Finding life insurance coverage can be a daunting task. Which carrier do you choose? Should you obtain a private plan or obtain one through your employer? What medical information do you need to provide them? Will any of your health issues be a cause for concern, leading to higher rates, or, at worst, denial of coverage?
When someone applies for life insurance, one of three things can happen: the first is acceptance, the second is postponement (which often requires the applicant to supply additional information) and the third is denial. So what happens if you are denied a life insurance policy?
The most common reason for a denial is the person is deemed to be in an “impaired risk” market, which means they have certain illnesses that may increase their risk of dying prematurely. These include diabetes, heart disease, high cholesterol or blood pressure, a previous cancer diagnosis, even repeated DUIs. Receiving new diagnoses, as well, can lead to a denial of coverage because treatment has not been started to address them.
However, all hope is not lost. There are subsequent steps that denied applicants can take in order to have their application re-evaluated.
1. The first thing a denied applicant should do is ask for more information pertaining to the insurance company’s reasons for their denial. This is your right as the applicant. The carrier can provide more detailed information upon the applicant’s request – whether it was due to exam results, medical history, driving record, or some other reason. From there, you can communicate with your primary care doctor about continued treatment, or to confirm that the treatment information was provided along with the diagnosis.
2. Another actionable step an applicant can take is to confirm the results with the insurance company. Mistakes can happen – names, numbers, and other information can get mixed up from time to time. Make sure it really is your application that is being denied, not someone else with the same name or birthday as you. In addition, an applicant can double check the data that was provided to the carrier – this will involve contacting your doctor. If you confirm that one reason for the denial was poor results on a particular exam, make sure to confirm this with your doctor so that the information is accurate.
3. The third step is to work with your insurance agent. Even if you’ve done extensive research, it’s always a good idea to get a second opinion in these cases. There are life insurance agents that specialize in high-risk cases, and so by providing them with detailed information, they can work to find a better match for you if you are denied the first time. Life insurance policies described as “graded” or “graduated” are designed especially for people who have less than perfect health. The premiums may be more expensive, but it is an option for those considered to be in the high-risk market.
Getting a second opinion is a viable option only if the reason for your initial denial is one that another insurance carrier may accept. For example, if you are denied coverage because of elevated cholesterol levels, but another carrier will accept you despite this condition because you manage it effectively with medication, then getting a second opinion may be an option worth looking into.
As a last resort, it may be necessary to apply for a different type of policy altogether if the reason for denial is too severe. Your insurance carrier can work with you further on other options available to you.
If you are eventually approved but are still considered “high risk”, your insurance rates may be higher than normal. In this situation, it is important to let time pass. Over the next few months or even years, your rates can drop because of elapsed time between previous diagnoses and the time that you applied for insurance. As symptoms pass or become more stable over time, your rates may come back down. Also, if there are concerns with your driving record or previous DUI violations, oftentimes those blemishes on your driving record disappear or are settled after a given period of time has elapsed.
Also, be sure to check the life insurance policies offered through your employer. Oftentimes, these plans are more affordable than buying a policy out of your own pocket.