Life insurance companies use a process called underwriting to determine premiums and overall eligibility. Underwriting is the process used to evaluate and determine the risk of insuring someone or something.
Each insurer’s underwriting guidelines vary, which means that if you are rejected from one insurance company you are not necessarily disqualified for life insurance elsewhere. When someone is denied life insurance it is typically because they are categorized as high-risk. This categorization is often associated with health challenges the individual may face such as diabetes, obesity, or a previous diagnosis of serious disease.
Individuals can be denied life insurance for non-health-related reasons. Engaging in risky hobbies and behaviors like skydiving; having a history of DUIs or speeding tickets; having a dangerous job like roofing; having a criminal record or a less than ideal financial history; being a smoker, and failing a drug test are all reasons that people could be denied life insurance.
Why was your application denied?
The most common reasons for a denial of life insurance include chronic illness and/or lifestyle tendencies.
Chronic illness. If you’re suffering from a persistent illness at the time you apply for life insurance, the insurer may decline your application. Your chances of acceptance may increase if you can prove that your illness is being treated through an attending physician’s statement (APS).
Conditions can consist of but are not limited to the following:
• Anxiety or depression
• Asthma
• Cancer
• Diabetes
• Heart disease
• High blood pressure
• High cholesterol
• HIV and AIDS
• Obesity
• Parkinson’s disease
• Sleep apnea
Lifestyle. Smoking or other nicotine use, skydiving, or a history of alcoholism typically does not automatically disqualify you for life insurance, however, your premium will be significantly higher than those individuals who are not deemed to have a “risky” lifestyle.
What are the next steps if you are denied?
If you are denied life insurance regardless of the explanation of eligibility here are some next steps to take:
- Contact your agent. Contact your agent or the insurer to inquire about your denial for life insurance they will give you insight as to why you were denied.
- Confirm the results. If illness or poor health was the determining factor for denial, you should check in with your doctor to confirm the results.
- Consider appealing. If you’re denied life insurance on the basis of incorrect or insufficient information, you have the right to appeal the decision. You’ll have the best chance of winning your appeal by submitting timely and complete information, specifically from professionals.
Getting life insurance after being denied coverage.
- Apply with a different insurer. As mentioned above each insurer applies different criteria to their life insurance approval process. Therefor the next insurer may not deem you ineligible for the life insurance coverage you are looking for.
- Workplace life insurance plan. Your employer may offer you to obtain coverage through a group life insurance plan. This type of plan may not provide you with the life insurance level of coverage that you want, however, some level of life insurance will be better than no level of life insurance. Additionally, most group life insurance plans typically do not require you to undergo a medical exam prior to approving you for insurance.
- Try again later. If you are denied life insurance, you can use a waiting period to fix or eliminate any conditions that may have been the cause of your denial. You can quit smoking, focus on your driving record, and improve your finances. An insurer that sees progress in these areas is often more likely to offer you life insurance.
Contact us if you have questions regarding your current life insurance policy or if you would like to discuss a possible life insurance policy.