There’s nothing worse than hitting a snag when you’re trying to do the right thing to protect your family, right? like applying for life insurance only to find out your application has been denied. if this happens, what is your next move?
Don’t worry, there are options, and we’re here to explain exactly what to do if your life insurance application is denied.
request more information
Opening that letter from the life insurance company and seeing, “I’m sorry, but . . . ” is enough to worry anyone, especially if you have a family that depends on your income. So if this happens to you, your first step should be to contact your insurance agent or company to find out why.
Insurance companies look at your medical and non-medical risks when they review your application to see if you qualify and estimate costs. Your reasons could be anything from a serious medical condition (such as heart disease) or poor results on your life insurance medical exam to non-medical reasons such as bankruptcy, a criminal record, a positive drug test, or even a hobby dangerous.
review your case
once you have your reasons, you can make sure they have the right facts, because no one knows your situation better than you! If some of the information they submitted doesn’t seem up to date or just plain wrong, now is the time to appeal.
If the reason you were denied is based on incorrect or insufficient medical information, you have the right to appeal. The best way to do this is to ask your doctor to provide the insurance company with as much up-to-date information from your medical record as possible.
You can also appeal for non-medical reasons, such as an outdated financial record, an expired driving ticket, or incorrect details about your job and hobbies that put you in the high-risk category.
check with your workplace
If it looks like your life insurance application really was denied, it’s time to check with your employer. Your workplace may offer you a group term life insurance plan that you can enroll in.
Here’s the deal: It won’t give you the 10-12 times your income coverage we recommend, but it will offer something like a death benefit until you can get your own term life insurance in the future.
A group plan usually doesn’t cost you anything either. if you want to increase your payment, you can “top it up”, but this will cost you. supplementing your group plan is an option if you need it and you don’t really have any other options. but don’t sign up for any of the “rider clauses” offered by the company benefits representative, they’re not worth it!
Your workplace life insurance plan might help you get coverage in a pinch because they don’t require a medical exam. just remember: if you leave your job, you will lose your coverage.
contact a life insurance agent
If you haven’t already, it’s time to call in an expert! an independent life insurance agent is a lifesaver at a time like this.
And the great thing about agents is that they know the ins and outs of the life insurance underwriting process (all the behind-the-scenes stuff that decides whether your application is approved or denied).
so this means that an agent should be able to detect and fix any red flags in your request that might have caused the request to be denied in the first place. And it’s worth noting that just because one company denies you, that doesn’t mean all insurance companies will deny your application.
Unlike simply going online on your own (and hoping to find a company that will accept you), agents can search a much broader market for a policy that is worthwhile and works for you. They will also advise you on the next steps you need to take, which in some cases might mean that they suggest you wait a few months and apply at a later date.
allow a waiting period
Sometimes when you are denied for life insurance, you need to proactively play the waiting game to give yourself some time to correct whatever health issues caused the denial. Take this opportunity to try to lose weight or lower your blood pressure or cholesterol if you need to.
If you maintain healthy habits (such as eating healthy, quitting smoking, and exercising regularly), it could make a difference the next time you apply. do not give up! try to change the things you can control.
and time could also help with non-medical reasons for denial, like allowing enough time for those multiple speeding tickets to expire. a short break could be all you need to get approved the next time you apply.
While you’re in the waiting period, use that time to build your emergency fund. Any additional amount you can save will give you more peace of mind as you shop for life insurance.
We know it can feel like the world is against you at a time like this, but if you can make a few small changes while you wait, you’ll be in a stronger position moving forward.
apply again, but for a different policy
If your situation is dire and other routes (like your employer-provided life insurance mentioned above) aren’t available, there are some no-exam life insurance plans you can consider. but they will continue to ask you the same medical questions.
If you don’t have insurance, these plans offer you something, and that’s better than no coverage at all. But you should always talk to an insurance agent before you apply to see which option, if any, is right for you:
simplified issue life insurance
These policies do not require a medical exam, but you will need to complete a medical questionnaire with your application. the questions will ask if you have any serious medical conditions, so if you do, you probably won’t be approved for this type of coverage. Simplified issue premiums will cost you more, because the company is working from the questionnaire instead of a professional medical exam. payments are generally limited to $500,000 or less, but this type of policy may work if your health condition is not serious.
guaranteed issue life insurance
If you’re older or have a serious medical condition, a guaranteed issue plan allows you to get life insurance without a medical exam and without having to answer dozens of questions in a medical questionnaire. but the downside is the payout: it’s small, usually only up to $50,000.
and some policies will limit the payment of your benefits if you die within the first two years. so you could get back the premiums you paid, but nothing more. If you have a serious medical condition, you’ll need to weigh whether it’s worth paying a hefty premium for such a small payment (or none at all).
mortgage life insurance
mortgage life insurance only covers the balance of your mortgage. You will also not need to take a medical exam for this type of policy. If you already have a mortgage, you’ll need to answer a few health questions once your mortgage is issued. so this might work if you’ve been denied regular life insurance and you don’t have a serious medical condition. You can also get this type of life insurance with no health questions if you’re refinancing your mortgage.
The bottom line: No-exam policies like these will cost more than regular term life insurance, and the payout won’t be as good. but they are worth considering if your options are limited.
The reason you get life insurance is to protect your income and support your family if something happens to you. And when you fight to be approved, it creates unwanted worry and stress. But there are ways to get back on the road to coverage and people you can call for help.
If you’re looking for help finding a policy that works for you, we recommend ramsey’s trusted provider, zander. have worked for decades to connect people with the right life insurance policy.
