No one expects to be rejected for life insurance coverage, and when it happens, it can come as quite a shock. Insurers can deny coverage for many reasons: high-risk behaviour, financial issues, and, one of the most common reasons, medical concerns. No one company is the same as another, and what might be covered under one company may get you declined by another. But those three factors are generally the areas that cause insurers the most concern.
It goes without saying that insurance is a risk-adverse business. The riskier a client’s lifestyle, the more likely they might end up dying earlier. That’s why most insurance forms ask questions on what kind of activities you participate in, where you travel, whether you have ever been convicted of a crime, what kind of driver you are, whether you smoke, or whether you’ve ever taken illegal drugs. While some of these might only result in a decreased benefit or higher premiums, some of these concerns can cause your application to be rejected.
The same goes for your finances. If a bankruptcy has been filed, or if there has been a prior history of payment issues, it impacts your ability to get the coverage you need. Out of these examples, bankruptcy would be the biggest financial reason why life insurance may be rejected. Currently in Canada, there are approximately nine life insurance companies that will consider issuing policies to people who have filed for bankruptcy, and each company has their own stipulations that must be met before coverage can be issued.
For most people, however, the most common reason they may be rejected for life insurance is medical history. Whether it’s mental or physical health, weight, family history, or pre-existing conditions, what’s going on inside you will determine what kind of coverage you may qualify for. As with risky behaviour, one or two conditions may not be enough for coverage to be declined, but the more issues there are, the less likely it is that the policy will be issued. But no matter what, never lie on the application. If discovered, the policy would become null and void and coverage revoked. As this article shows, there are a few common mistakes people make when applying that you should be careful to avoid.
Even if you have been declined for whole life coverage, there may be a light at the end of the tunnel. If the denial is for medical reasons, no-medical life insurance is an option. The coverage may be lower than a standard policy, but sometimes even a little can make a big difference. Bankruptcy, as we’ve seen, isn’t the end of the world. Some companies will take a risk if you can meet their terms. As for lifestyle, if the concern is something like drug use, smoking, or a poor driving record, if the behaviour changes or stops, or if you’re clean for a period of 12 months prior to your application, you may be able to secure adequate coverage.
There are many reasons coverage may be rejected, but there are always options or alternatives if you’re willing to look.
Rejected for life insurance? We can help. Please contact us at 1-866-899-4849, or visit our term life insurance quote page.
