What can I do if my life insurance application is declined?
In some cases, insurance companies will deem the risk of insuring you to be too great and will deny your life insurance policy application. Policy rejections can be triggered by a number of things, like health issues, lifestyle choices, etc. Requesting a reassessment or trying another life insurance provider are just some of the ways you can overcome a policy rejection.
Taking the initial steps to get life insurance coverage is hard work. Whether you are applying online or going through the arduous process of choosing a broker and provider, it can be incredibly frustrating when you finally apply for a policy and your life insurance application is declined.
There are several reasons why your application can be declined. You have control over what affects some of those reasons; with others, you quite simply do not.
So why might you be declined for life insurance, and what can you do if that happens? Read on to find out your next steps if you find yourself in these aggravating circumstances.
Why was my life insurance application declined?
We have explained in detail the various factors that determine the price of your life insurance policy. Answers you provide to your insurance company help them assess the cost and risk of insuring your life. Sometimes when they are done with their calculations, they establish the risk is too great for themselves to insure you for the policy you applied for, and deny your life insurance application.
There may have been a specific health or medical condition (such as obesity, cancer, diabetes or another chronic illness), medical testing or lab results, lifestyle choices (such as risky behaviours like sky diving and extreme sports), criminal records, driving behavior, dangerous occupations, even age, or income, and much more that triggered the decline of your life insurance application.
What are my options if my life insurance application is declined?
Don’t freak out – while many Canadians are quickly approved for life insurance, you are not alone if you received a life insurance denial letter. While it’s normal to feel angry, resentful, or upset if this happens to you – realize there are always options available. Step back, assess your situation, and take the following steps.
Gather all the information you can. Reach out to the insurer or your advisor and ask for information on why you were declined. This isn’t a topic where you have to be in the dark. The insurance company can provide more detailed information upon your request on whether the decline was due to exam results, medical history, driving record, or some other reason.
If the decline was due to a health reason, insurance companies will typically have your exam results delivered to your family doctor detailing the medical issues behind their decision. From there, you can check with your physician to confirm the findings and any diagnosis.
Ask to reassess. At that stage, you should double-check that all the medical information shared with the insurance company was up to date and correct. If you find an error, you can always request the company reassess your application with all the correct medical data.
Ask them if they can issue with exclusions. In rare cases, insurance companies may reconsider a declined application if you agree to some exclusions based on your test results or medical history. For example, let’s say your insurance application was declined due to a heart condition. An insurance company may still grant you coverage, but exclude a death benefit if you pass away due to any complications of the heart that your condition may affect. Again, we stress this a very rare instance, but in your insurance buying journey, there is no harm in asking at this point.
If you’ve been declined, it will stay on your record for up to 7 years. Yes, that’s right – your record. Much like applying for credit, North American insurance companies share limited information regarding insurability of an applicant through a regulated body called the Medical Information Bureau (MIB). They do this to enhance transparency and consistency of information between the companies. In rare cases, the information the MIB provides prevents the more unscrupulous applicants from holding too many policies simultaneously or providing false information to get insured by one company after getting declined by another.
While this MIB may sound like another MIB …
At the end of the day, their work and purpose ensure that insurance seekers are treated fairly throughout the whole process.
Thus, presenting false information on an additional life insurance application is not in your best interests. First thing’s first, it will flag your record for added future scrutiny. Secondly, if you lie on an application and a claim is declined at death because of it, you end up not covering anyone or anything you wanted to in the first place.
Can I change any of the information to get my life insurance application approved?
Change is perhaps the wrong term, but there are some things you can attempt to get a different result.
As we mentioned before, make sure the insurance company has your most up-to-date medical information. They may have made a decision based on old lab results or doctor’s notes. Be diligent in ensuring they have recent information to make their decision.
Next, if you have time, use it. If you don’t need to be insured this minute, and you feel some of the negative medical results or questions can be improved, then take the steps to create a plan and make the necessary changes.
For instance, if an insurance provider recommends a loss of weight or a reduction in your cholesterol level, you can implement a plan to change these factors through medication, diet, exercise, or other methods and reapply when you get improved results. This logic can apply to behavioural factors as well, whether finding the willpower to stop smoking or changing your mind on travelling to active warzones.
Ok, I’ve accepted that my insurance application is declined. What are my options?
You are not out of luck, there are still many viable options if you are declined for traditional life insurance coverage.
Try another provider
We know we sounded a little alarmist before with the MIB, but some insurance companies have more flexible underwriting than others. In many cases, certain companies are more flexible on health conditions, while others look at lifestyle conditions more favourably. Just because you were declined by one company doesn’t mean the rest will follow. Though remember, because of your previous application, another insurance company will look at the new one with a finer toothed comb.
Simplified life insurance. Depending on what triggered your initial decline, you can consider simplified life insurance, sometimes called simplified issue. You’ll answer a short application to see if you are eligible for life insurance without a medical exam. If you pass, expect higher premiums as an insurance company takes on more risk with these types of policies.
Guaranteed life insurance. This option is incredibly simple; there are no medical exams or health questions, though the coverage usually tops out at $50,000. The premiums are much higher as this is a large risk for an insurance company to undertake, and there is an exclusion period when claims are not accepted – typically within the first 2 years of the policy.
Read more about simplified vs guaranteed life insurance.
Group life insurance
If you can get life insurance coverage through work or a professional association, take advantage of it. While the death benefit might not compare to what you had hoped to get, it’s better than no coverage at all. Additionally, some group benefit plans have options for continuing coverage if you make a career change – with some exceptions for underwriting.
Find a life insurance advisor you can trust
All of these options are at your disposal with the help of a licensed insurance advisor. If possible, find an experienced advisor who is knowledgeable about life insurance and has access to multiple brands and products.
With an insurance advocate by your side, you can always get a sober second opinion on your potential choices. Just keep in mind that a second opinion is a viable option – but only if the reason for your initial denial is one that another insurance carrier may accept.
Take for instance an earlier example. Let’s say you are denied coverage due to elevated cholesterol levels, but there is another insurance provider that would accept your application if you divulged the fact that you manage the condition effectively with medication. While you may not know this company existed by yourself, an experienced insurance advisor brings that knowledge to the table.
How much life insurance do I need?
While it may seem counter-intuitive for an insurance broker to tell you to buy less insurance, we would rather see you with some coverage than none at all. Everyone wants to provide as much for their loved ones as possible in the unfortunate event of their passing. If you’ve been denied coverage for a larger amount, however, you may want to be realistic about how much life insurance you truly need.
Try playing with the numbers in our life insurance needs calculator and see how much coverage you truly need. There may be a case where you are approved for a lower amount, or realize you were seeking too much coverage for your current needs.
Why is working with PolicyAdvisor the smart choice if my life insurance application is denied?
Finding life insurance coverage is daunting – and that’s without the added stress of a potentially rejected application. Which life insurance carrier do you choose? Should you obtain a private plan or obtain one through your employer? What medical information do you need to provide to obtain life insurance? Will your health issues be a cause for concern? Lead to higher rates? Or, worse, denial of coverage?
As exhausting as these questions seem – you don’t have to answer them alone. PolicyAdvisor’s life insurance advisors have experience with every potential situation a Canadian may have gone through while searching for life insurance. We put that experience to work helping anyone with questions and aspirations to get life insurance coverage – no matter what their circumstances.
PolicyAdvisor also has access to specialized insurers for high-risk cases; by providing them with detailed information about your specific situation, they can work to find you a better match if your initial application is rejected.
If you’ve been declined for life insurance coverage, it is not the end of the line. Get in contact with one of our insurance advisors and we’ll help you weigh your options.
The information above is intended for informational purposes only and is based on PolicyAdvisor’s own views, which are subject to change without notice. This content is not intended and should not be construed to constitute financial or legal advice. PolicyAdvisor accepts no responsibility for the outcome of people choosing to act on the information contained on this website. PolicyAdvisor makes every effort to include updated, accurate information. The above content may not include all terms, conditions, limitations, exclusions, termination, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail. All rights reserved.
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- Life insurance companies can reject a policy application if the insurance risk is deemed to be too great.
- Health issues, lifestyle choices, or risky occupations are just some of the reasons an application may be denied.
- A life insurance policy rejection will stay on your record for up to seven years.