Life insurance provides a financial safety net for your loved ones after your death. But what happens if your application for life insurance is rejected? If your life insurance application is denied, you can find out why, appeal the decision, try another insurance company or look for alternative coverage options.
1. Review Why Your Application Was Denied
Life insurance companies may reject your application if they discover anything that could shorten your life. Common reasons for denial include:
Medical Conditions
Medical conditions such as diabetes, high blood pressure or heart disease may disqualify you from coverage if your illness is life-threatening. If you've had cancer or are currently undergoing cancer treatment, your life insurance application may be denied until you've been in remission a certain number of years.
Smokers can usually get life insurance unless they've developed a disease due to smoking, but will pay higher premiums than nonsmokers.
Disabilities
It's illegal for insurance companies to deny life insurance due to a disability unless the condition shortens your life expectancy. For instance, deafness generally won't affect your ability to get life insurance, but cerebral palsy or epilepsy might.
Age
Insurers may deny term life insurance to applicants over a certain age, such as 75. Those 55 and older might not get 30-year term life insurance, but might qualify for a shorter term.
Risky Job or Hobby
You might be denied life insurance if you work in these dangerous jobs:
- Active-duty military service
- Construction worker
- Farmer
- Firefighter
- Grounds maintenance worker
- Logger
- Miner
- Offshore oil worker
- Pilot
- Police officer
- Steelworker
- Garbage collector
- Truck driver
Your application might also be rejected due to risky hobbies, such as skydiving, auto racing, rock climbing, surfing or scuba diving.
Positive Drug Test
Medical exams for life insurance often include blood and urine tests. If a test shows you've used illegal drugs, you'll probably be denied life insurance. Marijuana use may be an exception, depending on your state's laws and the insurance company's underwriting policies.
Driving Record
Your life insurance application could be rejected if your motor vehicle record reveals a history of accidents, reckless driving or speeding tickets. A single DUI or DWI might not keep you from getting life insurance, but a pattern of offenses could.
Lying or Omitting Information on Your Application
Lying on your insurance application or leaving out critical information, such as a family history of heart disease or a diagnosis of depression, could prevent you from getting life insurance. If the insurer discovers the falsehood after your death, they may deny your beneficiary the insurance payout.
Financial Issues
Insurers may reject your life insurance application if there's reason to believe you can't afford the premiums. This might happen if you have a history of bankruptcy, lots of outstanding debt or a low income.
2. Consider an Appeal
If your life insurance application is rejected, ask for details. See if the denial was based on inaccurate information, such as an error in your medical records or a false positive drug test. If you believe you were rejected in error, ask the insurance company how to file an appeal.
3. Try a Different Insurance Provider
Each insurance company has its own underwriting standards; just because one insurer rejected your application doesn't mean others will. Apply to several insurance carriers, being sure to answer honestly if asked whether you've been denied life insurance in the past.
Working with an independent insurance broker or agent may help. These professionals work with multiple insurance companies and know which carriers are more likely to approve your application. Some insurance professionals even specialize in high-risk clients.
4. Look for Alternative Life Insurance Coverage
Consider these alternative life insurance options.
No-Exam Life Insurance
There are several kinds of life insurance that don't require a medical exam.
- Simplified issue life insurance applications generally ask about your medical history and health status. The insurer also evaluates your medical records. Death benefits generally range from $25,000 to $300,000, but coverage may cost more than other types of life insurance.
- Instant life insurance is quick and easy to get. Apply online, answer questions about your health, and you'll usually get a decision within 48 hours. Death benefits are typically capped at $1 million.
- Guaranteed issue life insurance is permanent life insurance designed for those who've been denied life insurance due to health problems. You won't be asked about your health and are generally guaranteed to qualify if you're within a certain age range. Guaranteed issue life insurance is more expensive than other types of life insurance, and death benefits usually top out at $25,000.
Group Term Life Insurance
Some employers offer employees term life insurance and even pay the premiums. Since you generally don't need a medical exam to qualify, group term life insurance is open to people with health issues. Coverage may be a flat amount or a multiple of your salary, but is usually very limited, and generally ends if you leave your employer.
Whole Life Insurance
If your term life insurance application was denied due to age, investigate whole life insurance. Although it's much more expensive than term life insurance, whole life insurance is often available to people as old as 85 or 90. This permanent life insurance lasts your whole life or until age 99 (depending on the policy) and builds up cash value as well as a death benefit.
Final Expense Insurance
Concerned about your funeral expenses? A final expense insurance policy may be all you need. Final expense insurance can cover funeral and burial costs and is available to people up to 85 years old—or even older depending on the provider.
Disabled Veterans Life Insurance
Veterans with service-related disabilities may be eligible for Veterans Affairs Life Insurance (VALife). This whole life insurance with death benefits up to $40,000 begins accruing cash value after two years. Assuming you meet eligibility requirements, you'll be approved automatically, without having to prove you're healthy.
Savings or Retirement Funds
Use the money you'd otherwise put toward life insurance premiums to build a nest egg. Contribute more to your retirement plan or investment account, or use a high-yield savings account to build up a sinking fund for burial expenses.
5. Wait and Reapply Later
Making lifestyle changes to reduce your risk could help you qualify for life insurance in a year or two. Give up risky hobbies or dangerous jobs. Quit smoking and take steps to manage chronic conditions like diabetes or high blood pressure. Have your doctor run tests to confirm your health has improved before applying for life insurance again.
The Bottom Line
Improving your financial health might help you qualify for life insurance. Some insurance companies check your credit-based insurance score when you apply for coverage. Although this differs from the credit scores lenders use, it's based on similar information. The same actions that can increase your FICO® Score☉ , like tackling debt and paying bills on time, may boost your credit-based insurance score. Monitoring your credit score and adopting a healthy lifestyle can help you get life insurance and safeguard your family's future.
