Declined For Life insurance?…Learn Everything You need To Know

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Have you been declined for life insurance? 

If you have, well , that stinks.

However, there are things you can do to change your predicament.

But first, you should scream a bit, or eat  chocolate ice cream...whatever you need to do to get the frustration out of your system.

With that taken care of it's time  to start working to rectify the situation.

Why Were you Declined for Life Insurance?

Life insurance underwriters take all sorts of information into account when classifying a applicant. 

The primary information sources are:

  •  Answers to questions on the application.
  • Information provided by the Medical information Bureau (MIB)
  • Prescription history check
  • Driving history from DMV check
  • Answers to telephone interview 
  • Attending physician statements (APS)

Upon your request (you need to make the request), the carrier that declined your application will provide a detailed account of the reason, and information used, to come to the declination decision.

It is important that you have this information , as it will color the carrier choice that an independent agent will recommend going forward.

Did They Have The Right Information?

​How many times have you gotten a bill that was incorrect? 

Probably more than you care to think about.

Well, in this vein it makes sense to  verify ​the information that underwriting used to decline your application. 

Is the driving history they relied on correct? how about the Rx history? ​

Do you have reason to believe that the results of the medical exam are wrong?

If you do you can request a second exam- at your expense - but you should see your primary care physician first. ​

Key Take Aways

  • Underwriting at insurance carriers is thorough and has access to medical, prescription drug, and driving history. 
  • You have the right to request a detailed report on your declined application.
  • Make sure to double check the information used to make the declination decision.

The Info is Correct. Now What?​

​Once you have confirmed the accuracy of the information used to turn down your application, it's time to  talk with an experienced independent agent. 

An independent agent will have access to many carrier(often over 50) to shop your particular situation.

This is important, because different insurers have different appetites for specific types of risks. ​

Just because you were declined by one carrier does not mean you will be declined by all carriers.​ What is a decline at some carriers may be a table rated offer at others.

The trick is knowing which carrier to go to based on your individual situation. An independent agent is the best shot at success in this circumstance. 

What if you Truly Are Not Insurable By Traditional Carriers?

​The circumstance sometimes occurs where an applicant has been turned down for legitimate reasons and there are no current traditional alternatives. 

In these situations, the applicant has two options that can often be used in combination.

The first is to use either a simplified issue or guaranteed  issue carrier. These carriers are often used for smaller face amounts and are often referred to as "final expense" carriers.

I'm not implying you are peering at your final days, but rather pointing out that there are ways to obtain insurance when you are declined by the traditional carriers.   

Simplified issue policies require no medical exam and tend to both more expensive and far more lenient than traditional carriers.

Guaranteed issue policies are even more limited in that they have smaller face amounts (under 25K) and pay out on a graded basis.

That means that your beneficiary would only receive the full benefit after the Graded period (2-3 yrs. depending on the policy).

The other action you can take after you are turned down and there are no available alternatives, is to work to improve your health.

If your declination came about due to a health condition that can be improved by lifestyle choices, insurers will be happy to entertain the new and improved you.

Weight loss usually is accompanied by blood pressure improvement, cholesterol improvement, and control of type ll diabetes.

Just be aware that most life insurance companies want the weight change to be effective for 1 year before giving full credit for it.

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Your Next Step 

If you have been declined for life insurance or wan't to consult prior to an application , to avoid a similar fate, We'd love to hear from you. Please drop us a note with any questions.

James Tobin, CFP

Jim Tobin is the owner of Life Insurance Help Desk, a Fairfield County, CT. life insurance agency. You can find him on LinkedIn and Facebook. Over the past 10 years, Jim has used his CFP-financial planning designation to help individuals with their life insurance needs. In addition to working with life insurance clients, Jim teaches ESL classes in his spare time. He resides with his beautiful wife Nicole and the 3 cats that rule their lives..