No one likes rejection, especially those applying for life insurance. The good news is that a rejection doesn’t mean there’s no way to get life insurance.
You might have to get creative or find a different type of policy. For instance, if an insurer rejects you for a permanent life insurance policy, you may want to try a term life policy instead. Here’s more information about each one:
- Term life insurance offers coverage for a specific number of years, such as 10 or 20 years. If you outlive your policy, your insurer won’t have to pay a death benefit.
- Permanent life insurance, such as whole life, is for life. As long as you pay your premiums, your survivors will receive a death penalty when you die. These plans also have a cash value component. This allows you to tap into your policy while you’re alive.
There is a long list of reasons why someone might get declined coverage. If you get rejected by insurer, there’s a chance another one may give the OK. That’s because each life insurer has its own underwriting policies.
Let’s take a look at why you could get rejected and what to do if that happens to you.
Why you could get rejected for life insurance
Insurers may reject your life insurance application for a multitude of reasons. That includes if you’re considered a high risk.
Maybe you’re a deep sea fisherman or an ice climber with dangerous jobs. Are you overweight with a disease directly related to your weight like heart disease or diabetes?
We could come up with any number of risk scenarios, but the main problem is that an insurer may consider you a high risk. Insurers don’t like to take risks — especially for term life policies.
There are still ways to get coverage if you’re high risk. To begin, consider how life insurance is approved. There is an underwriting department that combs through applications looking at everything from finances to pre-existing conditions to your hobbies and decides if you’re worth the insurance risk.
Each company’s underwriting department has a different set of rules. A rejection from one company for a pre-existing condition doesn’t automatically assume a rejection from all life insurance companies.
Keep in mind though that there is a national database called the MIB. This database contains all applications for life insurance. So, insurers know how many applications you’ve completed and your answers on those applications.
What to do if you’re declined for life insurance
So, what do you do if you’re declined for life insurance? Follow these steps:
Find out why you were declined
The life insurance company has to reveal the reason you were denied coverage. Once you have this information, contact your doctor’s office.
Maybe it was an erroneous lab test or something that needed more explanation — both of which your doctor can indicate to the life insurance company. It’s possible that providing the life insurer with further evidence that you’re healthy could get your decision overturned.
Promote your healthy habits
Even if the lab results were correct, there’s still a chance you can get that rejection reversed.
Remember that database called MIB? Your rejection will be filed with it.
The database helps insurance companies detect and fight fraud by comparing your results and answers from each application. There’s nothing you can do about your real medical conditions because they will obviously be flagged on your records.
What you can do, though, is to show that the conditions are under control. For instance, if you’re following your doctor’s advice, taking your medication and taking steps to improve your lifestyle.
That may help you in an appeal.
Appeal the decision
Once you have a copy of your rejection, call the insurance company and find out their specific appeals process. You’d hate to lose out because you missed their time frame for filing.
Don’t forget to collect all of your evidence — doctors notes and anything else that might help your case. Get help. If you’re feeling overwhelmed, find a lawyer who can help you sort through the process. Attorneys who specialized in insurance can help.
An important step that some might forget, once you file your appeal, follow up. Things get lost, computers send the files to the wrong place, who knows the reason? If you follow up and stay on top of it, you won’t miss any deadlines.
Apply for a different policy
The next option you want to consider is applying for a different life insurance policy.
If you were rejected for permanent coverage, consider term life. Other options might be more costly or not offer as large of a payout, but if you’re looking to get some coverage and some peace of mind for your family, you need to consider every avenue.
Workplace group life insurance policies are also possible. Some have a flat payout they offer and others will pay based on your service to the company. These types of policies may not take your health into account since your policy will be balanced out by your colleagues.
Workplace life insurance plans usually don’t offer much coverage, but it’s better than nothing.
Getting rejected for life insurance may seem scary, but there are ways to still get coverage. Make sure to take these four steps if you’re declined, so you can get coverage for your family and give yourself peace of mind.