Health factors

If your life insurance application has been declined, there’s no need to panic. There are many options available from different insurance companies to get coverage.

Insurance companies consider multiple risk factors in their decision to accept or reject an application. Each company has its own risk factors. For example, diabetes is a health condition of some applicants. One provider may decline you because you have it, while another insurance provider may still accept your application.

If one insurance company has rejected your application, you can apply to another company, and they may accept your application.

It is important to understand the possible reasons for a life insurance application decline and see what you can do about it.

Reasons why your life insurance application has been declined?

Health factors

There are several risk categories based on your health. Life insurance companies categorize their clients into specific categories. The reason for this is that life insurance companies want to minimize the risk of an early death. Here, they would have to payout before being able to collect enough premiums to recoup their costs.

Chris Stocker with Diabetes 365 notes, “Every life insurance company has its own set of guidelines and underwriting requirements.  One company may decline you for having Diabetes.  At the same time, insurance providers would gladly accept you.  Life insurance for type 2 diabetics is the perfect example, as there are many options for you

Risky jobs and hobbies

Each daily activity you perform carries some risk. Some jobs are riskier than others. Firefighters, pilots, flight operations personnel, and truck drivers are a few examples of people with risky jobs. You can have trouble getting coverage if your line of work involves more risk. Similarly, a risky interest in activities such as skydiving or bungee jumping could result in the rejection of an application.

Fraud

Contracts for life insurance are built on trust. This includes lying or deliberately omitting important information while applying for life insurance. 

An insurance company may instantly reject your application if they discover you have a history of fraud. Insurers perform a thorough background check. You may not be able to cover your tracks so effectively. Remember, once they catch you trying to attempt fraud, they will send a report to the bureaus. Your records will go into a central database shared by many insurers. This means that other insurance companies that you might subsequently apply to will learn about your past. As a result, they can also decline your application.

Bad Driving Record

A bad driver is also someone who is more at risk of dying early. Therefore, some insurance companies also investigate the applicant’s driving records. This is to see whether they are a good driver or not. So, before you apply for life insurance, do factor this into your changes of getting accepted or rejected. 

Criminal Record/Felony Charges

If the applicant has past criminal charges against them, the chances of life insurance application rejection increase. Life insurers find such applicants highly risky, and so, most of them simply reject these applications.

Past Record pf Debts

Insurance companies investigate several financial factors too to assess your finances. They check if you have any previous records of filed bankruptcies, or if you have any outstanding debts or loans. They will also do a thorough assessment if you will be able to pay the monthly premiums or not. If your financial standing is not good, they may not reject you outrightly. They may offer you some other financial solutions and options that may help you.

This, if you have previous records of bankruptcies or defaults, your application for life insurance is most likely to be rejected.

What to do if your life insurance application is declined?

There are various reasons for the rejection of an application. We will consider the options that you have if your life insurance application is rejected.

There are no hard and fast rules here. But you can take the following steps:

Request a reassessment

It’s possible that you made a genuine mistake in the application. You can request a reassessment. Some companies have this policy, and they will facilitate you in resubmitting the application.

Apply again

Insurance companies have different types of life insurnace policies. Sometimes, they allow the process of reapplication after a set period. For example, they may allow you to reapply after 60 days. Or 90 days. It all depends on their policies. So, once the grace period is over, you have a chance to reapply too.

Another important thing is to rectify the cause of your rejection. For instance, an insurer declines your application because you have uncontrolled diabetes. You can wait for several months and take good care of your diabetes. Once it’s controlled, you can reapply again. And this time, your chances for approval will get high too.

Choose a different company

If you understand why your life insurance application was rejected, you may investigate the factors. Based on this knowledge and the help of a broker, you can look for another insurance company that may have flexible policies.

Opt for exclusive coverages

Some insurance providers offer exclusive coverage plans. For example, if a patient suffers from a chronic disease, the insurer may provide their insurance coverage, but they will not cover the cost if the applicant dies of that specific disease. So, in some cases, applicants can choose to get these coverage policies too.

This also stands true in case you get rejected for a term or permanent life insurance policy. If this happens, you can look into other coverage policies offered by various insurance providers. These policies may be more expensive, but you will get coverage anyway.

Some of other coverage policies include:

Guaranteed Life Insurance

This type of policy does not require a medical exam, so it is easier to obtain. However, its premiums are higher, and the death benefit can be as low as $50,000. It’s usually best for covering end-of-life and funeral costs.

Simplified Life Insurance

Compared to regular life insurance, simplified life insurance offers more forgiving requirements. It also does not call for a medical exam, and eligibility is determined based on how you respond to a few straightforward health questions.

But the coverage is less comprehensive than that of normal policies, and the cost is more. However, it is less expensive when compared to a similar guaranteed life insurance coverage.

Mortgage Life Insurance

This life insurance policy makes sure that, in the event of your passing, your family won’t lose their home. The insurance will cover the remaining sum of the mortgage in case of your demise.

Most people are eligible for mortgage life insurance because there is no medical exam required. You can purchase it at the time you apply for a mortgage or soon after.

Choose group-life insurance through work

Workplace group life insurance is assured. Therefore, individuals with serious medical issues may be eligible to get life insurance through work. Enroll in life insurance if your employer provides it as a benefit for employees.

Conclusion

Nobody likes to be rejected. However, you have many options available to get coverage. Follow the steps above and work with a life insurance broker to see what alternatives are available for you.