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Denied Life Insurance Application

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Ron Attias, a licensed insurance broker. He had no particular loyalty to any one insurance company, so he was able to shop all major insurance carriers. This means that you always get the BEST plan at the LOWEST price. Each plan can be customized to fit your specific healthcare...

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UPDATED: Jul 9, 2019

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Being denied for anything has such a glum implication in our culture. For some, it means they were not well off enough to get that mortgage or that particular credit card.

However, when it comes to being denied a life insurance policy, you still have some options and may be able to salvage that decline and get your life insurance policy issued. In this post, I will discuss some of the reasons the insurance company declines an applicant, and what you can do about it.

Related: Why do you get conflicting life insurance rates?

Life Insurance Application Outcomes

Once the life insurance underwriter gets the result of your exam, He/she will look at those along with your answers to the health questions on the application. He/she will come up with 1 of 4 outcomes:

  1. Approved as applied – it has the best sound. It means that your application is accepted at the same rate you were quoted, no changes there.
  2. Approved other than applied – this one means that your application was approved, however, you will need to agree to the new rates before they will issue and mail your policy. It usually happens due to a medical issue, and they will rate you accordingly.
  3. Postponement – this usually happens for significant diseases, such as breast cancer survivors who wish to apply just a few months after treatment ended, and the company isn’t willing to take the risk yet. The company will tell them to reapply in 3 or 5 years, depending on the cancer type, stage, and grade.
  4. Declined – has the worst sound. The company you applied for isn’t willing to offer you coverage. There are many reasons the insurance company can reject your application. It is mostly due to one or more of these issues: medical history, driving history, bankruptcy, or some information they got from the Medical Information Bureau or your medical test results.

Related: What is life insurance underwriting?

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What Can You Do After the Company Has Declined Your Application

  1. Get the facts straight –You should have received a letter from the insurance company stating that they are sorry to decline your application and here are the reasons why. The reasons could be anything from a recent DUI to a condition found on your test result. If you have a broker (and you should!), call him/her to discuss other options based on the current information you know now. I can’t tell you how many times an applicant isn’t telling the truth when a broker asks about criminal history or height and weight, only to find out that the application is denied six weeks later. It’s better to disclose everything on the spot so at least you won’t have to wait six weeks to know if an application can be issued or not. I have also seen other cases in which the agent didn’t ask the right questions, so the applicant had no idea that his/her high-risk hobbies, along with traveling to third world countries, will get him/her declined.
  2. Ask for your test results – if the declination is due to the medical exam results, ask the company to mail you the results so that you can compare them to your medical records and check with your doctor to make sure it is accurate. Mistakes do happen, but it’s not something we see very often.
  3. Talk with a different broker – If you tried to buy life insurance from a State Farm agent, for example (who only represents the one company), or worse, you shopped by yourself, try working with a broker, who represents more than one company. If you applied by yourself and got declined, you should really talk to a broker who can help you evaluate all the moving pieces.
  4. Appeal your declination – if you don’t agree with the life insurance company’s decision, you can appeal. For instance, if you were denied for having uncontrolled type 2 diabetes, but in your case it’s not true, prepare to have your doctor write a letter and have test results to show otherwise.

Last Thoughts

Life insurance denials are not the only thing that should concern you. Many times, you are overpaying for a policy because your agent placed you with the wrong insurance company for your specific health issue. Every life insurance company on the market has its own set of underwriting guidelines, and there is no “one size fits all” approach when it comes to choosing coverage.

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