If You’ve Been Declined For Life Insurance, Read This!
Unless you’re rich, chances are you should get some kind of life insurance coverage that will pick up where you left off (when you died) to take care of the continuing expenses of everyday life, your kids college, mortgage payments , bills and others. In many occasions, people who feel perfectly healthy get declined or postponed for life coverage and they can’t figure out why. When they write the insurer for an explanation they usually receive a very ambiguous and puzzling answer like “We were unable to offer you coverage because you don’t meet our current underwriting guidelines.”
About your “former” underwriting guidelines? Do I meet those? Or “…the values in your laboratory results do not meet our criteria for the requested product.” How about a different product? Or “We regret not being able to offer you coverage, your agent will be getting in touch with you soon.” Huh?! I don’t need an agent I need a life policy!
I’ll tell some of the likely reasons why you were declined or postpone. The term “declined” means that after careful evaluation, it has been determined that you are not a good risk, period! The company feel is not even worth it to offer you coverage at a higher premium. Yes, is that bad. There are exceptions to this, like if someone is still on probation or parole, and they have to be off of it before they can be considered for coverage. Or if you had a DUI or driving while intoxicated 3 months ago, you may need to wait a certain amount of time before they can offer insurance, just to make sure that you are not reckless, drunken, public hazard. In general, for the most part, “decline” is not good.
There’s another term that isn’t as terrible, and that is “postponed”. When you are “postponed” it means that the insurer may need additional information on you like medical records, financial statements, dates of treatment, outcome of certain surgery, name or address of a doctor, etc. Also you could be postponed until after an upcoming scheduled treatment or surgery that your doctor ordered. The reason is that being under general anesthesia is always a risk. If you are still under treatment for cancer, or taking narcotic medication, or had heart surgery less than 6 months ago you could be postponed for a predetermined amount of time.
If you are treated for cancer, you need to be in complete remission and off treatment before you are insurable. The narcotic medications are addictive and some people can’t get off of them completely. Some companies won’t issue you coverage until you’ve been narcotics-free for 6 months. “Oh what do they know, I can always lie.” You can, but insurance companies have access to multiple sources of information, and you can be sure that they will find out if you are lying. Never lie on a life insurance applications because if the company later finds out that there are medical records dated prior to the application date, your beneficiaries may not get paid. Depending on the situation, and the State that the policy was sold in, is possible that your lie could be considered as “material misrepresentation” or in other words that you purposely provided false information to the insurer in order to be approved, or approved at a lower rate, in which case the insurer may just return the premiums paid to the beneficiaries, and not pay the full benefits stated on the policy.
If you’ve just began to treat your diabetes, or high blood pressure, the insurer needs to wait a few months to see if you’re keeping your condition under favorable control. If you are postponed you have a chance that after a specific period of time you can re-apply for coverage and after reviewing any new medical, driving, or criminal records there’s a chance that you may be offered a coverage at a regular premium, or if you are not a perfect risk, at a rated premium.
Let’s go back to those of you who feel are healthy, eat well, work out, keep a proportioned height and weight, and still get postponed or declined. Every life insurance company has its own guidelines for evaluating an applicant or proposed insured, meaning you. Some use their own home-grown underwriting guidelines, based on years of accumulated actuarial statistics of thousands of prior insureds and claim experience. Other use guidelines established by their reinsurers. In general, if your lab tests show increased cholesterol ratio, bilirubin, liver enzymes, or blood sugar you could be postponed. Many otherwise healthy people don’t know they have high cholesterol. Some people have naturally elevated liver enzymes even if they never drink alcohol. May be you’re overweight according to the insurance company’s chart. If you know you are not the out of shape-bulging out of your pants type of individual and you are being charged a higher premium due to your build, you should ask your agent for the paramedical examiner to come back and measure your chest and abdomen. If your chest measurements are bigger than your abdomen’s or just about equal, you may be able to dodge paying more for your coverage.
You could be declined for coverage because of your salary. Some agents just want to sell you a policy, don’t really take the care to take into account that your income is too low for the amount of coverage that you’re applying for. The rule of thumb is your annual income times 10. If you make 20,000 a year and you want to get 600,000 you would need to show evidence of additional income. The reason is that you should be worth more alive than dead. If they issue you a life policy for 200,000, this is the amount of money that you would have made in ten years, which would cover your beneficiary’s finances in the event of your untimely loss. But, issuing a policy for 600,000 which is way more than you would have earned in ten years, would be ethically irresponsible since it would be a motive for someone to want to murder you, since now you’re worth more dead than alive. Of course this is just a simplification because if you are younger, you will work for many more years and they would factor this in. Older applicants can only get from 7 to 4 times their annual income if they are after 60. Again, every company has variations on their guidelines so don’t be discouraged, just consult with your insurance agent to make sure that you finances can justify the amount of coverage you need.
Just to be sure of your future and to make it more financially stable you can opt for income protection insurance. You can look online or talk to your insurance advisor about income protection insurance quotes to get a fair understanding of different plans and what you can get from your income.
Your driving record can get you declined. Most companies look at the last 3 years of your motor vehicle records or MVR and if you’ve had a string of speeding tickets, driving intoxicated or other moving violations, it doesn’t matter that you can run at the speed of light, or ride a bike until the wheels catch on fire, you could be declined. Your family history can get you disqualified for a “preferred” classification, meaning you would be issued at a slightly higher premium than someone with no family history of cardiac disease before age 60. If you practice sports like sky diving, scuba diving, B.A.S.E jumping, hang gliding, paragliding or other type of sports that represent a higher than average risk you could be charged an extra premium. Coverage could be denied in some cases depending on how deep and what type of scuba diving you do, like, wreckage, salvage or cave diving. If you have a history of dangerous sports related accidents you could be declined.
When the underwriter (that’s the person who evaluates your application for coverage) reviews your file, they look at the whole picture and this includes your family’s medical history, your medical history, finances, lifestyle, occupation and everything else they can get their hands on. Even the agent’s notes on the “agent’s remarks” portion of the application. Some agents make notes like “client was wearing an oxygen mask” or “noted large number of medications on the kitchen counter”. This notes appear on the app usually when the client denies having any medical history.