Disputing Life Insurance Denials: Your Options Explained

Being turned down for life insurance can be disheartening, but it doesn't have to be the end of the world. There are a few things one can do if they've been denied life insurance. Firstly, it is important to understand the reasons for the denial, which could include health challenges, risky hobbies, a dangerous job, a criminal record, or financial history issues. Once the reason for the denial is confirmed, one can consider appealing the decision, especially if it is based on incorrect or insufficient information. Working with a financial professional or applying with a different insurer could also increase the chances of approval. Additionally, guaranteed issue life insurance policies, which do not require a medical exam or health history, could be an option for those who have been denied coverage. While disputing a life insurance denial can be challenging and may involve legal processes, it is important to remember that there are alternatives to explore.

Reasons for denial: health, age, lifestyle, and mental health

When applying for life insurance, you will be asked to provide personal information regarding your age, income, health, weight, hobbies, and criminal history. If you fail to answer these questions honestly or omit required information, an insurance company may deny your claim.

Health

Insurance companies often deny claims based on non-payment of premiums. However, they also deny claims based on the state of your health. For example, if you have a pre-existing medical condition such as diabetes, insurance companies may be unwilling to insure you. This is because they consider you a "high-risk customer".

Age

Life insurance companies are more willing to insure you if you are young and in good health. If you are young, you can get a medical evaluation to present to the insurance company, who will then likely be happy to issue you a policy.

Lifestyle

Life insurance companies also take into account your lifestyle when considering your application. If you have dangerous hobbies such as skydiving, rock climbing, or scuba diving, insurance companies may deny your claim.

Mental health

Mental health issues may also be a reason for denial of a life insurance claim. For example, if you have a history of depression or anxiety, this may be considered a pre-existing condition that could increase the risk of a policy payout.

Appeal a denial: contact your doctor and insurer, confirm the results, and consider appealing

If your life insurance application is denied, your first move should be to contact your insurance agent or company to find out why. Insurance companies consider both medical and non-medical risks when assessing your application, so the denial could be due to a serious medical condition, poor results from your life insurance medical exam, or non-medical reasons like bankruptcy, a criminal record, a positive drug test, or a dangerous hobby. Once you know the reason for the denial, you can decide how to proceed with your appeal.

If the denial was due to incorrect or insufficient medical information, you have the right to appeal. For example, if you had high blood pressure in the past but it has since been resolved and the insurance company wasn't aware, you can ask your doctor to provide the insurance company with up-to-date information from your medical file.

You can also appeal non-medical reasons, such as out-of-date financial records, old driving offences, or incorrect details about your job or hobbies that placed you in the high-risk category. If your circumstances have changed and you no longer engage in high-risk activities, be sure to inform the insurance company.

If the denial was based on accurate information, you may want to consider other options, such as checking with your employer to see if they offer a group term life insurance plan or reaching out to an independent life insurance agent who can help you navigate the underwriting process and find a policy that works for you. Remember, just because one company has denied your application doesn't mean that all insurance companies will.

No-exam and guaranteed life insurance: no medical exam required, but may be more expensive

No-exam and guaranteed life insurance policies are good options for those who have been denied coverage in the past. While some no-exam policies require you to complete a health questionnaire, you won't need to undergo a medical exam. Guaranteed life insurance, on the other hand, doesn't require a health history, questionnaire, or medical exam.

No-exam life insurance policies are offered by Colonial Penn, Ladder, AIG, and Mutual of Omaha. Colonial Penn's no-exam life insurance provides coverage of up to $50,000 and is available in most states, starting at $9.95 per month. Ladder offers higher coverage of up to $3 million, with the option to increase or decrease the coverage amount during the policy period. AIG's guaranteed issue life insurance is more affordable, with policies starting at $20 per month, and Mutual of Omaha has a higher age cut-off of 85.

No-exam and guaranteed life insurance policies are generally more expensive than traditional life insurance policies. They are suitable for individuals who have been labelled as high risk due to health issues, pre-existing conditions, or mental health. These policies can provide peace of mind and financial protection for individuals and their families, helping to cover income replacement, funeral costs, debts, and daily expenses.

It is important to note that no-exam life insurance policies may have limitations on coverage amounts and age restrictions. Additionally, the application process may still involve answering health-related questions or providing health records. The cost of these policies is influenced by factors such as age, lifestyle, and medical history.

Dispute options: provide additional supporting documentation, contest the rejection, and contact your state's department of insurance

If you've been denied life insurance, it's important to know that you're not alone. Being denied life insurance can be disheartening, but it doesn't have to be the end of the road. Here are some dispute options to explore:

Provide additional supporting documentation

If you believe the denial was made in error, you can request more information from the insurer about the specific reasons for the denial. You can then work on providing additional supporting documentation to address their concerns. For example, if your application was denied due to health-related issues, you can consult your doctor to obtain a recent report on your health status. If the denial was due to non-medical reasons, ensure that the reason cited by the insurer is valid and address any concerns they may have.

Contest the rejection

In some cases, you may have the right to appeal the decision, especially if the denial was based on incorrect or insufficient information. It's important to act quickly and submit timely and complete information to support your appeal. This may include updating your medical file, credit report, driving record, or any other relevant documentation that can strengthen your case.

Contact your state's department of insurance

If you feel that your claim was obviously mishandled, you can seek assistance from your state's department of insurance. They can provide expertise in insurance navigation and may be able to help you argue why the claim should be paid out. Additionally, some states employ insurance appeals specialists, and representation at the state level can carry significant weight with the insurer.

While disputing a life insurance denial can be challenging, time-consuming, and costly, it's important to know that you have options to explore. Remember to act promptly, seek professional advice, and provide as much supporting documentation as possible to strengthen your case.

Avoid denial: be forthcoming on your application, understand the terms, arrange automatic payments, review your application, and talk to your beneficiaries

Avoid Denial: Tips for Applying for Life Insurance

Be Forthcoming on Your Application

When applying for life insurance, it is crucial to be transparent and provide accurate information. Non-disclosure or misrepresentation of pertinent details, such as medical conditions, risky hobbies, or criminal history, may result in your application being denied or your beneficiaries being deprived of the payout later on. Be honest about your health, lifestyle choices, and any other factors that could impact your risk profile.

Understand the Terms

Before signing up for a life insurance policy, make sure you comprehend the terms and conditions thoroughly. Understand the coverage, exclusions, and requirements for making claims. Additionally, be aware of the contestability period, which is typically a two-year window during which the insurance company has the right to question or contest a claim.

Arrange Automatic Payments

Life insurance policies require regular premium payments to remain in force. To avoid accidental lapses in coverage due to missed payments, consider setting up automatic payments. Most life insurance policies offer a grace period for late payments, but it's best to ensure timely payments through automation.

Review Your Application

Before submitting your application, carefully review all the information you've provided. Double-check that all your answers are truthful and accurate. Any discrepancies or omissions could lead to issues with your coverage or potential denial of claims in the future.

Talk to Your Beneficiaries

Communicate openly with your beneficiaries about your life insurance policy. Let them know where they can find the policy documents and relevant information. This proactive approach will help them navigate the claims process more efficiently if the need arises and ensure they are aware of their entitlements.

Frequently asked questions