Applying for life insurance is an important process that every adult with dependents should do. It’s as detailed of a process as applying for health insurance. There are three possible outcomes: approved, postponed, or denied. A postponed application means you may need to provide additional documentation or have a second test. If you know these top five reasons why life insurance is denied, you may be able to avoid a denial or know your next best move.
1. Being Obese
Being overweight is one thing, but obesity is weighed negatively against life insurance applicants. The reason is that so many other health issues may arise, lowering your life expectancy. A few include:
- High blood pressure
- High cholesterol
- Type 2 diabetes
- Liver and gallbladder disease
- Breast or colon cancer
Sometimes obesity may not be an issue with the carrier if you are up front about it. However, you may not realize yourself that you are obese. For example, obesity is based on your BMI. If you put down an incorrect weight on your application, believing you are correct, and it’s higher, you could be considered obese and falsifying information.
2. Testing Positive for Hepatitis during the Exam
Having hepatitis can lead to fibrosis, cirrhosis or liver cancer. Since some types are life threatening, some carriers may not accept you. Many other carriers may accept you if you are undergoing treatment. So the key is that if you know you have it, ensure you get the treatment, and it’s documented and sent to the carrier. If you discover that you have hepatitis while undergoing your life insurance examination, ask the insurance providers to postpone the application. Then undergo that treatment and come back for a follow-up to be accepted.
3. Failed Liver Exam
A life insurance provider will not deny you a policy if you drink. While it’s best to not have any alcohol in your system 24 hours prior to your test, it will not result in an instant denial. What will deny you is if you have a positive alcohol marker, which is a test to determine if your liver functions are elevated or not. You can read more about liver issues as they affect life insurance here.
4. Applying for Too Much Coverage
The purpose of life insurance is to help your family bury you as well as maintain their lifestyle or at least help offset the costs of your income loss. So you should not apply for life insurance thinking you will set your family for life on a payout that your current income would never generate.
You must financially justify your application. Insurance companies use ratios to verify the applicant’s income and net worth make sense. For example, if you make $40,000, trying to take out a $1,000,000 policy to generate wealth that did not exist will not be approved.
5. Not Being Upfront Regarding a Prior Denial for Life Insurance
If you’ve applied for life insurance coverage with another company and received a denial, do not lie about it. Be up front regarding your denial, because that medical information will appear on the Medical Information Bureau (MIB) report.
If your life insurance application is denied, be sure to find out why they denied you. Then, take that information to another carrier for a second opinion. Every life insurance carrier does not have the same underwriting guidelines and may be more lenient than another.
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Peter Higgins says
I had a similar problem when I applied for term life insurance. I was denied by a few companies because of medical issues I had. This can be frustrating but I eventually found a company but my price was really high.
I experienced something similar,but was able to get a good premium term life insurance policy from another company at a reasonable price. With all the online companies now, you can shop around for a less expensive policy fairly easily.