Why would you be declined for life insurance

Most people denied life insurance coverage are caught off-guard when the agent or company lets them know their decision. Many times, the denied individual could have known upfront if they’d have a problem getting a life insurance policy issued and may have been able to make personal adjustments or find another company that would likely approve their application.

This article is intended to help you understand potential reasons why you could be denied life insurance. Hopefully, your situation is such that you’ll be able to locate an insurance company that will find you to be an acceptable risk.

Now, let’s look at some common reasons that people are denied life insurance when they apply for coverage.

Life insurance companies employ people called “actuaries,” who analyze risk and the company’s claims-paying history to help determine your insurability. With your age and mortality rate being critical factors in their decision about issuing you a policy, your health status plays an important role.

Let’s look at three health conditions that prevent many applicants from getting approved:

• Obesity. As of 2021, the American obesity rate is 42.4%, and it continues to rise. It’s a big issue because it is a significant contributor to the development of illnesses and events like heart attacks and strokes. Some life insurers aren’t necessarily more liberal with their underwriting, but they will take into account your build, as well as your weight. If you think this could be a problem area for you, have your agent research companies that use a “build chart” when underwriting policies.
• High Cholesterol. Another common reason for denials is high cholesterol, lipids, and triglycerides. Your total cholesterol is determined by the ratio of high-density cholesterol (HDL) and low-density cholesterol (LDL). HDL is “good” cholesterol, and LDL is “bad” cholesterol. The wrong ratio puts you at an increased risk for heart disease and stroke.
• Diabetes. High blood glucose/sugar levels also is a primary reason you can be denied coverage. High levels are an indicator of the onset of diabetes or that you are already considered to be diabetic. Some companies are more lenient concerning diabetes, so do your homework before you fill out your application.

If you suffer from a chronic illness and apply for life insurance coverage, there is a high probability of your application being denied. Chronic illnesses include:

• Cancer
• Diabetes
• HIV/AIDS
• Heart disease
• Parkinson’s disease
• Asthma
• Alzheimer’s disease

If you can provide a statement or medical records from your doctor attesting to the treatment and stability of your illness, some companies will be more comfortable insuring you.

Yes, there is age discrimination when applying for life insurance. Older adults will find it more difficult to find life insurance products they want at affordable premiums. Statistically, the older you get, the more health problems you’ll develop. This makes you an increased risk for the insurance company, which is something they avoid.

As it is with most types of insurance like health insurance and disability insurance, it’s best to apply when you’re younger and healthier.

When applying for life insurance coverage, it’s almost always a pre-requisite that you have a medical exam, including providing a urine sample. If the lab that examines your urine finds blood or protein, this can pose a major problem for you.

It can be caused by either extreme physical activity or kidney disease. If you’re denied because of this, have your doctor get another sample from you and have it analyzed. If it comes back normal, submit that information to the insurance company for re-consideration.

Learn More: No Medical Exam Life Insurance

Another facet of the medical exam is having a blood sample drawn. From your sample, insurers can determine if your alcohol consumption level is much higher than “normal” levels. If they are, the odds are much greater you’ll be denied coverage.

Some occupations are riskier than others, which poses a more considerable risk for the insurer. Some jobs that are considered to be hazardous include:

• Airline pilots and flight engineers
• Logging workers
• Fishers and related fishing workers
• Roofers
• Refuse and recyclable material collectors
• Structural iron and steelworkers
• Truck drivers
• Farmers, ranchers, and other agricultural managers
• Construction laborers
• Electrical power-line installers and repairers
• Police and sheriff’s patrol officers

If you earn a living through one of these hazardous occupations, life insurance is often available for members of an industry association for your profession.

When applying for life insurance coverage, your income and net worth will determine how much coverage you can apply for. For example, an individual earning $20,000 per year is not likely to be approved for a $1 million life insurance policy. The risk to the insurer is too great that there would be an enormous financial benefit for someone from your death, which could also put you at risk.

Life insurance companies provide information to a repository called the Medical Information Bureau (MIB). This information contains a lot of information about you, including your health history, prescription medications you take, and how many life insurance companies you’ve applied for coverage with. It’s a big strike against you if your report shows that you have recently applied at numerous other life insurance companies and were denied coverage.

These are some of the reasons you could be denied life insurance coverage. It can be beneficial to work with an independent life insurance agent who represents multiple life insurers. They can often match your situation with insurers that are known to issue policies to people with similar circumstances as yours.

Reputable insurance companies will not go out of their way to avoid paying a valid claim, but they make it clear up front what could cause them not to pay a death claim. These are four common reasons why insurers can legally deny payment of a claim.

• The death occurred during the contestability period. The first two years you are covered by a life insurance policy is known as the contestability period. If you die during this period, the life insurance company can investigate whether or not you provided correct information on your application. Even if it was an accident, like you provided the wrong date of birth, the claim could be denied.
• The policy didn’t cover the type of death. Life insurance policies contain wording which explains what kinds of death will cause a claim to be denied. For example, if you were killed while committing a felony, like a bank robbery, the claim will be rejected. Death caused by your participation in a hazardous hobby, like skydiving or scuba diving, that is excluded by your policy could also be a reason for denial of claims payment.
• You failed to disclose relevant information. This wouldn’t include writing down the wrong zip code on your application or the wrong driver's license number. It does include pertinent information, including facts that would have impacted their decision to issue you a policy, such as not disclosing that you had previously suffered a heart attack.
• You failed to pay your premiums. It’s happened more than once that a named beneficiary approached a life insurance company to have a claim paid, only to find out the policy had lapsed years ago because of the non-payment of premiums. Having premiums paid by a monthly bank account debit can help prevent this from happening to you.

A good life insurance agent is worth their weight in gold. They’ll make sure accurate and complete information is submitted to the insurer, that you understand any conditions that could void payment of a claim, and they’ll let you know if your policy is in danger of lapsing. A referral from a friend is often a great way to find the right agent.

Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

Don’t be disheartened if your first life insurance application was unsuccessful. Different insurers have their own application criteria and assessments of risks, so it doesn’t mean you’ll be refused again. You should, however, heed our advice on how to proceed to ensure you can still access the best life insurance deals on the market.

In This Guide:

If you’ve been declined life insurance, your first step should be to find out the specific reasons why your application was rejected. Typically, it’ll be based on a combination of health and lifestyle factors. You can ask your doctor for a copy of your medical records or ask the insurer to send over whatever medical information they have for you. Once you’ve received this, if you’re still uncertain as to why you have been refused life insurance then speak to an insurance advisor who can assist.

If you’re a very high-risk person, an insurer may determine that it’s not in their financial interests to insure you. Or they could, but by setting very high premiums which, in all likelihood, are prohibitively expensive.

Common medical reasons that mean you can’t get life insurance

Let’s take a look at some of the most common medical conditions that cause an application to be rejected:

• High cholesterol, lipids or triglycerides
• Being overweight or obese
• Elevated liver function
• History of cancer
• Hepatitis
• HIV and AIDS
• High levels of glucose or blood sugar

It’s not necessarily the case that your application will be instantly rejected if you have one of these medical conditions, but on the whole, you may find it harder to get insurance. However, if you develop one of these conditions after you’ve successfully taken out a policy don’t worry – your cover should still be valid.  

Common lifestyle factors that mean you can’t get life insurance

And now, let’s look at the lifestyle factors that most frequently lead to a rejection:

• Smoking
• Alcohol consumption
• Job risk – for example if you work at heights, in construction, at sea etc.
• Income limitations – some insurers will decide not insure you on the basis of your income being too low, as they assume you won’t be able to keep up with your payments.
• Previous rejections – a bit of a catch-22, but if you’ve been previously refused life insurance you may appear to be a higher risk.

It’s important to note that, as with medical conditions, if there is a combination of lifestyle factors that pose a risk present, then your application is more likely to be rejected.

You can still get a life insurance policy if you’ve been rejected, but how competitive a deal you can get will depend on why your application was unsuccessful. So first, find out on what exact basis you’ve been declined life insurance: if it was due to lifestyle factors, then you could well get cheap life insurance in the future if you make certain adjustments, such as stopping smoking.

On the other hand, if you can’t get life insurance due to medical reasons, don’t fret. There are specialist insurers out there who will cover certain medical conditions, so you could still find a deal – your options may just be more limited. However, the cost may well be worth it for peace of mind, knowing that your loved ones are looked after should the worst happen.

Consider over 50s life insurance

If you've been rejected life insurance or you're struggling to find cover, if you're aged 50 or over then you should consider a specialist over 50s policy. 

These are a type of 'whole of life' insurance policy that promise guaranteed acceptance, and you're not even requied to answer any medical questions when applying for it. 

While over 50s life insurance policies are a safe option if you're struggling to find cover elsewhere, you should note that these types of policy typically demand higher premiums, while the total payouts are generally lower and set aside for things like funeral costs. 

Don’t give up!

When you’ve been declined life insurance, don’t put another application in right away: it’s likely you’ll be rejected again on the same basis. We can’t stress this enough: you need to find out why you’ve been rejected and go from there. Build a solid picture so you can productively hone in on your search.

For example, your application may have been refused on the grounds of your income being too low, but there are many insurers who will still cover you irrespective of what you earn. Knowing this, you can then tailor your life insurance comparison accordingly rather than relying on guesswork.

Again, remember it’ll usually be a combination of factors that leads to a rejection – in few instances is it one standalone factor that’s a big red flag.

Speak to an advisor if you’ve been declined life insurance

If you’ve been refused life insurance and have discerned where your application failed, you can always seek guidance from an advisor if you don’t want to navigate the complex world of life insurance alone. Speaking to a professional will give you clarity when you proceed to compare life insurance deals with us.