Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
There are several reasons an applicant would be denied life insurance coverage, chief among them is medical unsuitability, i.e the risk for the company is too great. Behaviors like hazardous vocations, dangerous recreational activities, multiple motor vehicle violations, DUIs and drug addictions. Falsifying information, misleading or omitting of material facts can also result in a declination.
Assuming that all the cards are on the table and the agent really knows what they are doing, declines should not happen too often. But even in that case, here are some reasons people can be denied life insurance.
1) Medical reasons that even they may not realize or think about when they talk to their agent. E.g. The applicant takes two medications for depression, which is insurable. But when the underwriter looks at the medical records, they find that the patient has recently expressed suicidal thoughts to their psychiatrist, and the policy is denied.
2) Insufficient medical information. E.g. The underwriter wants to see the results of an MRI and no one can find it.
3) Tobacco with a serious health condition that is impacted by smoking. E.g. Someone says they quit smoking when they had a heart attack a year ago, but then tobacco is found in lab results.
4) Financial reasons. E.g. The applicant is in the middle of bankruptcy proceedings, has a very poor credit rating, and owes back taxes. Rather than calling this a decline, it is often called a postponement.
5) Wrong product. This is the most common reason for decline I hear about when people come to us after being declined elsewhere. They were just told to apply with a product that clearly does not work with their health and personal details. That is a completely avoidable reason for being denied.
As you can see by the examples above, some people would be better off going with a No Exam policy to lessen their chances of being denied. Others are better off using medically underwritten coverage. Using an agency that specializes in taking cases declined by others can help you get an approval the first time.
There are numerous reasons to be declined for life insurance. Think of it in terms of gambling. You are placing a small bet, monthly premium, in order to make sure your loved ones have enough money to live at their current means, which is a large payoff at your death. Therefore an underwriter will look at all of the factors to determine your risk of dying within a specified period of time. They look at age, build, medical history, health, lifestyle, residence, occupation, etc. to determine that risk. If they feel any of these factors are too risky you will be declined for life insurance.
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1) Medical reasons that even they may not realize or think about when they talk to their agent. E.g. The applicant takes two medications for depression, which is insurable. But when the underwriter looks at the medical records, they find that the patient has recently expressed suicidal thoughts to their psychiatrist, and the policy is denied.
2) Insufficient medical information. E.g. The underwriter wants to see the results of an MRI and no one can find it.
3) Tobacco with a serious health condition that is impacted by smoking. E.g. Someone says they quit smoking when they had a heart attack a year ago, but then tobacco is found in lab results.
4) Financial reasons. E.g. The applicant is in the middle of bankruptcy proceedings, has a very poor credit rating, and owes back taxes. Rather than calling this a decline, it is often called a postponement.
5) Wrong product. This is the most common reason for decline I hear about when people come to us after being declined elsewhere. They were just told to apply with a product that clearly does not work with their health and personal details. That is a completely avoidable reason for being denied.
As you can see by the examples above, some people would be better off going with a No Exam policy to lessen their chances of being denied. Others are better off using medically underwritten coverage. Using an agency that specializes in taking cases declined by others can help you get an approval the first time.