Life insurance companies use a process called underwriting to determine not only how much your insurance premiums will be but also whether you’re eligible for life insurance coverage at all. Each insurer’s underwriting guidelines vary, so if you get declined for life insurance with one company, you may have more luck with another. You may fall into the “impaired risk market” which means you have something in your background that makes you a risk for dying prematurely – For example diabetes, obesity, a previous cancer diagnosis, or even a history of DUI’s. But, often times, it doesn’t mean the hunt for an approval is over. We would like to give you a list of some options which include applying to a more suitable company or a different policy type.
Underwriting Will Collect Information
During underwriting, life insurance companies, look at many different factors. The insurer will want to get a picture of the risk you pose, which means looking at your hobbies and health. They will look at anything that could kill you prematurely, like smoking, skydiving, or having a family medical history of cancer. Upon request, the carrier can provide detailed information on why you were declined. Was it due to medical history, current exam results, driving record or something else. Denials for current exams tend to be the most shocking, as you many not know about an illness or disease beforehand.
Inspect and Confirm the Results
There are times when underwriters may have been provided incorrect information. Once you receive your results, you should double check all the information they received. If you are denied coverage because of your exam, reach out to your doctor to confirm the results. It’s possible that an insurance company would deny coverage for under-diagnosed lab results, which is not necessarily a justified reason for denial of coverage. You could be denied for occupational or recreation hazards, criminal records, and even financial distress. Having records such as these, which are not updated or detailed enough, can lead to postponement or declines because the underwriter simply can’t access a proper risk profile.
Talk to Your Life Insurance Agent/Broker
If your life insurance application is declined, the first thing you should do is talk to your life insurance agent or broker. They’ll probably contact you first – when informing customers that they’ve been declined, life insurance companies tell the broker first and then send the prospect a letter directly. The insurer will usually say why your application was declined. Your broker can work with you to analyze the decision and decide on what to do next. Luckily, when you apply to another life insurance company, you can reuse the medical exam from your first application. That should shave a few weeks off of your application timeline. Each life insurance company adheres to its own set of underwriting guidelines, meaning identical application to separate carriers could yield different results.
Apply for a Different Policy Type…
Alternative Life Insurance Products
If your carrier deems you to be high risk, you may still be able to get insured by purchasing an alternative type of life insurance. These are no-exam life insurance policies, but they may offer lower coverage.
Simplified-issue Life Insurance
With simplified issues you’ll be able to skip the pre-exam. However, that doesn’t mean you won’t have to discuss your health issues, and the underwriter will still see your medical records. Simplified-life issue life insurance is also more expensive. For the same amount of coverage you’d get from a traditional term life insurance policy you’ll pay much higher premiums. Additionally, most simplified-issue plans offer no more than $100,000 in coverage.
Guaranteed-issue Life Insurance
Also called “guaranteed-acceptance” life insurance, guaranteed issue life insurance skips underwriting entirely. That means no medical exam and no look at your medical records. You’ll still be asked about your health, and misrepresenting yourself will have the same consequences as other life insurance policies. Not only is guaranteed-issue life insurance more expensive, it also offers a much smaller death benefit. Usually, it’s between $10,000 and $50,000.
Once you do find a life insurance policy, you may still want to continue shopping for coverage. Depending on your premiums and death benefit, there may be some money-saving options down the road. For example, if you were declined life insurance due to obesity and you then lose weight, let time pass and reapply for coverage. Once medical records are updated, there’s a chance you could receive a lower rate. Additionally, if you were declined due to your driving record or criminal action, you may need to wait until the offense is cleared. There is no one size fits all regimen to combat declination. However, taking these steps could alleviate the stress and annoyances that make finding coverage so daunting for you.
Rollins Insurance represents multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio.
Rollins Insurance is an independent insurance agency providing our clients the best prices with the most coverage possible since 2008. We represent multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio. We find that most people are under-insured and over-paying when we meet them. We love what we do and our primary business is Personal Auto, Homeowners, and Life and Health insurance. We are a family-owned and managed business that specializes in providing needs-based insurance services.
>> Learn More About Us and Our Staff