Finding out you have been declined life insurance can be devastating. Please know that being denied life insurance is not the end of the road, but rather a (rather large) road bump. There are still many options available to you. In the following article we will list the reasons for being declined, provide some insights into why and also provide next steps so you can continue on your journey to getting life insurance.
Being Declined For Life Insurance
Considering we now know the importance of life insurance, it can be scary, frustrating, and a little saddening when finding out that your application has been declined. However, a rejection doesn’t necessarily mean that you will never have an opportunity to get life insurance ever again.
Later, we will be discussing the options that you now have after being declined, such as choosing a better fully underwritten life insurance company that caters to your particular health condition.
And if you would rather bypass an exam all together, consider simplified issue no exam life insurance.
First though, we want to go through some of the main reasons for rejection (or higher rates) for those of you that are currently going through the application process.
Reasons for Postponement or Decline
Elevated Liver Function – If this health problem is seen, there are two possible routes with the first being a denial if the levels are too high. If you have elevated liver function, the application might be postponed for the time being while you deal with the issue and visit a doctor.
If you find the cause and the problem is fixed, the application can then continue and this part of the process will be clear.
This being said, there are some companies that goes against this general rule. In fact, some companies may allow people with liver function four times higher than the average as long as the person hasn’t tested positive for alcohol marker or hepatitis.
Alcohol Marker – Leading on from the previous point, a positive alcohol marker means that the liver function is being kept at abnormal levels as a result of alcohol. If you only drink a couple of times a week, this will not be a problem but a bottle of wine every day after work is likely to cause more issues. When you drink heavily, the liver function is affected and therefore so will your application for life insurance.
Often, people get frustrated at this level of examination by the life insurance provider but you have to realize that an alcohol marker shows a number of things to the company.
First and foremost, your liver is struggling to keep up with the amount of alcohol you consume which should say enough in itself.
Second, a life insurance company needs to assess your health both now and the likelihood of problems occurring in the future. If you are consuming more alcohol than the average person, the long-term effects of this can be devastating.
History of Cancer – As you can imagine, any form of cancer on the medical history is an immediate black mark against your record. For some companies, they see it as an uninsurable issue which means that you will be declined almost instantly. In recent years, we have seen more life insurance companies consider cancer survivors though. In your application, you will need to be in remission for more than twelve months and they will consider the type of cancer you experienced along with severity and various other factors.
Obesity – Officially speaking, obesity can be defined as more than 25% or 32% body fat for men and women respectively. Using these guidelines, we can see that over 30% of all Americans are currently ‘obese’ which has impacted on the application system of life insurance.
Nowadays, extreme obesity will see an applicant denied regardless of other factors because this health issue opens the door for the likes of heart disease and diabetes. Anything under this, the insurance company will assess your case and you may face higher premiums.
Recent Hospital Trips – If you have recently had a stint in hospital, your application is likely to be postponed until you have stayed free from health problems and been healthy for a period of months. Even with severe issues like heart attacks or strokes, insurance may still be possible but you will have to be free from the hospital for six months before resuming your application once again.
Cholesterol/Triglycerides – With a slight elevation of either of these, you will probably be accepted without a hitch. However, if you have a known problem with the doctors or have levels significantly higher than the accepted level, you will run into some problems. If between average and problematic, you might be asked to see a specialist and postpone the application until it is under control. If anything higher than this, some companies will choose an automatic rejection.
Urinary Troubles – During a medical examination, they will take samples of your blood and your urine. Depending on the company, you will either be postponed or declined for life insurance if they find protein or blood in the urine. Sometimes, this can be caused by excessive physical exercise which is why most companies will postpone until you have seen a doctor. However, it can also be caused by kidney disease which is why they are cautious. Initially, bladder cancer can also cause protein in the urine so a visit to the doctor should be made anyway.
Drug or Alcohol Abuse – Considering these two problems have an impact in both the short- and long-term, they will be considered within your application.
If you are currently struggling with either problem or have done so in the past, the company is likely to ask the extent of the issue.
If you have been clean for a certain amount of time, it shouldn’t have too much of an impact. If you are currently attending rehab, you could see a decline straight away.
Other Health Conditions – Although we have discussed many of the major health issues taken into account, the full list is actually quite extensive and can include high blood pressure, epilepsy, hepatitis, high level of lipids, and elevated glucose or HbA1c levels.
Normally, a life insurance company will assess your case in terms of extent and the period of time for which you have suffered with the problem. Strangely enough, providers are more cautious with new conditions than they are with ones that have been in place for decades. With the latter, it shows that the person has it under control so they are more likely to be accepted. From here, the condition will contribute to how much they pay each month.
Too Much Coverage – At its very core, life insurance is all about replacing lost income after someone passes away. Therefore, you won’t be able to take out a million dollar policy if you only have a small income, such as those currently receiving SSDI for a disability. Although you will be allowed a bit extra to pay for children and other factors, you will be declined if you apply for something well above your means.
Motor Vehicle Report – During the application, you will be asked about motor offenses and people generally lie because they think it will help. Unfortunately, providers will check whether you have any violations or DUI questions so you might as well confess early in the process. When working with an agent, they will typically find companies that will accept despite problems on your license.
Previous Denials – If you have been declined for life insurance in the past and you didn’t notify your agent, you are likely to be declined again because they didn’t factor this into the decision when choosing a company. Regardless of the reason, you should let the team at JustBuryMe know so that we have all the information available when finding the right policy for you.
Next Steps After Being Denied Life Insurance
With these reasons out of the way, let’s look into what happens next if you have already been rejected. At first, we always advise people not to panic because many US citizens are declined for life insurance each and every year. Failing this, they are accepted but required to pay higher premiums. Below, we have three steps to the recovery process and what to do next.
Step 1: Collect Data – When assessing your application, you may not realize that the insurance company will actually collect information from various different sources. Not only will they use the information provided by yourself, they will look at your driving record, Rx database and Medical Information Bureau (MIB).
Therefore, your first step should always be to find out why you were declined. Of course, you want to know why you were declined but you also want to know if the medical exam picked up on something serious.
Step 2: Confirmation – With the application system being a combination of machines and human interaction these days, errors do exist. Whether somebody input the wrong data or maybe the machine read something wrong, you will need to confirm that every single detail in your application is correct. If you failed on medical grounds, you can contact your physician and have it confirmed whilst discussing the issues that arise.
Elsewhere, it might be that you have a particularly dangerous job, you have financial problems, or maybe even a criminal record. With any of these records, it gives the life insurance cause for concern but you should contact them if these records aren’t up-to-date or even wrong. Let’s not forget, many companies still use people to assess claims so an oversight or a mistake is viable.
Step 3: Contact an Agent – After you have done the research, you can then contact an agent to find out what to do next. In all likelihood, the company you chose first time around wasn’t the best so there are still opportunities to get insured. As long as you choose an agent who has access to all the little health niches in the life insurance marketplace, they will know exactly where to look for a policy that will accept you and offer everything you need at the same time.
If you were rejected for a medical problem, your next application must be for a company that accepts this medical problem in some capacity. For example, you might have diabetes which the first company cannot help with at all. With your next application, you can work with an agent to find a policy that suits you while accepting your type of diabetes.
Step 4: Compromise – If your denial reason was too severe and it looks as though no company will accept you, there may need to be some compromising on your part. In some situations, people have to give up certain features or they may even have to go for a guaranteed issue life insurance policy.
Of course, this has no medical examination or medical questions. Although you will have a graded benefit – this means that the full death benefit will not be available for the first couple of years – at least you can have protection in place.
There we have it, your guide to life insurance declines. With this information at hand, you know the major causes of rejection as well as what you need to do next. No matter what happens, it is important to persist with life insurance because the effort will be worth it for the family and friends you leave behind!