3 Things You Can Do If Life Insurance is Declined | Buying life insurance can be a complicated process. You are dealing with the thought that an accident could happen to you or your loved one. Unfortunately, sometimes insurance companies will choose to deny coverage, making an already complicated process even harder. If the insurance company denies your application for coverage, you will probably have several questions.
You might be wondering on what grounds the company has denied your coverage. It can feel arbitrary and confusing, but there are usually reasons for a company to deny coverage. You are entitled to ask the company why they choose to deny your application. For the most part, they can give you that information. Often, your life insurance broker or company will even contact you first! Knowing why you were denied coverage can help you proceed.
More practically, you might wonder what your next steps are, if any. Fortunately, there are several recommended steps to proceed. Remember, being declined for life insurance isn’t the end of the road. Companies have different standards of acceptance, and there are many routes to take to get the coverage you need.
Reasons You Could Be Declined for Life Insurance
There are several reasons you could find yourself declined for life insurance. Some reasons are under your control, and some are not. The easiest way to increase your chances of acceptance is to avoid lying. Remember, these companies are adept at spotting fraud. They even have access to the MIB, a national list of attempts to purchase life insurance.
If your details change from application to application, and your details in real life did not change, they could flag you as a liar and deny coverage. Companies could also deny you coverage for monetary reasons. For example, if you apply for a higher value policy than they would expect for your income, they may deny you. Likewise, applying to multiple policies, especially when you already have a policy, is a red flag. If you’re trying to apply for a life insurance policy on someone else’s life, you’ll have to prove that their death would cause you financial loss. If you don’t, the company will be legally forced to deny you coverage.
Many of the reasons a company may deny you coverage are outside of your control. For example, you could be denied coverage if they find you have a pre-existing condition. Sometimes the life insurance medical exam will reveal a health condition. If the medical exam does reveal a condition, you’ll have to show the company that you can manage it. If you can’t, they could decline you for life insurance coverage.
In addition, if you have a history of risky activities, you could be declined life insurance coverage. Thrill-seeking hobbies like sky-diving, DUIs, and speeding all fall under this category. They may also deny your application if you have a dangerous job.
What To Do After Being Declined for Life Insurance
Seeing all of those reasons can seem discouraging. But there’s no reason to give up! Here are three steps to take after you have experienced an application denial for life insurance.
Step 1: Collect information about why you were declined
This is an easy but essential step. As mentioned above, life insurance companies like Assumption Life will often take care of this for you. If they don’t mail you or otherwise send you information about why they declined to cover you, you can ask them yourself. They should be happy to give it to you!
Step 2: Review the decision
Now you can review the information they gave you. If any of it is wrong or out-of-date, you can let the company know! For example, if you’ve stopped sky diving, but they still have it listed, you can update your information. An updated profile might convince them to lower your risk category.
You can also ask your doctor to review the information for any medical inaccuracies. Your doctor can also help you lower your risk factor and help get you and your loved ones the financial security you need.
Step 3: Apply for a different policy
There are several options to apply for a different life insurance policy. Sometimes, your workplace will offer group life insurance. These policies are often low-cost or no-cost to you. Unfortunately, that means they will not pay as much money in the event of an accident.
There are also many kinds of life insurance policies that do not require a medical exam! They tend to be more expensive and pay out less. That said, if you are genuinely unable to be covered under a standard policy, they provide more security than no policy at all.
There are a few different kinds of No-Exam life insurance policies. One that is available to almost anyone is called a simplified issue life insurance policy. To get one, you’ll still have to fill out a medical questionnaire. Be aware that if you have a significant health issue, you can still be denied.
There is also something called a guaranteed issue policy. These are useful if you have a severe health condition or are too old to be approved for a standard policy. For these, you don’t need to fill out any medical questions. They have very small payouts and very high premiums but can be better than nothing.
Finally, there is something called mortgage life insurance, which will cover your mortgage costs, but not anything else. Depending on the circumstances, you might have to answer a questionnaire for this kind as well.
These no-exam policies tend to cost more and pay less. That said, if you’ve already experienced a denial of life insurance coverage and can’t find another option, they might work for you.
Being denied life insurance doesn’t mean it’s over
It can be frustrating to experience a denial of life insurance coverage. Having no policy can endanger you or your loved ones’ financial security. But that frustration doesn’t have to last. Depending on the problem, getting coverage could be as simple as updating your information or asking a different company to cover you.
You could negotiate for term life insurance or a smaller death payout. You could even choose one of the several no-exam policies. That means accepting a lower payout and higher cost to guarantee you get something should the worst happen.
Don’t give up! There are always options. Remember that the worst policy is no policy. If you or a loved one have experienced a denial for life insurance, one of these options might be right for you.