Life insurance is an important way to financially safeguard your loved ones if you pass away unexpectedly. It ensures peace of mind by ensuring your family will be looked after after you’re gone. However, it can be disheartening if your life insurance application is denied. Knowing the common reasons for rejection can help you navigate the process better. Here are eleven possible causes for your life insurance application being rejected.
Lots of individuals believe that because they don’t have good health, they will either have to pay extremely high rates or be refused when applying for life insurance. But, the underwriting guidelines may not be as harsh as you assume!
Don’t stress if you’ve been denied, there are other choices available.
Let’s explore 13 reasons why life insurance applications are often rejected, ways to minimize the chances of rejection, and unconventional insurance options.
1. Chronic Illness
One major cause of life insurance rejections is having pre-existing health problems. Insurance companies evaluate the risks involved in providing coverage, and certain health conditions can raise the chances of early death. Issues like cancer, heart disease, diabetes, or obesity may lead to a declined application or higher premium payments.
Showing proof from your doctor that your illness is being treated could improve your chances of being accepted by the insurance provider.
Chronic illness refers to prolonged health conditions that persistently affect individuals.
- Psoriasis
- Alzheimer’s disease
- HIV/AIDS
- Cancer
- Heart disease
Remember, every insurance carrier is unique. It is important to inform your independent agent about your medical condition so they can find the right company for you.
2. Age
Life insurance gets pricier as you get older, and certain insurers might refuse coverage if you are above their age limit. Each company has its own limitations, so it is crucial to explore and select a provider that fits your requirements.
As you grow older, there are products that become unavailable to you. That’s why it’s crucial to apply for coverage while you’re young and in good health. By doing so, you’ll have more choices and can also secure lower premiums.
3. When there’s blood or protein is found in your urine.
When you apply for life insurance, you usually need to have a medical exam that includes providing a urine sample, unless you choose a no-exam policy.
The presence of blood or protein in your test results can be problematic. This is because if either of them appears in your urine, it indicates either intense physical exertion or kidney disease.
If your test results show any abnormalities, make sure to consult your doctor. Insurance companies usually disregard these abnormalities if you provide them with follow-up results.
4. Alcohol Abuse
Don’t stress, occasional drinks are unlikely to impact your underwriting result. But if you have abnormal liver functions, insurance companies may test for excessive alcohol consumption. If your drinking levels are significantly higher than normal, your chances of denial increase.
5. Jobs or hobbies that involve a high level of risk or danger.
Taking part in risky occupations or hobbies like extreme sports, skydiving, or flying private planes can be concerning for life insurance companies. These activities raise the chance of accidents or fatalities, which may result in a denied life insurance application or higher premiums. Some hazardous jobs include: [job examples].
- Airline pilots and flight engineers: They are responsible for safely flying planes and ensuring their engines and systems are functioning properly.
- Logging workers: individuals employed in the forestry industry to harvest timber.
- People who catch fish and engage in other fishing-related activities.
- Roofers: Professionals who work on repairing, installing, and maintaining roofs.
- Refuse and recyclable material collectors: are responsible for collecting and managing waste items that are either non-recyclable or recyclable.
- Structural iron and steel workers: professionals who specialize in the construction and installation of iron and steel structures.
- Truck drivers: individuals who operate large vehicles to transport goods from one place to another.
- Agricultural managers, including farmers and ranchers
- Construction laborers: individuals who perform physical labor tasks on construction sites.
- Electrical power-line professionals who install and fix power lines.
- Patrol officers from the police and sheriff’s departments.
Approval may be more challenging for individuals in these professions.
6. Obesity
Regrettably, obesity has been a significant problem in America for quite some time. The CDC’s latest study found that 42.4% of Americans are obese, and this number is still increasing.
Different life insurance companies have different approaches when it comes to obesity. They have underwriting guidelines that include a “build chart” which takes into account your height-to-weight ratio.
Contact your agent to determine the ideal life insurance company for you based on their specific build chart requirements.
7. High Cholesterol
Elevated cholesterol, lipids, and triglycerides could lead to rejection of your application.
The ratio of HDL (good cholesterol) to LDL (bad cholesterol) determines total cholesterol levels. Higher levels of LDL and lower levels of HDL increase the risk of heart disease and stroke.
8. Diabetes
Having high blood sugar levels, similar to high cholesterol, can result in denial of life insurance. These levels often indicate a higher risk of developing diabetes, which makes it more challenging for insurance companies to provide coverage. However, different companies have varying policies regarding diabetes, so don’t give up hope.
To know more about buying life insurance for diabetes, read this article.
9. The history of cancer
Your underwriter considers family history when you apply for coverage. If cancer runs in your family, it may affect your results. If you have had cancer before, it will likely concern insurance providers.
Less severe types of cancer, such as skin cancer, usually do not hinder approval from most companies. However, if the cancer is more serious, like breast cancer, the company will consider factors like cancer type, progression, and duration of remission.
10. Income Insufficiency
Certain life insurance policies, especially those with a cash value feature, may necessitate a financial background evaluation. If one has a bad credit history, declared bankruptcy, or faced financial difficulties, their application may be rejected due to the increased likelihood of missing premium payments.
Certain insurance agencies refuse to provide life insurance to individuals with a household income below $20,000 (this threshold differs across companies). Insuring low-income individuals may lead to issuing numerous small policies, resulting in reduced premium income.
11. Past Life Insurance Terminations
Having a life insurance policy canceled or terminated because of not paying or violating the policy terms can make it harder to get coverage later on. Insurers see these terminations as signs of bad financial management, which increases the risks involved.
Life insurance companies use the Medical Information Bureau (MIB) to get a report on applicants’ past life insurance history. This helps insurers guard against individuals who might lie about their health or medical conditions.
Being denied in the past doesn’t guarantee you’ll be denied again.
12. Criminal History
If you have a criminal record, especially for serious offenses, it can make it harder for you to get life insurance. Insurance companies evaluate the risks involved in providing coverage, and a criminal history raises concerns about your lifestyle choices and potential risks.
13. Risky Driving History
Having a bad driving history, such as many traffic violations, DUIs, or accidents, can have a negative impact on your life insurance application. Insurance providers consider reckless driving as a sign of higher risk, which can result in more expensive premiums or even rejection of your application.
Different approaches to traditional policies are available.
If you get denied regular life insurance, you can choose no exam life insurance as an alternative. These policies let you apply for life insurance without needing a medical exam, which can be advantageous for certain people.
In the past, no exam policies used were pricier compared to traditional policies. However, due to their growing popularity, premiums for no-exam policies have become more competitive in recent years.
If you have medical issues in your history, the underwriter will still review your medical records. Hence, this may not be the best approach to take.
Instead of a no-exam policy, you have the option of Guaranteed Issue (GI) life insurance. It’s meant for people who are permanently disabled, have significant health problems, collects Social Security or SSDI for a mental disorder, or are deemed high-risk.
These policies are open to individuals aged 50 to 85 and do not require a medical exam. They have minimal health questions or none at all and are issued rapidly. With guaranteed issue policies, you can get coverage ranging from $5,000 to $25,000.
GI policies have a 2-year waiting period, where if you pass away within that time, you only get back the premium paid. After the waiting period, your beneficiary can receive the full death benefit amount if your death was due to a medical condition.
In Summary
Getting denied life insurance can be disappointing, but it’s important to know why. To increase your chances in the future, be honest, stay healthy, and address any risk factors. Seek advice from an insurance expert to find the best coverage for you.