Life Insurance Application Denied
Life insurance companies rely on a process called underwriting to decide how much your insurance premiums are, what your policy looks like or whether you’re even eligible for a policy at all. But opening a note from an insurance company that “regrets to inform you that your life insurance application was denied” is disheartening.
Insurance companies review medical records and non-health care information to make their decisions. Their reasons could be anything from a preexisting medical condition, such as high blood pressure, to a dangerous hobby, like skydiving.
Why Was My Life Insurance Denied?
There are a variety of reasons your life insurance application could have been denied. Some common reasons you might be declined life insurance include:
- Chronic illness
- Preexisting condition
- Lifestyle choices
If you are denied, the first thing you should do is contact your agent to find out why. It’s important to review your application and discuss the results with a licensed agent to ensure nothing was overlooked. Insurance agents know the ins-and-outs of the life insurance application process and can help you identify areas that might raise red flags in your file.
Mistakes do happen sometimes, so you also want to make sure there were no errors that unnecessarily led to your denial.
During the underwriting process, insurance companies look at a variety of factors to determine your eligibility for life insurance. It’s important to be honest on your application, even if you're in poor health or engage in a risky hobby.
But not all insurance companies are the same. While one insurer may decline you because you have a preexisting condition, another might not.
If you do fall into a high-risk category and your life insurance application denial is firm, there are options.
Buying a Life Insurance Policy After Being Denied Coverage
If you were denied life insurance coverage and you have good insight into why an insurer made that decision, you have several choices:
- Apply with a different life insurance company. Every company has a different underwriting process and criteria for approvals. What didn't work for one insurer may be okay with another.
- Wait a while and try again later. If you were denied coverage because of poor health — for example, you have a history of smoking, obesity, or high blood pressure — you can spend some time getting healthier and show a potential insurer your progress when you reapply down the road.
- Buy coverage through a workplace plan. Tap into your employer’s group life insurance plan for coverage. You might qualify for lower coverage or have slightly higher premiums, but at least you'll have some form of life insurance coverage.
- Consider a simplified, no-medical exam policy. This option is great if your workplace doesn’t offer a plan or you’re self-employed. It allows you some basic coverage without having to undergo a medical exam. While the coverage limit might be low and often costs more, you'll have a plan that protects your family if you unexpectedly die.
If you feel strongly that you should have been approved for life insurance, you can appeal the insurer’s decision. You will increase your chances of winning your case by providing all your medical files, health care records and any other credible documents they need to review your case.