Life Insurance Disqualifiers: Health, Age, And Lifestyle Factors

Life insurance is a tricky business. While insurance companies spend millions of dollars on advertising and selling life insurance products, they also deny coverage to millions of applicants each year. There are many reasons why someone might be denied life insurance, and it's important to understand these reasons before applying. Some common causes for disqualification include pre-existing health conditions, age, dangerous jobs or hobbies, drug use, poor credit, and a criminal history. Obesity, diabetes, and high cholesterol are also factors that can increase your risk of being denied coverage.

Poor health

Pre-existing Conditions

A pre-existing medical condition is an illness, injury, or disease that you have had or are currently experiencing before taking out life insurance. Providers will weigh the risk of your condition and the chances of claiming when deciding whether to offer you a policy and how much to charge. Some pre-existing conditions might not significantly impact your premiums, while more severe conditions like heart disease, cancer, or diabetes could make it harder to get a competitive price or even result in a denial of coverage.

Physical Health

All life insurance providers take your physical health into account. Most will require you to undergo a medical exam and blood tests before issuing a policy. They are betting that you will live longer than the term of your life insurance policy. Any major health condition, such as high cholesterol, obesity, or other chronic illnesses, will be viewed as a higher risk. Depending on the severity and the specific company, you may be denied coverage or face higher premiums.

Mental Health

Unfortunately, many life insurance companies will deny coverage or charge higher rates if you have a history of mental health issues. This includes common and benign conditions such as anxiety, as well as more serious disorders like PTSD or bipolar disorder.

Lifestyle

Your lifestyle choices can also impact your eligibility for life insurance. For example, insurance companies may deny you coverage if you are a chronic alcoholic showing signs of deteriorating health, including liver failure. They consider alcoholics more prone to engage in risky behaviours, such as drunk driving. Similarly, if you are a smoker, you may be denied coverage or face significantly higher premiums due to the increased health risks associated with smoking.

Family History

In addition to your own health, insurance providers will also consider your family's medical history. If your family has a history of cancer, for example, it may reflect poorly on your application.

Improving Your Chances

While poor health can be a significant obstacle to obtaining life insurance, there are steps you can take to improve your chances:

• Prove that you are undergoing treatment for your health condition and that it is under control.
• Adopt a healthier lifestyle, such as improving your diet, quitting smoking, or exercising more.
• Apply for life insurance earlier in life, as premiums tend to increase with age.
• Compare quotes from different insurance providers, as they have varying criteria for assessing risk.
• Be honest and accurate in your application, as withholding information could invalidate your policy.

Criminal record

A criminal record does not automatically disqualify you from getting life insurance, but it can make it more challenging and expensive. The impact of a criminal record on your life insurance application depends on several factors, including the type and severity of the crime, how long ago it occurred, and whether you are still serving a sentence or on probation. Here is some detailed information on how a criminal record can affect your life insurance application:

Application Process

When applying for life insurance, you will be asked detailed questions about your criminal history, including the nature of the offence, the date of the charge, and any sentences or probation periods. It is crucial to be honest about your criminal history during the application process, as lying can lead to rejection or denial of benefits. Some insurance companies will ask about your criminal history from the last two, five, or ten years, while others will want to know if you have ever been convicted.

Felony Convictions

If you have a felony conviction on your record, you typically need to wait at least a year after your conviction or until your probation period is over to qualify for most life insurance policies. Insurance companies view people with felony convictions as high-risk, and it is unlikely that you will be approved if you have a violent felony or multiple felonies on your record. The longer it has been since your conviction, the better your chances of obtaining life insurance.

Misdemeanours

Misdemeanours and lesser infractions on your record usually won't impact your premiums significantly. However, multiple or recent charges will raise flags for insurers, and they may increase your premiums or deny coverage.

Incarceration and Probation

If you are currently incarcerated or on probation, it is highly unlikely that you will be approved for life insurance. Most insurance companies will automatically decline your application if you are in jail, awaiting trial, or on probation. They usually require at least a year to pass since the conviction before considering your application.

Alternative Options

If you are denied traditional life insurance due to your criminal record, there are alternative options available. These include:

• Simplified issue life insurance: This type of policy has a simpler application process and may be more accessible to those with a criminal record. However, it can be more expensive due to the increased risk for the insurer.
• Guaranteed issue life insurance: These policies ask only basic questions and do not require medical exams. They are more likely to accept applicants with criminal records but typically come with higher premiums.
• Group life insurance: If your employer offers group life insurance as part of your benefits package, you may be eligible for this coverage regardless of your criminal history.

Impact on Premiums

Having a criminal record will usually affect your life insurance rates. The cost of life insurance will fluctuate based on your overall health and lifestyle. If you are convicted of a felony, you can expect higher premiums due to the increased risk associated with your criminal record.

In summary, while a criminal record can be an obstacle to obtaining life insurance, it does not necessarily disqualify you. The specific details of your criminal history will be evaluated by insurance providers, and alternative options are available if you are denied traditional coverage. Working with an independent broker can help you find the best policy for your situation.

Dangerous job or hobby

Engaging in hazardous activities, whether as a hobby or occupation, can significantly impact your life insurance coverage. Life insurance providers consider hazardous activities as high-risk pursuits that increase the potential for injury or loss. As a result, individuals who participate in these activities may face higher premiums, exclusions, or even outright denial of coverage.

High-Risk Occupations

Certain occupations are deemed hazardous due to their inherently dangerous nature, and insurance companies may deny coverage or charge higher premiums for individuals working in these fields. Some examples of high-risk occupations include:

• Law enforcement officers
• Military service members
• 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

High-Risk Hobbies

When it comes to hobbies, activities that are considered high-risk can also affect your life insurance coverage. These hobbies are typically adventurous or extreme sports that carry an increased risk of injury or death. Some common high-risk hobbies that insurance companies scrutinize include:

• Skydiving
• BASE jumping
• Rock climbing and mountaineering
• Racing (car, motorcycle, etc.)
• Aviation (private)
• Scuba diving
• Surfing (especially big wave surfing)
• Snow sports (skiing, snowboarding, snowmobiling)

Factors Affecting Life Insurance Coverage

The impact of a dangerous job or hobby on your life insurance coverage depends on several factors, including:

• Frequency: The more often you engage in the activity, the higher the risk, and the higher your premiums are likely to be.
• Experience and qualifications: More experienced and qualified individuals are seen as less likely to get into accidents, and training and certifications can help keep rates affordable.
• Health and medical history: Pre-existing medical conditions can further increase the risk associated with dangerous activities, potentially leading to higher ratings or even denial of coverage.
• Type of activity: Different insurance companies may have varying definitions of hazardous activities, with some activities considered riskier than others.

Options for Coverage

If you engage in dangerous jobs or hobbies, there are still options available to obtain life insurance coverage:

• Be truthful on your application: Non-disclosure or fraud can result in denial of claims or cancellation of the policy.
• Shop around: Not all insurance companies treat high-risk activities the same, so working with an experienced broker to find the right company can help you obtain coverage at standard rates or lower ratings.
• Obtain coverage before starting a dangerous hobby: Locking in low rates before engaging in a risky activity can help you secure more affordable coverage.
• Adventure Activities Coverage: Some travel and sports insurance companies offer specialized coverage for extreme sports enthusiasts, often in the form of an exclusion waiver.
• Obtain necessary certifications: For certain hobbies, obtaining certifications from approved organizations can help improve your chances of obtaining coverage and qualifying for better rates.

Drug use

Illegal Drug Use

If you're currently using illegal drugs, you can expect an automatic denial of coverage from traditional term or whole life insurance providers. Most insurers will require you to demonstrate that you've been drug-free for at least five years before they will consider offering you traditional coverage. Even then, it may take up to 10 years or more before you're eligible for the lowest insurance rates. Working with an independent insurance broker can help you find insurers that are more accommodating of your circumstances.

Prescription Drug Use

Even if you're using prescription drugs, life insurance providers will still evaluate your application based on the health condition being treated. For example, medical marijuana used to treat cancer will have a bigger impact on your application than marijuana used to treat mild anxiety. It's important to be honest about your prescription drug use during the application process, as insurers will verify your answers against your health records.

Marijuana Use

The legality of marijuana varies across different states and countries, and life insurance providers have their own guidelines when it comes to marijuana use. Some insurers offer lower rates to frequent marijuana users, while others only offer the best rates to occasional users. Frequent marijuana smokers may be classified similarly to tobacco users, resulting in higher premiums. If you fail to disclose your marijuana use during the application process and are later found to have cannabis in your system, the insurer may treat this as a material misrepresentation and deny any claims made on your policy.

Sobriety and Recovery

If you have a history of substance abuse, you may need to demonstrate a period of sustained sobriety before qualifying for traditional life insurance policies. This period typically ranges from two to three years for alcohol and five to 10 years or more for illegal drugs. During this time, you may want to consider alternative coverage options, such as group life insurance through your employer or final expense life insurance.

Financial history

Income and Net Worth

When you apply for life insurance, the insurer will consider your current income and total net worth to determine the amount of coverage you can apply for. Most companies will allow you to apply for a life insurance policy that matches about 30 times your income. They may ask you to verify your income, especially if you have non-traditional sources of income, such as freelancing or rental properties.

Credit History and Debt

A poor credit history, previous bankruptcies, or significant personal debt may be red flags for the insurance company. Insurers want to be confident that you can afford the premium payments and that you're not committing insurance fraud. They may review your credit report to assess factors such as bankruptcy and DUI convictions, which can affect premium rates.

Affordability

Life insurance companies may also consider your ability to afford the premiums. Some agencies may have internal restrictions, refusing to write a life insurance policy for someone whose household income falls below a certain threshold, as this can result in issuing a large number of small policies with lower premium flows.

Previous Denials

If you have been previously denied life insurance, your risk of being declined again increases. Life insurance carriers subscribe to the Medical Information Bureau (MIB), which shares information about previous life insurance applications and their outcomes. However, a previous denial does not automatically mean you will be denied coverage in the future.

Fraud

Insurers will also assess your application to ensure you are not committing insurance fraud. They may request verification of your income and financial information to confirm that the policy you're applying for is appropriate for your financial situation.

In summary, financial history plays a crucial role in the life insurance application process. Insurers consider your income, net worth, credit history, debt, and ability to afford premiums to determine your eligibility and the applicable premium rates. Previous denials of life insurance can also impact your chances of being accepted in the future.

Frequently asked questions