5 Reasons Why Your Life Insurance Application May Be Denied

Getting rejected can be hard, especially when it comes to trying to project your family and future. 

If you’ve recently applied for life insurance and received a denial of coverage, you may be wondering why exactly you were not approved. While the life insurance company that rejected you won’t be able to offer your coverage, it’s important to know how you’ll likely be assessed when you choose to apply with another carrier. 

Now, each life insurance carrier will assess risk differently, but we find that there are common risks or reasons why applicants find themselves denied coverage. In this article, we’ll be looking at the most common reasons life insurance applications are denied so you can be in the know with what insurers are looking at. 

1. Health history 

When evaluating an application, life insurance providers will be reviewing multiple factors of your life. This includes your physical health and any history of past medical conditions. 

If you’re living with chronic illnesses, diabetes, or other diseases at the time of your application, your insurer may be inclined to deny you coverage - as your current health could pose too much of a risk to them to provide you with a policy. Some insurers may approve coverage if consistent treatment methods are proven, but your existing health conditions may increase the price of the policy. 

Additionally, any history of chronic disease, cancer, diabetes, or suicide in your family (typically parents and/or siblings) may make it more difficult for the applicant to be approved for coverage. 

Applicants who have recently become cancer free (congrats!) should know that most insurers require you to complete 5 years of remission before you can qualify for life insurance coverage. 

2. Age

Receiving life insurance gets more difficult and more expensive the older you get. In fact, most carriers have age limits set on their policies, meaning once you get to the age of 75-80 you won’t be able to apply for new coverage. 

In general, we recommend  looking into getting life insurance when you’re younger and once you start having dependents - such as when you’re first starting a family. If you apply for permanent life insurance coverage when you’re young, the policy will stay with you for the rest of your life as long as premiums are paid. For more information on when you should consider getting life insurance, read this guide: When are the Best (and Worst) Times to get Life Insurance?

3. Lifestyle choices

While living in the moment and throwing caution to the wind can be a fun life for some, it may not result in the best prospects for life insurance. 

When evaluating your application, life insurance providers will weigh the inherent risk associated with certain lifestyle choices you may have. This can include participating in risky hobbies (skydiving, piloting planes, etc.), having an occupation that is considered to be high-risk (police officers, active duty military, and more), or having a history of heavy drug, nicotine, or alcohol abuse. 

4. Financial reasons 

Part of the risk assessed when you apply for life insurance is a review of your financial history and stability. 

So, you will find it more difficult to get approved for coverage if you have a long history of unpaid debts, late fees, or bankruptcy. This is because carriers will view you with a higher likelihood of being unable to pay your life insurance policy premium. 

Insurers have also been known to deny applicants coverage if the amount they apply for doesn’t make sense for their financial situation. For example, if someone with little net worth and a low annual income suddenly applies for 2 million in coverage, this will raise red flags for the insurer and likely result in a denial. 

5. Lying on your application 

If you’re found to have intentionally misled or lied about certain information on your life insurance application, including the areas discussed above, you can be denied coverage. 

This also includes withholding any important information from the insurer during the application process. 

Companies will verify the information provided, but in the rare case something slips through the cracks, the insurer may not have to provide coverage after your death if relevant information was withheld or lied about. 

As with any insurance policy, it’s better to be honest and forthcoming when applying for coverage to ensure you receive coverage and maintain a good reputation amongst carriers. 

What can I do if I’m denied life insurance coverage? 

If you have found yourself rejected by a life insurance provider, either for the reasons listed above or any other, know that all hope is not lost!

Working with your trusted insurance agent or broker can help to determine the reason for your coverage denial and then help you decide what your next steps should be. Occasionally applicants can simply be denied due to lack of information or misunderstanding and reapplication may be possible. 

Otherwise, you can look into making changes to your current lifestyle or health, in hopes of applying again and being approved after shedding some of the perceived risk you may currently have with insurers. 

Applying for your future

Having life insurance can be a vital way to ensure your dependents will be financially cared for after your passing - making it all the more frustrating if your application has been denied. 

Now that you know more about the risks that life insurance providers will be on the lookout for, you can hopefully plan ahead on what you can change or update in your life to improve your chances at receiving coverage. 

Once you are approved for coverage, it’s important for you to know what to expect your policy to cost. To learn more about how much life insurance policies typically cost, and what influences the price, check out this guide: How Much Does Life Insurance Cost in Massachusetts?