What do you do when life insurance is denied? Do you give up and forget about it? Or would you rather restart the application process? More often than not, prospective policyholders go for the second option.
But you don’t need to apply for the application again if you don’t know what went wrong in the first place. So, in this article, we are going to talk about what to do if you get denied life insurance and the reasons why it was denied.
Can Life Insurance Claim be Denied?
Yes, your claim for life insurance can be denied for different reasons. The most common reason is that you made an inappropriate claim. This could mean providing incorrect information about your health.
But what could be the reason why your application is turned down in the first place? Find out in the next section.
Why is My Life Insurance Application Denied?
In this section, we are going to talk about some of the cogent reasons why the insurance company wouldn’t accept your life insurance application.
1. This isn’t the First Time Your Application is Rejected
Have you applied for life insurance coverage before and got rejected? That could be the reason why you got another rejection – and more is coming!
Many life insurance companies keep a tab on the applicants and the reasons why their applications were rejected.
It is better to find out what those reasons are and fix them. Otherwise, you would be setting yourself up for endless rejections.
2. Your Health Condition May Be Working Against You
Remember that this is a life insurance policy. As such, the insurance company wants to be sure that you are fit and that your life expectancy is higher.
Your current health condition may be a reason why your application didn’t see the light of day. For example, applicants with chronic medical conditions, such as diabetes, asthma, cancer, and Alzheimer’s disease may not be accepted.
Other common diseases and health conditions that could impact the acceptance of the application are:
- Parkinson’s disease
- Obesity
- HIV/AIDS
- Heart disease
Rejections are higher if your health condition is severe. For example, cancer and heart disease patients may get higher rejections than those suffering from diabetes and obesity.
3. Hazardous Jobs are Limiting
What type of work do you do? Does your job expose you to certain health risks? If so, your preferred life insurance company may not be motivated to process your application.
To put it into perspective, hazardous occupations are those jobs that pose higher risks to the workers. For example, pilots, construction workers, police officers, and drivers are exposed to different kinds of risks. From plane crashes to getting into a shootout or an accident, the risks are so many to ignore.
4. Bad Driving Record/Habit is a Limitation to Life Insurance Application
How good are you at driving? About 90% of car owners will say they are good at driving, but their record says otherwise.
The times you over-sped rammed into another car or got a speeding ticket show that you aren’t a “good driver.”
Your life insurance company puts this into perspective to determine how possible it is for you to drive safely.
If you have more negative reports on your driving record, getting a life insurance policy may not be easy.
5. Age Discrimination is Rampant with Life Insurance Application
Certain age limits are considered before processing a life insurance policy. This can also vary by the insurance company. The benchmark is between the ages of 65 and 75.
Although it is insurance that “covers you for life,” being younger may help you get it faster. The idea is that the older you age, the higher the health conditions you develop. It is better to start your life insurance application process while you are a bit younger.
Also, older life insurance policyholders will pay more premiums than those who are younger.
6. Personal Finances Cannot “Finance” the Policy
Life insurance policies require money as you would be paying premiums to keep the policies active. That is why most insurers place a premium on prospective policyholders that have “enough money in the bank.”
Some of the reasons why your finance may be an impending factor in getting a life insurance policy are:
- If you are bankrupt.
- If you don’t have a stable means of income or a source of passive income.
- When you are trying to use a lower amount to apply for a higher policy. For example, paying $50,000 for a life insurance policy worth half a million dollars.
7. Do You have a Mental Health Record?
Having mental health issues isn’t bad some insurance companies would prefer you look into it on time. However, having a serious mental health issue, such as PTSD or anxiety may be a limiting factor to your life insurance application.
Besides, having a record of self-harm or inflicting injury on others wouldn’t make a good impression on your application.
8. Exposure to Hazardous Activities
In addition to working in a “hazard-prone environment,” it may also be a bad idea to apply for the policy if you engage in hazardous activities.
Examples of these activities are:
- Hiking
- Adventure sporting
- Mountaineering
- Rock climbing
Note: They are tagged “hazardous activities” because of the associated risks of injury and death. You might fall off a cliff or break your leg in the process of engaging in any of those activities.
When is Life Insurance Claims Denied?
So, your life insurance application has been processed but you are unable to make a claim. Do you know why? Here are some reasons why the insurance company isn’t convinced to make the payout:
- Non-payment of the premium. Remember that the premium is the “single-most-important factor” that keeps the life insurance policy active. When it is not paid or paid on time, the chances of making a claim are slimmer.
- Outliving the Policy: This happens when you have exhausted the coverage and length of the term. It is common with the term life insurance. For example, if the term life insurance lasts for 10 years, you wouldn’t be able to claim in the eleventh year.
How to Get Life Insurance after being Denied
The issue of how often are life insurance claims denied doesn’t need to bother you because something can be done about it.
Here are tips on what to do when life insurance is denied:
- Fix the problems that led to the first application denial.
- Treat your mental health, if you are suffering from one.
- Pay your premiums and on time too.
- Lead a healthy lifestyle by shunning the likes of drugs, alcohol, and smoking.
- Start the life insurance application process while you are younger. Don’t wait until you become a grandad!
- Take your health seriously. Follow your medical doctor’s counsel and eat healthily.
- Improve your finances, such as maintaining a good credit score, being debt-free, and earning more income, either directly or passively.
Conclusion on What to Do When Life Insurance is Denied
Life insurance helps in protecting your life and leaving something behind for your loved ones when you pass away. Start the process when you are younger and make healthy lifestyle choices so your chances of getting approved will be higher.
