It’s tough to learn that the life insurance company you applied to will not be offering you coverage, especially if you were fully expecting a yes!
You may fall into the “impaired risk market,” which means you have something in your background that makes you a higher risk for dying prematurely—think things like diabetes, obesity, a previous cancer diagnosis or even a history of DUIs.
While many applicants with this type of history understand they’re up against a hurdle or two, it’s not any easier to be denied life insurance coverage. But, often times, it doesn’t mean the hunt for an approval is over.
There may still be options, which include applying to a more suitable company or applying for a different policy type.
Here are three actionable steps you should take if you’ve been denied life insurance.
1. Collect information. Before an insurer denies an application, they collect lots of data from several sources to evaluate your risk. If the risk is high enough, you are either rated, postponed or denied. In any of these circumstances, requesting more information on the reason for denial is your right.
Upon request, the carrier can provide detailed information on why an applicant is declined, whether it was due to medical history, current exam results, driving record or something else. Denials from current exams tend to be the most shocking, as you may not know about an illness or disease beforehand.
2. Confirm the results. Errors can happen. Wires can be crossed. Double check the data that was provided to the underwriter. If poor exam results were cited as the cause, confirm it with your primary care physician. In some cases, a company may simply deny coverage because of new, undiagnosed lab results, even if there is little cause for concern.
In other scenarios, you could be denied for occupational or recreational hazards, criminal records and even financial distress. Having records such as these, which aren’t updated or detailed enough, can lead to postponement or declines because the underwriter simply can’t assess a proper risk profile.
3. Work with an agent. Even with proper research, the first company you apply to isn’t always necessarily the best. Passing along detailed information to an agent can allow them to search into better options. A well-trained high-risk life insurance agent can assess information thoroughly and find a better fit for you.
But you also need to understand that applying to another carrier is an option only if the reason for denial (such a diabetes) is one another may accept (because your diabetes is under control with medication). Each life insurance company adheres to its own set of underwriting guidelines, meaning identical applications to separate carriers could yield different results.