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Nobody likes to have their application denied for anything they want, whether it be an application for a credit card, a job, or something else important for their family’s financial future. With that in mind, what happens if you’re denied life insurance?
Jump ahead to these sections:
- Can You Be Unsuitable for Life Insurance?
- How You Can Fight a Life Insurance Denial
- What Else Can You Do After a Life Insurance Denial?
- Popular Life Insurance Alternatives
Unfortunately, millions of people have their applications denied each year when they apply for life insurance. Like all businesses, life insurance companies have to turn a profit, and they do that by insuring people that they believe are a “good risk.”
If you’ve been denied life insurance, don’t give up hope that you’ll be approved for coverage now or in the future. This article will give you tips on following through after a denial and getting the protection you and your family need. Although it won’t be easy and will take time, it can be done.
Can You Be Unsuitable for Life Insurance?
Is it possible to be unfit for life insurance? Unfortunately, life insurance companies can deem you unsuitable for life insurance when you apply. These are the most common reasons life insurers deny applications:
Physical health factors
These are three health conditions that will typically keep you from getting approved:
- Obesity: As of 2021, the obesity rate in the U.S. is 42.4%, and it continues to rise. It’s significant because it’s a major cause of heart attacks and strokes, which costs life insurers billions of dollars in claims annually. If you think your weight might be a problem area for you when you apply for a policy, have your agent research different companies and their height/weight guidelines before applying to find those that might be more inclined to insure you.
- High Cholesterol: Another common reason for denials is unacceptable levels of cholesterol, lipids, or triglycerides in your blood. Your total cholesterol is determined by the ratio of high-density cholesterol (HDL) and low-density cholesterol (LDL). HDL is known as “good” cholesterol, and LDL is “bad” cholesterol. The wrong ratio increases your risk for heart disease and stroke.
- Diabetes: High blood glucose/sugar levels are also a primary reason you can be denied life insurance. They indicate the possible onset of diabetes or that you already have diabetes. Some companies are more lenient regarding diabetes, so ask your agent to apply to these companies if diabetes is an issue.
Chronic illness
If you suffer from a chronic illness and apply for a life insurance policy, your application for a standard life insurance policy will probably be denied. Chronic illnesses include:
- Cancer
- Asthma
- HIV/AIDS
- Diabetes
- Heart disease
- Parkinson’s disease
- Alzheimer’s disease or dementia
Providing a doctor’s statement or medical records attesting to the treatment and stability of your illness may make some companies more comfortable insuring you.
Age
Yes, life insurance companies discriminate against age. Older adults will find it more challenging to find good protection at affordable premiums. Statistically, the older you get, the more health problems you’ll develop, making you a higher risk applicant for the insurance company, which they avoid.
As it is with most types of insurance, like health and disability insurance, it’s better to apply for coverage when you’re young and healthy. Still, there are options no matter your age.
Blood or protein in your urine
When applying for permanent or term life insurance coverage, having a medical exam is almost always required. This includes providing a urine sample. If the lab results indicate the presence of blood or protein, this can cause your application to be denied.
Blood or protein in the urine can be caused by either extreme physical activity or kidney disease. If you exercise strenuously before providing your initial urine sample, have your doctor take another sample and have it analyzed, but this time don’t work out beforehand. If it comes back normal, submit those results to the insurance company for reconsideration.
Alcohol abuse
Another procedure the paramedic performs as part of the medical exam is drawing blood. Based on your sample, insurers can tell if your alcohol consumption level is higher than levels they find acceptable. If it is, chances are good you’ll be denied coverage.
Hazardous occupation
Some occupations are riskier than others, which means more death claims payments for the insurer. Some jobs they consider to be hazardous include:
- Airline pilots and flight engineers
- Fishers and related fishing workers
- Roofers
- Loggers
- Refuse and recyclable material collectors
- Structural iron and steelworkers
- Farmers, ranchers, and other agricultural managers
- Construction laborers
- Truck drivers
- Electrical power-line installers and repairers
- Police, highway patrol, and sheriff’s officers
If you earn a living through one of these occupations, check out life insurance for members of an association or union for your profession.
Financial reasons
When applying for life insurance coverage, your financial condition can also affect your insurability. For example, if you have a poor credit score and a history of bankruptcy (personal or business) an insurer will be more likely to deny your application.
Previous denials
Finally, life insurance companies provide information to an institution known as the Medical Information Bureau (MIB). This information includes your health history, prescription medications you currently take or have previously taken, and how many life insurance companies you’ve applied for coverage with. It counts against you heavily if your MIB report shows you’ve recently applied for policies with other life insurance companies and your applications were denied.
These are some reasons you could be considered unsuitable for life insurance coverage. It may help to use the services of an independent life insurance agent who represents various life insurers. They can often match your situation with companies known to issue policies to applicants with similar circumstances.
How You Can Fight a Life Insurance Denial
If you’ve been denied life insurance and you feel the decision by the insurer was a mistake, don’t give up immediately upon learning of their decision. Here are some steps you can take if you’re denied life insurance:
- Contact your provider: Contact your agent or the insurance company directly. Find out the specific reason(s) you were denied coverage, and make sure a mistake wasn’t made on the application you submitted. Confirm the results. If the insurance company cited a health issue you’ve never been told you have, see your doctor and make sure there is a legitimate reason for you to be concerned.
- Appeal: Appeal the decision. If your application was denied based on insufficient or incorrect information, you have the right to appeal the company’s decision. Your chances for a successful appeal increase if you submit new information in a timely fashion.
New information can include doctor’s records, recent and credible information concerning your personal history like your driving record or credit report, or updated information about your occupation.
Keep in mind that life insurance companies make money by accepting applications, not denying them. They want to insure you if possible, so don’t be afraid to contest a denial if you have a legitimate reason to do so.
What Else Can You Do After a Life Insurance Denial?
In addition to talking with your agent or the life insurance company, here are some other things you can do after your application has been denied:
Make lifestyle changes
To begin, if your medical exam came back with negative results concerning alcohol or drug use, cut back, abstain, or seek treatment. If your weight caused the denial, start an exercise program and modify your diet. Many insurers will postpone your application to a future date, which can be six months or longer, depending upon what caused the denial.
Consider group insurance coverage
Another option is to check out group life insurance where you work: many companies offer group life as an employee benefit. Most group life plans don’t require you to undergo a medical exam, and they’re very liberal with their underwriting practices. You may not be able to get as much coverage as you’d like, but some life insurance is better than no life insurance.
Shop around for coverage
Next, apply with a different insurer. Every life insurance company has different underwriting standards and criteria when evaluating applications. Try applying with other companies before you give up hope. It’s an uphill battle, but you won’t know if another insurer will cover you unless you try.
Look for a different policy type
Finally, Consider a different type of life insurance policy: if you applied for a traditional permanent or term life insurance policy and were denied, there are two other types of life insurance you should consider: simplified issue life insurance and guaranteed issue life insurance.
- Simplified issue life insurance: Simplified issue life insurance will ask you a limited number of questions concerning your health, and no medical exam is required. As a result, the approval rate for these policies is very high, and you can often get coverage to begin immediately upon submitting your application. However, be aware that the face amounts for these policies are small, and they often cost more than traditional life insurance coverage.
- Guaranteed issue life insurance: This is precisely what the name implies. It’s life insurance that the insurer guarantees they’ll issue you when you apply. Not only is no medical exam required, but the insurance company also won’t ask you any questions concerning your current health or health history, either. However, face amounts are limited (typically $2,000 to $10,000), and it’s the most expensive type of life insurance you can buy.
A professional life insurance agent can help you with finding the best life insurance policy and determining how much life insurance you may need.
Popular Life Insurance Alternatives
Lastly, if you applied for life insurance and were denied, the chances are good that you were trying to provide money for your loved ones when you died to make up for your lost paycheck or help them with final expenses, like if they’ll be responsible for funeral costs.
Though these ways aren’t as effective as life insurance because it takes time for the accounts to grow and make a meaningful financial difference to your loved ones, consider:
- Fixed annuity: Another product available through your life insurance agent, a fixed annuity is a product that helps you put money aside and grow tax-deferred. All of the interest a fixed annuity earns over time is taxed partially when you withdraw it, not as it sits and compounds.
- Variable annuity: Similar to a fixed annuity, growth is tax-deferred, but your money is invested in mutual funds or other equities, and its growth depends on market performance instead of an interest rate set by the insurer like it is with a fixed annuity. Because they carry market risk, variable annuities are riskier than fixed annuities.
- Mutual fund: Finally a mutual fund or other investment: mutual funds, stocks, bonds, etc., can also grow into substantial assets you can leave your loved ones when you die. However, they are riskier than life insurance and fixed annuities because your growth is tied to stock market returns, which can be either positive or negative, meaning you could lose some or all of the money invested.
Don’t Give Up If You’ve Been Denied Life Insurance
With a little bit of effort and a few physical or lifestyle changes, you may be able to buy standard life insurance if you’ve been denied coverage. It may take time, perseverance, and patience, but many people have successfully been approved for policies after being first denied coverage.
In the meantime, consider a policy with a smaller payout, like a simplified or guaranteed issue policy. They may provide the financial cushion your family needs while you wait to be approved for a standard policy.