Reasons You Might Get Denied for Life Insurance

When it comes to getting life insurance coverage, you have the option of either purchasing a policy on your own or being added to a workplace group policy. If you aren’t offered life insurance through your job, however, applying for a personal policy is your only option for coverage.

The life insurance application process is an important first step, and gives carriers the information necessary to determine your coverage options, premiums, and whether or not to offer you a policy in the first place. Not all applicants will be approved for a life insurance policy after applying and, in fact, there are a number of reasons why an insurance company might deny your application for coverage.

Reasons Your Life Insurance Application Might Get Denied

Here are some of the most common concerns that can play into your application for a new life insurance policy being denied, especially if multiple factors are present.

Your age

It’s important to note that different carriers have different application requirements, which can even vary from one type of policy to the next. Age limits, for example, can often be found on term life policies, and indicate the highest policyholder age that they are willing to cover. This limit may affect the age at which you can purchase coverage, and when that coverage is scheduled to end. 

If a carrier’s term coverage age limit is 85, for example, you won’t be able to buy a 30-year policy at age 65. Instead, you’ll need to settle for a 15- or 20-year coverage term. 

Your medical history

Your personal and family medical history will play a significant role in the application process and even the rate you pay for coverage. If you have diabetes that isn’t well-controlled, for example, you could be denied coverage. And if you have a history of cancer, for example, the carrier may require you to be in remission for a certain number of years before you can buy a term or whole life policy.

Your medical exam results

Applicants will often be required to submit to a paramedical exam when applying for life insurance. This exam, which typically includes a quick physical along with blood and urine samples, can give carriers a good idea of the applicant’s health and any underlying conditions they may have.

If the results of this exam identify an issue or exceed certain thresholds, you may be denied coverage or offered a different policy at a different premium.

Your weight

Insurance companies consider applicants’ body mass index, or BMI, as part of their underwriting process. Being overweight — or having a BMI greater than 25 — can be a risk factor for many different diseases and health concerns, so carriers will factor this in when reviewing your application.

Especially when combined with other factors, being overweight could result in a denial or higher rates for coverage.

Your tobacco, alcohol, or drug use

Most insurance companies will still issue you a policy even if you’re a smoker, the premiums will just be higher than those for non-smokers. Social drinkers typically won’t see any impact on their premiums and, in some states, even recreational drug use can be acceptable. 

However, if you say that you are not a tobacco user, drinker, or drug user but your paramedical exam indicates that you are indeed a smoker, have been a heavy drinker for years, or you’re an illegal drug user, you could be denied coverage altogether. 

Your occupation (or hobbies)

The riskier your lifestyle, the more risk you pose to an insurance carrier. So if you have a very risky job or hobby — such as being a stunt plane pilot or race car driver — you could very well get denied a new policy with certain companies. At the very least, expect your rates to be higher than if you had a lower-risk occupation.

Your driving history

Car accidents result in tens of thousands of deaths each year in the United States. If you have been convicted of DUI, have a history of at-fault accidents, or demonstrate a pattern of reckless driving, you might be denied coverage or offered a higher rate for your policy.

Your coverage amount

Life insurance can be a great way to financially protect your loved ones and even establish wealth, but the amount of coverage you’re allowed to buy will have limits. For example, if you make $30,000 a year and want to buy a $20 million policy, you will likely be denied. 

Each carrier has its own proprietary formula, but just note that depending on your health, age, income, and other factors, you will likely be limited in how much coverage you can buy.

What to Do If Your Life Insurance Application is Denied

If your life insurance application is denied, it doesn’t necessarily mean that you can’t buy a policy at all. Here are some first steps you can take.

Check for mistakes

Applications can be lengthy and mistakes aren’t impossible. Check to make sure that you didn’t make any big errors on yours, and contact the carrier to ask about the denial. In some cases, it could simply be a misunderstanding.

Make adjustments

You might be able to turn a denial into an approval by simply adjusting the policy you’re requesting. For example, if you’re denied a 30-year term life policy, you may still be able to buy permanent life coverage. Or if you’re unable to buy coverage from one carrier, you could try applying through another.

Wait a few years

In some cases, applying again in a few years could be the answer to buying coverage. This is especially true if you had cancer and haven’t been in remission long enough, or if you’re too young to buy the term life policy you want. You could also get better rates if you’re a former smoker by waiting a certain number of years before applying again. 

Bottom Line

Life insurance is one of the most important things you can buy to protect your loved ones, but buying that coverage can be tricky for some people. Applying for life insurance is not guaranteed, but there are some things you can do to better your chances of approval or, if you’re denied, better your chances for buying in the future.