- Everyone who has people who depend on their income or support probably needs a life insurance policy, but not everyone who needs coverage will be approved for it the first time they apply.
- Life insurance companies may deny applications for a variety of reasons; if you’ve been denied, your first step should be to find out why! If it turns out you cannot appeal the decision, there are other steps you can take to get coverage and protect the people you love most.
- Everyday Life Insurance only recommends policies that you are likely to be approved for in the first place, saving you the stress of having to consider other options, work with an agent, or wait for coverage!
In today’s consumer culture, we often assume that products or services we want are guaranteed to us as long as we have the money to buy them; many people are surprised to discover that this is not the case with life insurance policies.
Life insurance companies use a process known as underwriting to assess the risk of issuing you a policy. If red flags are discovered that would indicate that it is not in the company’s best financial interest to insure you, they have the right to deny you coverage. There’s a lot of information out there about what type of policy to buy, how to figure out how much coverage you need, and etc. (usually coming from the life insurance companies themselves) but not as much regarding a denied application. It’s a real possibility – one insurer in Tennessee turned down 70% of applicants!
Here’s what you shouldn’t do if you are denied coverage: give up and go without. Life insurance is an incredibly important tool that replaces the value of your income or support to your family in the event that you pass away prematurely. If you don’t have a life insurance policy in place, and something happens to you, your spouse, children, and/or elderly parents could be left in a tight financial spot, without the resources they need to thrive and enjoy the kind of life you’d want them to experience.
Life insurance is a necessity for most people. So what are you supposed to do if your life insurance application is denied?
The first step to take if your life insurance application is denied
When you receive the notice of denial, the first thing you should do is contact the insurance company to find out why. Learn what red flag(s) led to their decision in order to ensure that they have all of the correct information!
Life insurance companies may deny you due to a preexisting health condition or due to something concerning they find during the medical exam (most policies require an exam for underwriting purposes). They may deny you due to not having enough information about your health. If you have anything on your criminal record, or if you have a job or hobby they consider dangerous, you may not be approved. A history of mental health issues, a bad credit score, or even a bad driving record can all be additional reasons for denial.
If you don’t know why they’re denying you, you can’t argue the denial or make an attempt to fix the problem, and any other life insurance company you apply to may deny you for the same unknown reason. You have to find out why! If the information they have about you is outdated, insufficient, or just wrong, you can and should appeal their decision.
If you can’t appeal, try to get temporary coverage via your employer
If all of the information they have is correct, don’t panic – there are more steps you can take to get a policy! In the meantime, though, you don’t want to go without any type of coverage, so it may be time to check with your employer and see if they offer any group life insurance plans. This will likely not give you the full amount you need, but it will give you some measure of protection until you can buy your own policy later on. These group plans are usually free to you as long as you continue to work at that job.
Speak with an agent as soon as possible
At the same time you are checking with your employer about group coverage, you will need to contact an insurance agent to get more information about what to do next. Life insurance agents are experts on coverage, applications, and underwriting; they have the resources, contacts, and knowledge to be able to either work around the denial or find you a policy that you are more likely to be approved for. While not every life insurance agent has your best interest in mind and may try to push you towards buying products you don’t truly need, they can give you an idea of what next steps you should take, which usually include two things: either allow for a waiting period or consider other options for coverage besides a traditional term life plan.
Wait for six months to a year, then try again
Depending on why your life insurance application is denied, your life insurance agent may recommend waiting for a while, trying to actively change the reason(s) for denial, and then applying for the same policy. If you were denied for health reasons, you can use the waiting period to work with your doctor and lose weight, eat healthier, quit smoking, etc. If you were denied due to a recent diagnosis and were put on medications, the waiting period can allow your medication to prove to the insurer that it’s working. If you were denied for nonmedical reasons, like a bad driving record or other criminal incidents, waiting may allow you time to work with an attorney and clear your record.
Consider other types of life insurance coverage
In some cases where the reasons for denial are factors outside of your control – like a chronic condition, for example, or a career you love but that is classified as high-risk – a waiting period will not change the insurer’s decision, and you may need to look into a type of insurance that’s not underwritten.
There are three types of life insurance coverage that may work for you if your life insurance application has been denied: simplified issue, guaranteed issue, or mortgage life insurance. These are often known as non-medical life insurance plans, and they are not fully underwritten, meaning that you are more likely to be approved faster. However, you will pay more for less coverage with these plans, and they may not be available to older applicants.
Simplified issue coverage does involve answering questions about your health, but doesn’t require a medical exam. Guaranteed issue coverage does not involve providing any information about your health; you are nearly guaranteed to qualify for this, but the coverage amount offered is often extremely small (less than $1,000 in some cases), which may not even be better than your workplace policy. It is also extremely expensive compared to other types of coverage. Mortgage life insurance covers your mortgage balance only, and does not require a medical exam but may require answering some health questions. Working with a life insurance agent can give you a better idea of which non-medical policy may be best for your specific life situation.
Everyday Life’s process only recommends plans you are likely to be approved for!
At Everyday Life Insurance, we understand how frustrating it can be to apply for a life insurance plan and be denied coverage; we also understand that everyone’s life is unique, which is why we take into account your personal life circumstances in order to match you with life insurance plans you are likely to get approved for at the quoted price right away! You can use our Needs Assessment Tool to discover how much coverage you need and get a customized recommendation for a term life insurance policy that fits your life. Our policies automatically adjust over time to start saving you money from the start. Get your personalized quote today at https://insurance.everydaylifeinsurance.com/quote/!