Life insurance is a strange business. Insurance companies spend hundreds of millions of dollars advertising and selling life insurance products. But then the same insurers deny life insurance coverage to millions of applicants each year.
Before you shop for life insurance, it’s important to understand what could prevent you from getting coverage. Just because one insurer denies coverage, it doesn’t necessarily mean that you can’t get life insurance at all.
What can get you denied a life insurance policy?
The most common reasons to be denied life insurance include being too old, physical or mental health conditions, having a dangerous job or hobby, drug use (including, sometimes, cannabis), very poor credit, or a criminal history.
Let’s take a closer look at some of the most common reasons a company may deny you a life insurance policy.
All life insurance providers take your physical health into account. In fact, most life insurance companies require you to to have a medical exam and undergo blood tests before they will issue a policy. They are, after all, making a bet that you’ll live longer than your life insurance policy term.
You may suffer from high cholesterol, obesity, diabetes, or other chronic illnesses. With any major health condition, the life insurance company will view you with more risk.
Depending on the severity of the health issue and the specific life insurance company, you may be denied coverage.
You don’t have to worry about some of the most common chronic health conditions like high blood pressure (hypertension), high cholesterol, and even diabetes, if it’s well-controlled. Applicants with more serious conditions, like cancer or HIV, however, are almost always denied life insurance coverage.
Don't lie on your life insurance application! Life insurance companies require you to grant them sweeping permission to view your medical records, and they will. Lying on a life insurance application is a guaranteed way to get denied coverage. Worse, insurers share information and doing so may make it impossible to get life insurance with any company. Finally, insurance fraud is a criminal offense.
Mental health history
Unfortunately, many life insurance companies will deny coverage if you have a history of mental health issues.
Not all life insurance providers look at mental health issues in such a negative light, but many will deny coverage for seemingly common and benign mental health conditions.
I’ve known friends who have been denied life insurance just for seeing a therapist for anxiety. That’s an extreme case, but understand that more serious conditions like PTSD, bipolar disorder, or any history of self-harm may be grounds for life insurance denial.
What are a few examples of dangerous hobbies?
- Rock climbing
- Racing (tracking your car)
- Scuba diving
- General aviation
In many cases, it’s possible to pay extra to get something called a rider that will add coverage for deaths caused by one of these dangerous activities. Some insurers will approve coverage but include a policy exclusion that will not pay out if you die doing one of these activities. Some will reject you all together.
Some dangerous occupations that may get you denied life insurance include:
- Construction worker
- Truck driver
- Law enforcement officer
- Military service member
Perhaps unsurprisingly, life insurance companies will deny you if you report any kind of illegal drug use (or it shows up in your bloodwork). But what about using marijuana in states where it’s legal? And what about legal medical marijuana?
The answer is, it depends. I’ve known people to be denied life insurance by one company for reporting occasional use of legal medical marijuana. But the same people eventually found coverage with other insurers.
What about nicotine?
Some insurance companies won’t give life insurance policies to tobacco users. Period. Many other insurers will, but may charge premiums that cost up to 10 times more than premiums for non-smokers.
Given that quitting smoking is the single most important thing someone can do for their health, this is a defensible policy. The stats don’t lie: Smokers die a lot younger.
But insurance companies are an anxious lot. (There’s some hypocrisy there that they might deny applicants for suffering from anxiety). Most of them don’t make a distinction between someone who smokes two packs of cigarettes a day and someone who has an occasional cigar or who uses smokeless, non-tobacco nicotine like Zyn. To life insurance companies, nicotine is nicotine.
Obesity can be a reason you might be denied life insurance, too.
An often overlooked fact is that life insurance is less expensive the younger you are.
Not only do premiums get more expensive as you get older, most insurance companies have a maximum age at which they will issue a policy. (Maximum age varies, but tends to be around 65.)
Your personal finances can play a big role in whether or not you qualify for life insurance coverage. Many insurers will look at your credit report to determine if you have any previous bankruptcies or outstanding debt. Additionally, an insurer will look at your income to determine if you can afford coverage.
If you have a recent bankruptcy or high debt burden, your ability to secure coverage will be in jeopardy. But some insurers may be willing to work with you.
If you have a criminal record, then you may be denied life insurance coverage. The reasoning is that you may engage in a high-risk lifestyle if you have a record. But each life insurance company will treat your criminal record on a case by case basis. The circumstances and severity of the crime will be considered before they offer coverage.
If you are currently being charged with a felony, you will not be able to secure coverage until the charges are tried in court or dismissed. Additionally, you cannot apply for life insurance if you are currently in jail or on probation.
With a bad driving record, you pose a higher risk for the insurance company. Unfortunately, reckless driving habits point to a higher risk of death. Depending on your driving record, you might be denied coverage or faced with higher rates.
What do life insurers look for in a policyholder?
When you apply for life insurance, the company will look at various factors to assign an insurance score. The insurance score will affect your premiums and coverage options.
Each insurer has its own way of calculating an insurance score. With that, you cannot check this score like you can check a credit score. But you can work to improve certain areas of your life that affect this score.
Overall, life insurance providers are looking for policyholders that pose a low risk. A low-risk applicant will receive the best terms and an approved application.
How to increase your chances of being approved
The potential for denial can be a scary thought if you are trying to protect your family’s future. With that, you can work to improve your chances of being approved. If you take active steps to lower your lifestyle risks, then you might have better approval odds.
Here’s how you could lower your risk.
Stay in good physical health
If you are faced with a chronic health issue, then it can be more difficult to secure a policy. But you may be able to increase your approval odds if you can prove that a physician is treating your health condition. Depending on the company, you can ask the physician to write a statement that explains your health battle and confirm that you are actively pursuing treatment.
With increased physical health, you may be able to qualify for life insurance without a medical exam.
Treat your mental health
A history of mental health conditions can be an ongoing battle. You’ll need to be upfront about your mental health concerns. Any diagnosis will likely affect your rates and approval odds.
However, if you have taken steps to treat your diagnosis, that can positively impact your approval odds. With regular treatment and a steady medication plan, many insurance companies will offer coverage opportunities, but at higher rates.
Make better lifestyle choices
You can take steps to improve your overall health. That could include eating healthier, quitting smoking, or working out more.
Additionally, you could give up some of your adrenaline-seeking hobbies. If you create a safer lifestyle, then you should have less of a problem securing life insurance.
Unfortunately, you cannot turn back the clock. But if you can plan ahead, consider applying for life insurance coverage earlier in life. With a younger body, you may have a better chance of securing a policy.
Look into occupational life insurance
You may not have the opportunity to change your profession. With that, it can be difficult to secure coverage if you’ve been denied due to your line of work.
But your company may offer their own group life insurance policy as a part of your benefits package. Talk to your human resources department to find out if this is an option for you.
Improve your finances
If you have had recent financial troubles, consider cleaning up your credit report before applying for life insurance. You can work to improve your credit report by lowering your debt burden.
All insurers have specific rules surrounding bankruptcies. But you can find out about these ahead of time. For example, some insurance companies will require that you wait 12 months after your bankruptcy before considering you for coverage.
Talk to an agent if you have a criminal record
If you have a criminal record, you should speak to an insurance agent or broker before applying for life insurance. The agent will be able to assess your unique situation and make a recommendation. In some cases, you may find a company that is willing to work with you. In other cases, you may not be able to secure coverage.
Keep a safe driving record
A bad driving record can be difficult to clean up. But you can prevent future marks on your record by driving safely in the future. Additionally, you may be able to take classes to improve your driving record.
In some states, you can elect to take a safe driving class if you get a ticket. Sometimes the safe driving class will keep your record clear or any points on your license. Check out the rules in your state to keep your record clean.
How do you get life insurance if you are denied a policy due to these reasons?
Even if you make an effort to lower the risk you pose to an insurance company, you may still receive a denial. At that point, there are other avenues to consider.
Look into your workplace life insurance options
Depending on where you work, you may be able to secure life insurance through a group policy. Many employers offer this opportunity as a part of your benefits package. Although the coverage amount may be minimal, you could be able to gain coverage even with previous denials.
Look for an insurance company that works on individual cases
Although some insurance companies have no room for decision making on a case-by-case basis, some do. If your case is decided on an individual level, then you might have the opportunity to explain any red flags.
Mortgage life insurance
If you have a hefty mortgage balance that you don’t want to leave behind, you could look for mortgage life insurance. The policy will cover any remaining mortgage balance when you die.
Typically, you can purchase this insurance when you close on the mortgage or shortly after. You may not need to submit to a medical exam, allowing most people to qualify for this option.
Guaranteed issue life insurance
You may be able to secure a relatively small life insurance payout through a guaranteed issue life insurance policy. Typically, you will only be able to secure a policy of up to $50,000. But you will not have to answer any medical questions or take a medical exam. With that, most are able to qualify.
If you want to leave something behind for your dependents, then this could help. But you may not find the coverage amount you originally wanted.
Securing life insurance can be difficult if a life insurance company deems you to be a risky policyholder. Although you may not be able to remove all risks from your life, you can take steps to create a healthier lifestyle. With a better balance, you might find better approval odds.
If you cannot find a traditional life insurance policy that will work with you, then consider smaller payout opportunities such as mortgage life insurance or guaranteed issue life insurance. You will find smaller payouts. But these policies present an opportunity to provide a financial cushion for your family if the worst should happen.