What to do if you get declined for life insurance

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No one likes rejection, especially those applying for life insurance. The good news is that a rejection doesn’t mean there’s no way to get life insurance.

You might have to get creative or find a different type of policy. For instance, if an insurer rejects you for a permanent life insurance policy, you may want to try a term life policy instead. Here’s more information about each one:

Term life insurance offers coverage for a specific number of years, such as 10 or 20 years. If you outlive your policy, your insurer won’t have to pay a death benefit.
Permanent life insurance, such as whole life, is for life. As long as you pay your premiums, your survivors will receive a death penalty when you die. These plans also have a cash value component. This allows you to tap into your policy while you’re alive.

There is a long list of reasons why someone might get declined coverage. If you get rejected by an insurer, there’s a chance another one may give the OK. That’s because each life insurer has its own underwriting policies.

Let’s take a look at why you could get rejected and what to do if that happens to you.

Why you could get rejected for life insurance

Insurers may reject your life insurance application for a multitude of reasons. That includes if you’re considered a high risk.

Maybe you’re a deep sea fisherman or an ice climber with dangerous jobs. Are you overweight with a disease directly related to your weight like heart disease or diabetes?

We could come up with any number of risk scenarios, but the main problem is that an insurer may consider you a high risk. Insurers don’t like to take risks — especially for term life policies.

There are still ways to get coverage if you’re high risk. To begin, consider how life insurance is approved. There is an underwriting department that combs through applications looking at everything from finances to pre-existing conditions to your hobbies and decides if you’re worth the insurance risk.

Each company’s underwriting department has a different set of rules. A rejection from one company for a pre-existing condition doesn’t automatically assume a rejection from all life insurance companies.

Keep in mind though that there is a national database called the MIB. This database contains all applications for life insurance. So, insurers know how many applications you’ve completed and your answers on those applications.

What to do if you’re declined for life insurance

So, what do you do if you’re declined for life insurance? Follow these steps:

Find out why you were declined

The life insurance company has to reveal the reason you were denied coverage.

“Once you know the reason, you can take steps to improve your chances of being approved,” says Barbara A. Pietrangelo, chair of Life Happens, a nonprofit that educates consumers on life insurance and related products.

If it’s because of a medical reason, contact your doctor’s office. Maybe it was an erroneous lab test or something that needed more explanation — both of which your doctor can indicate to the life insurance company. It’s possible that providing the life insurer with further evidence that you’re healthy could get your decision overturned.

“Inconclusive test results can also sometimes throw off life insurance applications. Although this doesn’t necessarily mean you have a problem, it does mean you need to follow up with your doctor to get a conclusive result so you can purchase life insurance,” Pietrangelo says.

Promote your healthy habits

Even if the lab results were correct, there’s still a chance you can get that rejection reversed.

Remember that database called MIB? Your rejection will be filed with it.

The database helps insurance companies detect and fight fraud by comparing your results and answers from each application. There’s nothing you can do about your real medical conditions because they will obviously be flagged on your records.

What you can do, though, is to show that the conditions are under control. For instance, if you’re following your doctor’s advice, taking your medication and taking steps to improve your lifestyle.

That may help you in an appeal.

But, Pietrangelo says, it’s important to be honest about your medical history. She notes that marijuana is approved for recreational or medical use in some states, but it is still federally illegal.

“This means that life insurance companies may consider marijuana use as a risk factor, and your rate may be higher as a result,” she says. “ Many people choose to leave it off their life insurance application because of this…. Health data like this can be found through simple doctor’s records of past physicals, and lying about your marijuana use could result in your policy being denied or voided, which would be a much bigger problem.”

Appeal the decision

Once you have a copy of your rejection, call the insurance company and find out their specific appeals process. You’d hate to lose out because you missed their time frame for filing.

Don’t forget to collect all of your evidence — doctors notes and anything else that might help your case. Get help. If you’re feeling overwhelmed, find a lawyer who can help you sort through the process. Attorneys who specialized in insurance can help.

An important step that some might forget, once you file your appeal, follow up. Things get lost, computers send the files to the wrong place, who knows the reason? If you follow up and stay on top of it, you won’t miss any deadlines.

Apply for a different policy

The next option you want to consider is applying for a different life insurance policy.

If you were rejected for permanent coverage, you could possibly consider term life.

However, Pietrangelo says, if you are denied permanent life insurance from one company you won’t be able to purchase term life insurance from that same company. “You could try to apply with another company, however, other companies may ask if you have been denied life insurance elsewhere,” she says. “If you have been denied, it may be difficult to get approved with another company.”

Another thing to remember: Other options might be more costly or not offer as large of a payout. But if you’re looking to get some coverage and some peace of mind for your family, you need to consider every avenue.

You could also pursue simplified-life, guaranteed-issue or final expense life insurance. These policies give you coverage with little to no medical exam and application questions.

Workplace group life insurance policies are also possible. Some have a flat payout they offer and others will pay based on your service to the company. These types of policies may not take your health into account since your policy will be balanced out by your colleagues.

Another thing Pietrangelo says to keep in mind: When applying for life insurance coverage, bind the coverage by giving the company a check.

“I highly recommend taking this approach as it will ensure that you have coverage immediately, even if your application is still being processed,” she says. “It is important to bind the coverage, as this will protect your beneficiaries in the event of your death.”

Getting rejected for life insurance may seem scary, but there are ways to still get coverage. Make sure to take these four steps if you’re declined, so you can get coverage for your family and give yourself peace of mind.

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