Jeffrey Wade
Life insurance is a tricky business, and there are many reasons why you might be denied coverage. Insurers will look at your medical and non-medical risks, including your health, age, finances, driving record, and occupation. Pre-existing conditions such as cancer, heart disease, diabetes, and mental health issues can be disqualifying factors, as can dangerous hobbies like base jumping or racing cars. Your age, weight, and cholesterol levels will also be considered, and even your driving record and criminal history can affect your eligibility. However, it's important to note that not all insurers have the same criteria, and there are alternative options available if you are denied coverage.
| Characteristics | Values |
|---|---|
| Pre-existing conditions | Cancer, heart disease, severe mental-nervous disorders, high blood pressure, diabetes, asthma, HIV infection, obesity, high cholesterol, lipids, triglycerides, blood or protein in urine, alcoholism |
| Age | Older people are less likely to obtain coverage and pay higher premiums |
| Financial reasons | Income and total net worth, previous bankruptcies, high debt burden, recent financial troubles |
| Criminal record | Felony charges, being in jail or on probation |
| Dangerous hobbies | Racing, skydiving, base-jumping, scuba diving |
| Dangerous occupations | Military service member, law enforcement officer, airline pilots and flight engineers, fishers and related fishing workers, refuse and recyclable material collectors, structural iron and steel workers, farmers, ranchers, and other agricultural managers, construction laborers, electrical power-line installers and repairers |
| Drug use | Illegal drugs, cannabis, nicotine, tobacco |
| Driving record | DUIs, multiple speeding tickets |
What You'll Learn
Pre-existing conditions
When you apply for life insurance, the insurance company will evaluate your age, health, lifestyle, and medical history. They may also request a medical exam to assess your current health status. The specific policy types you qualify for will depend on your particular medical condition, how well your condition is managed, and the insurer's criteria.
If you have a pre-existing condition, it is important to follow your treatment plan and maintain a healthy lifestyle. This can improve your chances of qualifying for life insurance and may even lower your premium. Shopping around and comparing quotes from different insurers can also help you find the best coverage options at the most affordable rates.
In some cases, group life insurance through your employer may be an option, as health conditions are typically not considered for these policies. Additionally, guaranteed issue life insurance policies accept all applicants, although the coverage and benefits may be limited.
It is important to note that lying or concealing your pre-existing condition on your life insurance application can result in disqualification or increased premiums if discovered.
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Age and health
Life insurance eligibility is largely determined by risk assessment. Insurance companies evaluate factors such as age, health, lifestyle, and family medical history to determine the level of risk associated with insuring an individual. The higher the risk, the higher the premium, or the higher the likelihood of disqualification.
Age is a significant factor in life insurance eligibility, especially for long-term care insurance. Data from the American Association for Long-Term Care Insurance (AALTCI) shows that the chances of qualifying for long-term care insurance decrease as you get older, as the risk of developing health issues increases with age. Some insurers impose age cut-offs, usually 80 or 85, for those seeking coverage. Krystie Dascoli, a voluntary benefits practice leader, recommends buying long-term care insurance while young and gainfully employed to increase the likelihood of approval and access to higher face amounts.
Health status is another critical factor influencing life insurance eligibility. Certain pre-existing health conditions can significantly impact your eligibility for full coverage life insurance. Chronic diseases, such as heart disease, cancer, diabetes, high blood pressure, and liver disease, are among the top concerns for insurers. Pre-existing conditions are often considered high-risk by insurance companies and can lead to higher premiums or disqualification. However, having a pre-existing condition does not automatically disqualify you, and many insurers offer policies tailored for individuals with specific health issues.
Additionally, cognitive impairments, terminal illnesses, recent hospitalizations, and a history of substance abuse can also affect eligibility. Applicants exhibiting signs of cognitive decline or diagnosed with terminal illnesses may be disqualified or face higher premiums. Recent hospitalizations or surgeries may result in waiting periods imposed by insurers before providing coverage. A history of substance abuse is viewed as a higher risk factor, potentially disqualifying applicants or leading to significantly higher premiums.
In summary, age and health are crucial considerations in life insurance eligibility. While advancing age and certain health conditions can increase the challenges in obtaining life insurance, it is still possible to find coverage by shopping around, maintaining a healthy lifestyle, and working with knowledgeable agents who can guide you to the right providers.
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Dangerous hobbies
Life insurance companies are in the business of taking risks, and that risk is you. Actuaries perform a risk assessment and calculate the probability of your untimely death, charging you accordingly. Insurers consider a range of factors, from age and health to whether you engage in "dangerous activities".
Aviation and Skydiving
Private aviation, including helicopter pilots and student pilots, is considered a dangerous hobby. The risk is higher for smaller, private planes flown by amateur pilots. Skydiving, base jumping, and paragliding are also high-risk activities that can result in higher insurance rates or even denial of coverage. The frequency of these activities, the safety measures in place, and the level of experience can all impact insurance rates.
Scuba Diving
Scuba diving is often deemed a high-risk activity by life insurance companies due to the potential risks of equipment malfunction, drowning, and decompression sickness. The frequency of dives, depth, location, and certification can all impact insurance rates. Casual scuba divers who occasionally dive under supervision or in open water may not see a significant impact on their insurance premiums.
Mountain Climbing
While indoor wall climbing is generally not considered risky, mountain climbing is a different story. Life insurance companies view outdoor climbing, especially at high altitudes, as a dangerous hobby. The height, location, use of ropes, supervision, and future climbing plans are all factors that underwriters consider when assessing risk.
Racing
Racing, whether in cars, motorcycles, or boats, is considered a hazardous avocation by life insurance companies. The frequency of races, vehicle type, speed, amateur vs. professional status, and driving history are all factors that can impact insurance rates. While casual racing may not significantly affect premiums, more frequent and high-speed racing can result in higher rates or even denial of coverage.
Bungee Jumping
Bungee jumping is considered a dangerous hobby, though it may not rule out life insurance coverage completely. Frequent bungee jumping can result in higher insurance premiums.
Backcountry Skiing
Recreational skiing and snowboarding are generally acceptable for life insurance coverage. However, backcountry skiing and heli-skiing are considered high-risk activities. The frequency of participation, location, and use of professional guides are factors that underwriters consider when assessing risk.
It's important to note that the impact of these dangerous hobbies on life insurance rates can vary between insurance companies. Being honest about your hobbies during the application process is crucial, as failing to disclose them could invalidate your policy if the insurance company finds out later.
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Criminal history
A criminal record does not automatically disqualify you from getting life insurance, but it can impact your eligibility for insurance coverage. The impact of a criminal record on your life insurance eligibility and premiums depends on several factors, including the type of crime, the severity of the offence, and how long ago it took place.
Type of Crime
The type of crime committed will be considered by insurance companies when assessing your eligibility for life insurance. Certain types of crimes, such as violent crimes, sexual assault, drug trafficking, and insurance fraud, are more likely to lead to a denial of coverage.
Severity of the Offence
The severity of the offence will also be taken into account. Felony convictions are generally viewed as higher-risk by insurance companies, while misdemeanors have a smaller impact on your rates. However, multiple or recent misdemeanour charges will also raise flags for insurers.
Time Since Conviction
The amount of time that has passed since the conviction will also affect your eligibility for life insurance. Most insurance companies will require you to wait at least a year after your conviction or until your probation period is over to qualify for a policy. The longer you have been off probation, the better your chances of getting approved for life insurance and more affordable premiums. Some companies may require a longer waiting period, such as five or ten years post-probation, before accepting applications.
Other Factors
In addition to the criminal history, insurance companies will also consider other factors, such as your driving record, history of drug or alcohol abuse, and history of violent behaviour. It is important to be honest about your entire criminal record when applying for life insurance, as background checks are standard, and lying on your application may result in severe consequences.
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Financial situation
Bankruptcy
Bankruptcy is a significant red flag for insurance providers. It indicates financial instability and may suggest that you are a higher risk for insurance claims or non-payment of premiums. Bankruptcy can be a factor in denying life insurance coverage or increasing premiums.
Insufficient Income
Having a low income or insufficient financial resources can impact your ability to afford life insurance premiums. While this does not directly disqualify you, it may limit your options or ability to obtain a desirable level of coverage.
High-Risk Occupations
Certain occupations are considered high-risk due to their inherent dangers, physical demands, or potential for accidents. These include jobs such as commercial drivers, construction workers, police officers, loggers, roofers, and military personnel. People in these occupations may face higher premiums or challenges in obtaining coverage.
High-Risk Hobbies
Engaging in dangerous hobbies or activities can also impact your financial situation assessment. Insurers may view these hobbies as increasing the likelihood of injury or death, leading to higher premiums or coverage limitations. Examples include skydiving, rock climbing, motorcycling, and off-road driving.
Criminal Record
A criminal record, especially for financial crimes like fraud or theft, can impact your financial situation and insurance eligibility. Insurance providers may view individuals with a criminal history as higher-risk, leading to higher premiums or coverage denials.
It's important to note that the impact of your financial situation on life insurance eligibility can vary between insurance providers. Each company has its own underwriting guidelines, and some may be more accommodating of certain financial circumstances than others. Therefore, it's advisable to shop around and consult with independent insurance agents or specialists who can guide you to the right providers based on your unique financial situation.
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Frequently asked questions
Life insurance companies take into account your physical and mental health, age, lifestyle, gender, and financial situation when determining whether to offer you a policy. Some common reasons for disqualification include obesity, high cholesterol, diabetes, chronic illnesses, cancer, heart disease, mental health issues, dangerous hobbies, a criminal record, and a history of drug use.
If you are disqualified from life insurance, you can ask for more information from the insurance company and appeal the decision if it is based on incorrect or insufficient information. You can also check with your workplace to see if they offer a group term life insurance plan, reach out to a life insurance agent for advice, or apply for a different type of policy such as simplified issue life insurance or guaranteed issue life insurance.
Simplified issue life insurance policies do not require a medical exam, but you will need to fill out a medical questionnaire as part of your application. These policies are more expensive than traditional life insurance because the company has less information to base its decision on. Payouts are usually limited to $500,000 or less.
Guaranteed issue life insurance is for older individuals or those with serious medical conditions. It does not require a medical exam or a lengthy medical questionnaire. However, the payout is typically small, up to $50,000, and there may be a waiting period of a couple of years before the full death benefit is payable.
