If you are taking out a loan,
particularly a business loan, you may find that the lender requires you take
out a life insurance policy to secure the loan in case of your premature death.
Although, many types of life insurance may work, I have found that no exam term
life insurance works best. Read on…

When applying for a loan, life
insurance is not, usually, the first thing on our mind. After all, we are just
borrowing money which already collateralized with hard assets. Why would a
lender even need life insurance?

Why do some lenders require life
coverage for a loan?

In most situations, I have seen
lenders requiring life insurance for business loans. It is very rare that a
personal require a life policy. A lender will require a life policy to
collateralize the loan to further add security that the loan will be paid off.
You may have assets that the lender may have access to on case you default on
the loan while you live, but they are do not have the same guarantees once you
ide. In some situations, those assets may revert to a third party and the
lender may become one the last one to get paid. By requiring that the loan be
collateralized with insurance, the lender has a better guarantee that the loan
will be paid off in case of your premature death.

Which insurance plans are
available to secure a loan?

The lenders main interests are
the face amount of the policy and its guarantee period. In other words, if you
take out a loan for $500,000 with a 10 year payment schedule, then the lender
would likely require that you take out a plan that is at least guaranteed for
10 years with a face amount of $500,000. For that purpose, you can use almost
any king of life insurance – term life, whole life, universal life.

Why use no exam life insurance?

In most situations, I have found
that lenders do not mention the need for insurance until the last minute, and I
mean the last minute. It is not unusually that I would get a call form a business
owner who was told by the lender that he or she has three days to secure an
insurance policy so that the loan closing can happen on time. Three days is
very short and the only type of plans that can usually accomplish that are no
exam term insurance plans. Depending on the amount needed, more than one
company may be needed as no exam plans tend to have lower face amount limits.

Which no exam life insurance
plans is best?

As we mentioned previously, the
type of plan you will need depends on your lender’s requirements. In most
situations, I have found that no exam term life works well. It is rare that a
loan last for more than 30 years. The 10 year term plan seems to be the most
commonly used. Of course, you can choose to do no exam whole life or universal
life but rates are likely to be pretty high.

Another reason, you may to do no
exam life insurance, even if you have weeks to get your policy, is your unknown
health status. If you have had medical issues then this question does not apply
and no exam life may not be an option. If you are healthy tough, you certainly
should make sure that you first secure the insurance you need with no exam life
insurance and then, if you wish, do an exam plan later. The reason you want to
do this is to avoid finding out that you have a health issue you were not aware
of during an insurance exam. If that happens, it could really complicate things
and you may not be able to qualify for any insurance. In light of that, you may
want to consider a new hybrid insurance plan which allows you to get a good
amount of no exam life now and take an exam later.

Can anyone get no exam life
insurance for a loan?

Unfortunately, the answer to that
question is no. Two main factors limit the availability of no exam life, one is
health and the other is age. As we mentioned above, if your health is not the
best, you will not likely be approved for no exam life. At least, not term life
insurance. Also as you get older, the amount available goes down dramatically.
The biggest drop happens after the age of 65 where whole life may be the only
plans available.

Do I have to stay with no exam
life insurance?

Since rates on no exam life tend
to price higher than plans that require an exam, it is not uncommon for someone
to want to switch to a regular plan that requires an exam. I strongly advise
that you do not cancel your present plan until after you have secured a new
policy. The advantage of the exam plan is, of course, the potential for
substantially lower rates. I say potentially because the final rates is really
what matters and you may not qualify for lowest quoted.

Can a no exam life insurance be
assigned?

I have yet to find a policy that
cannot be assigned to the lender. It is important that you check first with
your agent though. If the policy cannot be assigned, it will useless to your
purpose of securing your loan.

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ABOUT THE AUTHOR

Philippe Deray – About the
Author:

Philippe Deray is President and
CEO of MCD Financial Services and MCD Life. Our web site address is
http://mcdlife.com/no_medical_exam_life_insurance/no_exam_life_insurance.htm

Our focus is No Exam Life Insurance for loans

With many years of experience in
the insurance business, we have developed proprietary methods to help
individuals and businesses get affordable life insurance to cover their loan.
We offer insurance plans for all individuals including seniors to age 85. Plan
options are term life insurance, whole life, universal life insurance and index
life insurance. We will make this process as simple as possible and get you an
answer as fast as possible.