database. Many health conditions are overlooked if there has been more than 2 years since diagnosis or treatment. The more serious health conditions like cancer might have a 5-7 year waiting period. Carriers are pretty upfront to your agents as to whether or not you will qualify. They either accept or decline you based on your condition. There are rarely multiple health classes.
Your policy is usually issued within a week. You won’t have to go through a blood test or medical exam.
The Catch is that for this simplified underwriting process, you will have to pay more per month than the other 2 types of term life insurance policies. Insurance companies have to take more of a risk because they haven’t taken your blood profile, they realize that you might be somewhat healthy but they haven’t done enough investigation to know how healthy. Therefore they will have to charge you more.
This type of term life policy is great for someone with a pre-existing condition that the insurance carrier looks at favorably. For example, there is a carrier who will accept anyone who had prostate cancer treated over 5 years ago. As long as the cancer is in remission and hasn’t needed any additional treatment over 5 years. They will issue a policy. Whereas an underwritten policy would require a statement from your doctor and further proof that you’re doing ok, the simpliefied issue just wants to make sure that your cancer is gone.
No Exam Term life insurance policy (The happy medium)
No exam term life just like simplified issue does not require a blood test or a physical exam. The difference comes with how the insurance carrier investigates your eligibility. Although you don’t have to take an exam, if the insurance carrier sees that you have a condition that is concerning, they may require additional info from your pirmary care of your specialist. For example, take the prostate cancer example above: the insurance carrier will most likely issue you a policy after 5 years but they want to make sure you have been following up with your doctor and that your PSA levels are current and favorable. They will ask to see your records. Premiums can be much less than the simplified. As a matter of fact, here is an example of a quote from a company who has both a simplified and a no exam policy. 35 year old female looking for $250,000 over a 20 year term.
$31 / month for the no exam
$46/ month for Simplified Issue.
The catch: It takes longer to get approved 1-2 weeks for many cases. And 4-8weeks if they have to order your medical records. This is great for someone who wants to get term as cheap as possible without going under the needle. Many of our clients fear that the examiner will find out that they have another issue by going through that process. So they elect to go with the No Exam Policy
Fully Underwritten ( the cheapest)
Fully underwritten term life will definitely be the most affordable of the 3 options. If you’re willing to go through an extensive underwriting process, and everything comes back perfect, you will be rewarded with a low rate. This is ideal for healthy people, who have had recent physicals. This is also ideal for people who already have life insurance coverage but want something more affordable. Even if the results come back unfavorable, you already have coverage, so it doesn’t hurt to go through the process.
This category also offers affordable life insurance for the Super Healthy. Most insurance carriers refer to this as Preferred Plus. This health rating is rarely available for No Exam policies.
The Catch: As previously stated, this types of life insurance will require you to go through a full medical exam process and takes 4-8 weeks to issue. Because of the exam process, you run the risk of the insurance company finding out about a new health issue that you were unaware of. This is why we usually don’t recommend this type of term insurance for people who usually skip their annual physicals.