Turned Down for Life Insurance? Here’s What to Do Next
February 14, 2022
If you’ve ever applied for life insurance and your application was not approved, you may think you are out of options. That’s not necessarily the case. Having your application rejected does not mean you can never get life insurance. Ahead, we discuss the common reasons for such rejections, as well as how and when to re-apply.
Why applications get declined.
The first step is understanding why you may have gotten declined. The most common reasons insurance companies deny an application for life insurance revolve around a perceived risk in insuring that particular person, such as health issues or a lifestyle and habits that suggest a higher risk of early death. An insurer may decline coverage for you for the following reasons:
- A health condition is discovered during a medical exam (some applications require medical exams).
- You have a pre-existing medical condition, such as cancer or heart disease.
- You are applying for too much insurance. That may mean the death benefit is out of proportion with your income. Or maybe you already have adequate life insurance, or you’ve applied for several policies within a short time frame.
- You had false information on your application. Insurers may consider you a risk if you misrepresent information on your application.
- Your driving record includes speeding tickets, DUIs, or other violations.
- You participate in certain hazardous activities such as motor vehicle racing or skydiving.
If your application is declined, be proactive. First, review your application answers and medical exam results to confirm that you answered everything correctly and that medical and background information is accurate. Contact the insurer (or the agent/advisor if you are working through one) to resolve any inaccuracies. In most states, insurers are required by law to explain why an application was declined. If after hearing from them you still are not approved, you’ve still got options.
Check how soon you can re-apply.
Simply trying again may be all you need. In certain situations, you may be able to solve the issue for which you were denied and reapply for the same policy after a certain waiting period.
Depending on the reason your coverage was denied or postponed, you can lose weight, stop smoking, take driver training courses, or wait until enough time has passed that the insurer does not factor past issues into its decision. Check with the insurance company to see how much time you need to give it. While this may take time (typically, most insurance companies will not insure you for at least two years after denying your application) it may result in your getting approved for a policy.
Apply for Guaranteed Issue Life Insurance.
This option may appeal to someone with a pre-existing condition as it does not require a medical exam or health questions. These policies do include a waiting period, typically two to three years. If you die during that time, your beneficiaries don’t receive the death benefit—but they will be repaid all of the insurance premiums you paid, plus interest. Insurers include this waiting period to prevent people who may be close to death from applying. Especially for those who can’t otherwise get life insurance, guaranteed issue insurance can be a solution.
Consider a different insurance company.
The fact that one insurer rejected your application doesn’t mean another won’t approve it. Every life insurance company uses its own risk formula in deciding whom they approve for a policy. So while one may adhere to very strict risk guidelines for health, another may have a lower risk level or require fewer, or even no health questions or exams. And some insurers have special programs that insure people despite a history of certain conditions such as breast cancer or diabetes. Do some research and find out if any insurers offer programs that will work for you.
Don’t forget life insurance through the workplace.
Be sure to take advantage of any group life insurance available through your job. Commonly offered by employers as a low- or no-cost benefit, group life insurance automatically qualifies you for a certain amount of coverage, typically one to two (or sometimes up to three) times your annual salary. While an employer group policy alone generally does not provide adequate coverage, it’s a good place to start. At the very least, it provides a partial sense of security until you can be approved for a policy that brings your overall coverage in line with your needs.
Don’t give up.
Having your life insurance application declined is disappointing, but it doesn’t have to be the last word on the subject. The protection that life insurance can offer your loved ones is too important not to pursue. And the insurance industry has evolved over the years to create opportunities to insure more people than in the past. Yes, some people may never be approved, but most can find coverage if they explore the options.
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