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Declined for Life Insurance: What You Need to Know

Licensed Life Insurance Agent/Staff Writer
March 10, 2020

When you apply for a life insurance policy, there’s always a chance you’ll be denied. And if a life insurance company has declined to cover you, it can be frustrating. Fortunately, being declined life insurance from one insurer doesn’t necessarily mean you can’t still buy coverage.

If you've been declined for life insurance, don't give up. Here's what you need to know about why insurers deny some applications—and what you may be able to do to obtain a life insurance policy anyway.

Why you may be denied life insurance

You might wonder why an insurer would reject an application from someone who wants to buy coverage and pay monthly premiums. 

Life insurance is highly regulated, so some denials happen for legal reasons. But usually, insurers deny applications because the company is unwilling to take on the risk of insuring you. Rejections are more common with people whose health or habits suggest a high risk of premature death.

Reasons for denial of life insurance coverage

A pre-existing condition such as cancer, unmanaged diabetes, or heart disease: While many insurers will cover people with some preexisting conditions (health issues you already have when you apply), some insurers won’t cover certain conditions.

A health condition discovered during your medical exam: Sometimes, the first sign that you have a health issue shows up in your life insurance medical exam results. In this case, you may need to prove to the insurer that you can manage the condition with your doctor before the company covers you.

A blemished driving record: DUIs, speeding tickets, and other citations may indicate to the insurer that an applicant participates in risky behavior.

Lying on an application: If the insurer discovers you’ve misrepresented pertinent information on your application, the insurer will consider you a moral risk. The company may deny coverage if it believes you're not acting in good faith.

Applying for too much insurance: If you try to purchase an abnormally high death benefit for your income, you may receive a rejection. You could also be declined if you apply for numerous policies in a short period, or you already have a lot of coverage.

No insurable interest: Insurable interest comes into play when you try to buy life insurance on someone else. In short, if you can’t prove that you would experience a financial loss in the event of the person’s death, your application cannot be legally approved.

Age: Insurers often place age requirements on their policies, usually between 18 and 80 or 85 years, but these rules may vary between products, states, and companies. While insurance agents are pretty good about not putting you through an application process if you don't meet basic age requirements for a policy, mistakes occasionally happen. If you’re 65 or older, look for senior life insurance. Or if you’re shopping for coverage for a minor, you may have to buy life insurance for children.

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What to do if you’ve been denied coverage

If an insurer declines you for a life insurance policy, you may still have options. Here’s what you can do to go after the coverage you need.

Ask questions: If the insurer doesn't tell you why you've been denied life insurance, ask. Some denials, like those due to inaccuracies on a life insurance application, may mean you'll never see an approval from this company. But with other denials, you may be able to alter the requested death benefit or apply for a different product and receive coverage. In some cases, you may secure a counteroffer in which the insurer automatically offers you a policy different from the one you applied for.

Confirm your information: Look over your application and test results to make sure they seem right. It’s possible you made a mistake on the application that led to your denial. It’s also possible the results of your medical exam aren’t accurate, so consider confirming them with your physician.

Apply with a different insurer: Each life insurance company has its own risk formula for deciding who to approve and who to deny, and some companies are more lenient when it comes to specific health conditions or habits. Consider working with a licensed, independent agent who can tell you which insurers are more likely to cover someone in your situation.

Apply for a different policy: Depending on the reason for denial, you may be able to apply for a different kind of life insurance coverage with a more lenient approval process. People with preexisting conditions might consider guaranteed issue coverage, for example. If your employer offers optional coverage, you may be able to buy group life insurance at work, which is typically cheaper and may provide an easier approval process.

You could also try a lower death benefit or accidental death or dismemberment (AD&D), which covers you only if you die due to an accident. Although these options may not provide the exact coverage you need, they could be better than no coverage at all.

Solve the problem: Some reasons for denial are fixable with time and effort. If poor health is the problem, work with your doctor to see if you can address the issue. If it’s your driving record, go to driver’s training or wait until citations become too far in the past to concern insurers. Addressing the reason for denial may take time, but if you’re patient, you could later be approved for the coverage you need.

Life insurance denial doesn’t mean it’s over

An insurer may have denied you coverage, but that doesn't mean you can't get a life insurance policy. Depending on the reason for denial, moving forward may be as simple as applying with another company, seeking medical care, or just sitting tight for a little while.

If you can’t wait that long for coverage, consider purchasing insurance for the meantime, even if the premiums are more expensive or the policy isn't exactly what you’re looking for. Short, term life insurance policies may be a good option. You could also consider guaranteed issue life insurance because you can’t be turned down for this coverage, or a low death benefit, which could provide a better chance of approval.

To prevent life insurance application denials, work with a licensed insurance agent who can find the right policy for your unique situation. Start by getting quotes from multiple insurers.

Written by
Kathryn Casna
Kathryn Casna is a licensed insurance agent and life insurance specialist who has appeared on The Simple Dollar and Best Company. On a weekly basis, she dives into complex life insurance topics to wring out genuinely useful information. When she’s not wrangling big ideas into easy-to-understand articles, Kathryn nerds out on budget-tracking spreadsheets and tries to coax her leash-trained cat to take outdoor adventures.