Life Insurance Denial: Common Reasons For Rejection

Life insurance is a crucial part of securing your family's financial future, but not everyone who applies is approved. There are many reasons why someone might be denied life insurance, including health issues like diabetes, obesity, or a previous diagnosis of serious disease, as well as non-health reasons such as engaging in risky hobbies and behaviours, having a criminal record, or failing a drug test. If you've been denied life insurance, there are still options available to you, including applying with a different insurer, considering a simplified or guaranteed issue life insurance policy, or working with a financial professional or agent who can help you navigate the process and find a policy that's right for you.

Reasons for Denial of Life Insurance

High-risk health conditions

If you have a high-risk health condition, you may have been denied life insurance. This is because life insurance providers consider your health when deciding whether or not to offer you a policy. They assess how likely you are to claim based on your current and past health issues.

Mental health issues can also be a reason for denial. If you have a history of mental illness, such as depression, anxiety, or bipolar disorder, this may be considered a pre-existing condition and could result in a denial of coverage. Additionally, if you have a history of substance abuse or addiction, this will also impact your application. This includes alcohol abuse and illegal drug use, as well as prescription medication misuse.

Life insurance providers will also consider your family medical history when assessing your application. If you have a family history of genetic or hereditary diseases, this may impact your application. For example, if you have a close relative who has suffered from a serious illness, this could be a reason for denial.

Non-health reasons

If you have been denied life insurance, the first step is to request an explanation from the insurance company. They are required to provide a reason for their decision in a denial letter. This can include anything from your credit report to your driving record to updated information about your occupation.

• Engaging in risky hobbies and behaviours, such as skydiving or base jumping.
• Having a history of DUIs or speeding tickets.
• Having a dangerous job, such as roofing.
• Having a criminal record.
• Having a less-than-ideal financial history or poor credit score.
• Failing a drug test.
• Being a smoker.
• Being older and having enough money saved up to self-insure.
• Not disclosing relevant information, such as a previous heart attack.
• Failing to pay premiums.
• Applying for life insurance with multiple companies and being denied coverage.

If you believe the denial was unfounded, you can draft a life insurance denial appeal letter. You can also appeal non-medical reasons, such as an out-of-date financial record, an old driving offence, or incorrect details about your job and hobbies.

If you have been denied life insurance, there are alternative options available, such as simplified issue life insurance or guaranteed issue life insurance. You can also apply to several insurance carriers or consider working with an independent insurance broker or agent.

Inaccurate information

Life insurance companies have to balance the risk they take on. If an insured person dies, they pay out a lot of money. If insurance companies approved everyone who applied, it wouldn’t take long before they went bankrupt trying to pay all the claims. To ensure they remain financially secure, insurers use a process called underwriting to determine the risk each applicant carries.

If you are denied life insurance due to inaccurate information, you have the right to appeal the decision. You can increase your chances of a successful appeal by submitting timely and complete information. This means having your doctor include as much up-to-date information in your medical file as possible and submitting the most recent and credible information about your personal history. This can include anything from your credit report to your driving record to updated information about your occupation.

It is important to note that even if you are denied by one company, that does not mean all insurance companies will deny your application. Working with a financial professional or an independent broker can increase your chances of approval, as they can help you navigate the underwriting process and search for policies that match your needs across a wider market.

Financial situation

Some insurance companies check your credit-based insurance score when you apply for coverage. This is based on similar information to a FICO® Score, so tackling debt and paying bills on time may boost your credit-based insurance score. Monitoring your credit score and adopting a healthy lifestyle can help you get life insurance and safeguard your family's future.

In addition, life insurance companies provide information to a repository called the Medical Information Bureau (MIB). This information includes your health history, prescription medications, and how many life insurance companies you've applied for coverage with. If your report shows that you have recently applied to numerous other life insurance companies and were denied coverage, this can count as a strike against you.

If you are denied life insurance, you can find out why, appeal the decision, try another insurance company, or look for alternative coverage options. You can also work with a financial professional or an independent life insurance agent who represents multiple insurers to help you pinpoint options and apply to those that offer the best chances of approval.

Previous denial

If you've been denied life insurance before and would still like to get life insurance, there are a few things you can do.

First, make sure you understand why you were denied. Contact the insurance company or your insurance agent to find out the reason for the denial. It could be due to medical or non-medical reasons, or even incorrect or insufficient information. Once you know the reason, you can take steps to address it.

If the denial was due to incorrect or insufficient information, you have the right to appeal the decision. Work with a financial professional or an independent insurance agent who can help you with the appeal process and guide you through the entire process of getting life insurance. They can also help you pinpoint options for coverage and search across a wider market for policies that may be a better fit for you.

If the denial was due to medical reasons, consider making changes to your lifestyle or health to reduce the perceived risk. This could include improving your diet, exercising regularly, quitting smoking, or addressing any underlying health conditions.

If the denial was due to non-medical reasons, such as a criminal record or a dangerous hobby, time may be your best ally. Waiting until things like multiple speeding tickets fall off your record could increase your chances of approval.

Remember, just because one company denies your application doesn't mean all insurance companies will. Each life insurance carrier assesses risk differently, so don't be discouraged. You can also consider applying for a different type of life insurance policy, such as simplified issue or guaranteed issue life insurance, which may have higher approval rates but may also come with certain limitations.

Frequently asked questions