Maybe you saw an ad on TV and decided to try for the No Exam life insurance policy they were touting. Maybe your spouse’s workplace extended an offer of coverage to you. Maybe you are part of an organization that was offering a life insurance policy, or got a flyer in the mail, or one of the many “simple” ways life insurance is sold these days.
If you have a health condition or other risk, you may have thought this type of policy was your answer. And you may have been shocked to find you were declined.
For businesses that specialize in life insurance for those with health condtions, as many as 50% of applicants have been declined for life insurance at one time or another. Many had not previously spoken to an agent due to the “simple” nature of the policy they had attempted to get. They often did not see or understand the terms for approval, and sometimes were declined for something they didn’t know they had, on a record they didn’t know existed! Others talked to an agent, underwent the insurance exam, and had their entire medical records reviewed, still to be declined.
Here are the top 5 reasons I have found that Life Insurance applicants are declined AND how each type of decline can be avoided or corrected.
1) The product did not cover your health condition
If the exclusions are not clear or the ad is misleading, you may find yourself applying for a quick issue policy that was really not designed for your medical condition. Likewise, if the producer is only able to offer limited choices, is not knowledgeable about the health condition, or is in a hurry to make a sale, he/she may not ask the right questions or match you with the best product for your situation.
How to avoid/correct this decline: Call the company BEFORE applying, to talk to a representative about your eligibility and explain the fine print to you. Better yet, call an agency that handles many products and talk to a trained agent who understands health conditions. Have him/her guide you through the choices until you find together a product that fits your health, budget, and type of coverage needed.
2) The application had missing or incorrect information
With no one to talk to or review your application, it can be very easy to overlook a blank or fill out something incorrectly. You may have applied for a higher face amount than your age allowed, signed the application from another state, or needed someone else to sign as Payer or Owner. If someone doesn’t contact you to help you correct those, even little things like using a PO Box instead of a street address can cause your application to be rejected.
How to avoid/correct this decline: If you submitted your own application directly to the company, FOLLOW UP with a phone call to ask if your application was filled out correctly. Better yet, consult a trained agency to fill out the appropriate application over the phone, in person, or have the assurance that your agent will “scrub” your application (make sure all is complete and correct) before submitting.
3) Something was on your records that you were not aware of
Simplified issue policies that do not require an exam or medical records rely on “behind the scenes” records to help determine whether or not you are eligible for them. These include MIB (Medical Information Bureau), pharmacy records, and MVR (Motor Vehicle Report). If the questions you answered on your application and your phone interview (if a phone interview is required) do not jibe with what is on these records, you most likely will be declined.
How to avoid/correct this decline: First of all, be aware that ANY time you apply for life insurance, even if a little policy you see on TV, the medical information on your application will put “codes” on your MIB that any future companies can see. This includes a code for past declines. Having been declined in the past does not automatically make you ineligible for most products. But if you can avoid a decline by simply reading the fine print, it’s a good idea.
You can go to http://www.MIB.com before applying to learn more about the MIB and request to see your report. It can help to obtain a list of your medications for the past five years from your pharmacist(s) so you can verify that you were prescribed each one and why. If there are mistakes on your reports, have them corrected before applying, if possible (or obtain a doctor record stating the correct information).
4) Incomplete medical records
Some people are declined for a policy that required exam and medical records, even though their health clearly qualified for that policy. The reason for the decline? Their doctor did not provide the carrier with the medical records requested. Often the applicants did not even know this was the reason because no one ever told them! Almost as common a reason for decline is that doctors wrote in the patients’ medical records that they needed a test which was never done. Even if the condition resolved and the test never needed, without further explanation, this can be a cause for decline.
How to avoid/correct this decline: List all the doctors that you have seen in the past 5 years (or since your diagnosis, if applicable) on your application. If your case has been in process over 6 weeks and you have not heard from anyone, contact your agent to find out if your doctor records have been turned in. Better yet, use an agency that will provide you with a personal Case Manager who gives you regular updates and will advise you on how you can help expedite the underwriting process.
It may be that you will need to complete the test recommended before you can be approved. Or you may be able to explain the circumstances, or obtain a doctor note, to avoid that. Working with an agent experienced with impaired risk life insurance is very helpful in situations like this.
5) Everything was done correctly but your health just didn’t meet the qualifications for that product
This should be the number one reason for declines, not number five. Skilled agents who are knowledgeable about assessing your health, have a smorgasboard of products for those with health conditions, and access to the carriers to ask ahead of time whether you qualify, usually can guide you through the jungle of picking the right product and getting an acceptable decision based on competed application and records. However, sometimes after reviewing your health history, the carrier just cannot approve you for the product that you and your and your agent thought you had a shot at.
How to proceed from there: Use an agent and/or website that specializes in Impaired Risk life insurance to find the next best product for you. It will cost more, but there IS something out there for you in almost every situation.
I cannot close this article without addressing the emotional impact of being declined for life insurance. As you can tell by the reasons above, being declined may have nothing to do with you! Yet almost every decline evokes at least one of the following reactions;
1) Feeling of being sicker than you really are.
It is terrrible to watch a client become crestfallen after a decline, thinking that their health is not as good as they thought it was. Keep in mind that medical doctors and life insurance underwriters do not necessarily assess health the same way. E.g. what your doctor considers a tolerable cholesterol number for you, may bump you to a decline by an insurance company. Don’t let it get you down! Your doctor knows you better. Just move on to the next best option and don’t give up.
I hate to say it, but often this anger is justified. Any time one works with a system and large companies, there is the chance for something to go wrong. Agents should be your buffer, but sometimes don’t do a great job of that, or things are beyond their control. Just don’t take it personally or let your anger keep you from jumping back in there to get the coverage you need.
If you were declined for a mail-in product, you may come to the conclusion that all such offers are bogus. If you used a website that left you hang out to dry, you may assume that all life insurance websites are like that. Or you may conclude that you really are uninsurable.
All of these reactions are understandable, but not based in fact. Do your homework and find what looks like a reliable website or agent for your situation. You may be pleasantly surprised next time.
Being declined for life insurance feels terrible. But once you know how and why declines happen, you are better armed to be approved. Don’t be afraid to ask for help. And Good Luck!