Choosing the right life insurance policy can take a lot of time and effort. After doing your research, filling out paperwork, and answering all the medical questions, your application may be declined. In this article, we’ll discuss the main reasons insurers deny an application and the steps you can take to increase your chances of being approved.
When you apply for life insurance, you must honestly list any illnesses you currently have. The insurer may also require a medical examination by a doctor of their choosing including blood or urine tests.
If you have an existing illness, the insurer will likely ask for an APS (Attending Physician’s Statement). An APS is written by your physician or specialist and outlines how your chronic condition is being treated.
Based upon this medical information, the insurer will decide if they can offer life insurance to you and may charge you higher premiums to cover your illness.
Certain lifestyle choices can increase your risk of dying, for example, smoking, heavy drinking, extreme sports, etc. Though most life insurance companies will still cover you, they’ll likely charge you a higher premium.
If your lifestyle choices are already starting to affect your health − for example, if you have developed lung cancer from smoking or liver disease from heavy drinking − then the insurer may reject your application outright.
It’s no surprise that the older you are, the riskier you are to insure. For this reason, the older you are at the time you apply for life insurance, the higher your premium is likely to be.
Certain insurance products are not available for people who are past retirement age, while others offer limited benefits for retirees. The most important thing to remember is that every insurer is different, so if you’re rejected by one, you may find another that suits you better.
Commons Reasons You May Get Declined for Life Insurance
The life insurance underwriting process is a way for insurers to determine an applicant’s eligibility for coverage. An underwriter weighs the risks associated with approving someone who wants to buy a particular life insurance policy.
The result of this evaluation enables an insurer to assign a rate class to an individual who wants to purchase life insurance. At the same time, the underwriter can decide that an applicant is too much of a risk to insure.
The various rate classes allow an insurance company to provide most people with some kind of affordable life insurance coverage while reducing an insurer’s exposure to high-risk applicants.
You may get declined for life insurance coverage after your exam because of a variety of health-related factors. Some of these things may be reversible with an improved lifestyle, increased exercise, and a superior diet. Other factors may be a warning sign of something more serious, which requires a specialist’s attention. The following factors may negatively impact your chances of getting coverage:
High PSA Levels.
A high PSA level – one that exceeds the 0-4.0 range, or a reading that is higher than your last exam – may mean you are at risk of developing prostate cancer. Even if there no additional risk factors, an underwriter may decline to issue an applicant coverage, or the underwriter may require that person to undergo more tests (and a needle biopsy) before approving or declining coverage.
High Creatine Levels.
High creatine levels may be an indication of serious liver and/or kidney problems, causing an underwriter to decline coverage for an applicant. Also, an applicant who is borderline diabetic and has high creatine levels –a BUN (Blood Urea Nitrogen) test will often reveal these numbers – may be at risk of developing serious medical complications, which may require long-term medication or surgery.
A1C Levels Are High.
An A1C test is a means of diagnosing diabetes. If an applicant’s A1C levels are high, and they may be several explanations (besides diabetes) for such a reading, those numbers can cause an underwriter to decline coverage. The normal range is, according to the Mayo Clinic, 4.5 to 6 percent. 6.5 percent or higher on two separate tests is confirmation of diabetes.
Drugs and/or Other Illicit Substances.
If a medical exam reveals that an applicant has nicotine and/or illicit drugs in his or her system, an underwriter can decline that applicant’s request for coverage. Alcohol and drugs are definitely not acceptable to an underwriter who is in the midst of evaluating a Term Life insurance application.
What Options Do You Have If You Get Declined after Your Exam?
If you get declined after your exam, you always have the option of applying for similar coverage with another life insurance company. You will have to go through the underwriting process again, which may be more or less stringent than the one where you were decline.
Consider alternative life insurance
There are a few insurance products that have flexible underwriting requirements and so are more likely to approve you. However, these are riskier for the insurer, and so they are likely to charge you higher premiums and limit the insured amount.
Simplified-issue life insurance
A simplified issue life insurance policy doesn’t require a medical examination with the insurer’s physician. You’ll still need to answer questions about your health, however, and the insurer will still need to review your medical records.
Guarantee-issue life insurance
Final expense life insurance
Final expense life insurance is sometimes called burial insurance. It is issued to people who are likely to die soon, and the benefit is only large enough to cover the funeral costs.
Workplace life insurance
Workplace life insurance is usually a group policy that your employer has in place with the insurer to cover all their employees. Because the policy isn’t specific to you, there are no medical checks, but not much flexibility either, and the coverage may be quite basic.
Adjust to a Better Lifestyle
If your application is rejected for health reasons, you can still appeal the decision by gathering more evidence to show the insurer that your illness is being well managed. You’ll need to prove that you are following a plan set out by a medical professional and taking steps to stay healthy, such as taking your medications, eating well, exercising, attending recommended therapy, etc.
If the insurer postpones your application, you can wait until your condition stabilizes and have a fresh medical evaluation done. This may mean taking more tests that show how your health has improved over time.
Accidental death (AD&D) policy
Alternatively, you can get accidental death and dismemberment (AD&D) insurance policy that pays death benefits to a designated party if your cause of death is an accident. This type of insurance is often less expensive than most forms of life insurance.
Use an insurance broker
Since insurance policy terms and conditions can be confusing, a life insurance broker can help you understand what went wrong with your application and the underwriting.
If your application was declined, that is to say, the insurer refused to cover you, the broker can advise whether you should apply again straight away or wait a while. They can help you find a product that is more suitable for your circumstances, increasing your chances of being approved.
If your application was “postponed,” this means it wasn’t declined, but you’re not getting coverage right now either. The insurer may be waiting for medical test results to come back or for your health condition to stabilize so that it can be assessed properly. It may just be that the application form wasn’t filled out correctly or was missing some documentation. A broker can help you iron out any administration wrinkles and give you advice on how to proceed with your application.
Of course, the best thing about insurance brokers is that they know the industry inside and out. They can help you get the best policy at the best price.
A declined insurance application doesn’t have to be the end of the road. There are avenues for you to appeal the decision and brokers who can help you get the life insurance you need.