I am not a big fan of “no exam” life insurance simply because when you are going to lock in 20 or 30 year term insurance it just seems prudent to do an exam and get the best possible rate you can. After a talk with one of my nieces the other day I am ready to back off of that advice for younger people.

The discussion we had pitted my advice that long term savings were more important than short term convenience. From her side she said that for herself, and she thought her friends, the exam was definitely not something she wanted to do if she didn’t have to (ah, to be young and not care what your cholesterol is, or that you even have liver functions). She also was liking the ability to apply, get fairly instant approval and pay with a credit card online.

She’s 27 and in good health, but likely preferred due to weight, so I ran some numbers for her. She wanted to look at $100,000 of 30 year term. The best rate out there was just over $12 a month. I then showed her the best simplified issue price at $16.50 per month, about $55 a year more. She wasn’t swayed by the $1500 she would save over the life of the policy. She was convinced that for herself and her friends quick, convenient, online payment and no exam was worth a few dollars a month.

She then also made a point about the future. Even though she would prefer to take this route now, when she has children and a mortgage, she will likely want a higher amount of insurance and at that time would be willing to do an exam to lock in a better rate, so she might only have this policy for 5 to 10 years. And if that’s the plan, when she does apply for the larger policy, she can replace the RBC Express Term policy.

Bottom line. I was 27 once and I can remember having that same kind of logic in my thinking 30 years ago when I was. So, I officially back off of part of my position on simplified issue, no exam term life insurance. I still believe that at about age 40, unless you are just in a screaming hurry to get life insurance in force, simplified products just aren’t a prudent choice. Before that, if you can live with the same logic as my niece, well, why not. It’s still real guaranteed level term life insurance.

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