rejected life insurance

What Are Your Options If You Get Declined for Life Insurance?


21 June,2013

Rejection. It’s one of the worst feelings ever. Whether it’s being rejected by your dream date at your high school prom, or getting rejected for a raise at your job. Nothing compares to the gut-wrenching feeling of being denied.

Getting rejected on applying for life insurance is no different. Nowadays, people have many different high risk conditions: high blood pressure, diabetes, sleep apnea.  Some of these conditions can prevent you from being approved when trying to take out a life insurance policy. If you’ve ever been declined for life insurance, then this feeling is all too familiar.

Just because you get denied by one insurance company, does that mean you should give up? Absolutely not. If you’ve been declined for life insurance, here are some options to consider.

1. Try Another Life Insurance Company

What most people don’t realize in the life insurance world, is that every insurance company underwrites its policies differently. What that means is that, one company may be more lenient on someone’s height and weight, whereas others would decline you immediately. That’s one of the major benefits in working with an independent life insurance agent that has the ability to shop it with multiple carriers.

Just like in the prom example above, getting denied by one girl doesn’t mean you can’t ask many other girls out. One of the key factors of getting approved, is being able to demonstrate that you are taking care of your condition. If you have high blood pressure, make sure that you’re taking the medication that your doctor has prescribed to you. Also demonstrate that you’re working out and eating right. All these factors can help getting you approved by another carrier.

2. Get Coverage Through Work

I often advise people to always get life insurance from a third party, versus at your place of employment, in the event you were ever to leave your job. But if you get declined for life insurance, then that becomes much more difficult. If your employer provides a group life insurance policy plan, then it makes obvious sense to get enrolled. That doesn’t mean that you shouldn’t try to get third-party insurance, it’s just a good substitute until that time occurs.

3. Consider a Guaranteed Issue Policy

Guaranteed Issue Life Insurance (also referred to as “graded death benefit policies”) are attractive in the sense they don’t require medical exams. You just have to answer some basic health questions, which don’t get that in-depth, in your medical condition. Does that sound too good to be true? Well, it kind of is for the following reasons:

  • Qualifying period. The term ‘graded’ means that if something were to happen to you in the first year taking out the policy, your beneficiaries would not get the full benefit. Typically, you have to wait two to three years before you’ll get the full coverage. Your heirs would only receive the premiums that you paid, plus a little bit of interest on top of it.
  • It’s much, much, more expensive. By bypassing some medical exams, the insurance company must account for this. They do this by asking for a much higher premium. In some cases, I’ve seen guaranteed issue policies be ten to fifteen times as much as a traditional term policy. But, once again, if you’re not able to get coverage, and you know you need it, this might be your only option.

4.  Wait and Try Again

If you have no life insurance coverage this isn’t the strategy I would lead in with.  Be sure to try one of the above options first.

Depending on why you got declined, you may have the option of reapplying after a certain period of time has passed.  One example might be a person who is recovering from breast cancer.  If they had surgery recently, you’ll more than likely get declined or “postponed”.   After you’re able to demonstrate to the carrier that the cancer hasn’t returned and your treatment is going well, you’ll be able to reapply and even potentially get affordable life insurance.

Don’t Give Up

The moral of the story:  don’t give up!

Getting denied for life insurance is not the end of the world.  The best thing you can do is work with an independent agent that is able to work with a bunch of different companies so they can shop your case to all of them.  It’s always good to have plenty of options and choices.