I got an application in the mail yesterday from a Garden State Life It came with a (dang it) non-negotiable sample death benefit check and all of the emotional verbiage they could come up with in order to convince you to act now and don’t take time to check out the competition.

Their product is laughably called BudgetGard. They must be talking about the company budget because they get to save the cost of a life insurance exam and then turn around and provide you with a viciously overpriced and poorly guaranteed term insurance product.

Like our friends at AARP they seem to have embraced the logic of getting people into a term product with rate increases every 7 years that ends at age 80. While there is a conversion option that lasts to age 65, there isn’t any mention of what that product is or how huge the price is.

They mention in their compelling argument that “Some of those other term life plans you’ve seen elsewhere may require you to take and pass a rigid medical exam to qualify for coverage. Not so with BudgetGard. No medical exam is required!” So, what are you really gaining by not getting the free exam? A normal life insurance exam is done at no cost to you and consists of blood and urine specimens, a check of your height, weight and blood pressure and a review of your medical history.

Well, you have to answer all the medical questions for this company anyway, so that’s no big deal. If you check anything at all for health issues they have the right to obtain your medical records and everything in there is fair game for declining your coverage. Even if you say no to all the health questions they can still find information on you in the Medical Information Bureau (MIB). No exam is not code for guaranteed issue.

So, if you are moderately healthy you are far better off taking an exam that in most cases will get you better than standard rates. If you qualify for better than standard rates $100,000 of 10 year term at age 55 could cost you as little as $20 a month. If you were no better than standard it could cost you as much as $44 a month. This company’s price for $100,000 of 7 year term is $67 a month.

But here’s the real kicker. the company is underwriting you for one rate class, standard. If you are better than a standard risk you still get their standard rate. If you are worse than a standard risk they simply decline to offer coverage. If you take an exam you will get approved at the rate class you qualify for and if for some reason you don’t qualify for standard, traditional insurance offers higher rates so you can still get insurance. Here’s the other real kicker. Those higher than standard rates may very well be better than the company’s standard anyway.

Bottom line. There is no real advantage to “no exam life insurance”. It is an advertising ploy to make you feel like you’re getting away with something when the truth is that, best case, what you will get away with is a policy with terrible rates and terrible guarantees.