A permanent life insurance policy is a great way to build wealth while you’re still alive and protect your family should the worst happen. For most people, getting life insurance is a case of deciding how much coverage they need. But what happens if you’re denied life insurance and are faced with not being able to get coverage? We’ve got the lowdown with this guide.
I’ve been denied life insurance
Getting denied for anything kind of sucks, doesn't it? Fortunately, according to the American Council of Life Insurers (ACLI), fewer than one in 200 claims are denied, so it's unlikely your application will get a big fat rejection sign on it. But if you are one of the unlucky ones, there's no need to admit defeat–you have options.
First of all, you should ask for more information and find out why you were denied. Contact your insurance agent or company and ask them why, especially if the rejection letter or email is light on details. Most insurers look at your medical and non-medical risks when assessing if they should give you a policy, and you could have been denied for either one.
A serious medical condition or poor results from your life insurance medical exam tend to be the most common reasons why people are rejected. Or it might even be non-medical related, with factors like bankruptcy, a criminal record, a positive drug test, or a dangerous hobby all having an impact. All of a sudden, monthly paragliding doesn't look like such a good idea.
You’ve got more info. Now it’s time to review your case
Ok, so now you know the reasons why you were denied life insurance. Whether you're happy with the explanation or not, it's time to review your case. Most importantly, check that the details are correct. It doesn't happen often, but, on occasion, insurers may have made a mistake.
No one knows your situation better than you, so fine comb over everything. If you find that any of the information is incorrect, your next move should involve making an appeal to the insurer.
Ask your doctor to provide the insurance company with up-to-date information from your medical file. You can also appeal nonmedical reasons, such as an out-of-date financial record or incorrect details about your job and hobbies.
It’s good to talk, so speak to an expert
Try speaking to an expert who can give you more information about getting a policy. Life insurance agents know the ins and outs of the underwriting process and how everything works, which means they might be best placed to advise.
They can help you with your next move, whether it's going for a term policy instead or trying for a lower amount of coverage with permanent life insurance. They can look at red flags around your application and perhaps point you in the direction of an insurer that will give you coverage.
Most of the time, it’s fine to go online and get a quote for life insurance–in fact, it’s usually the best way to do it as it’ll save you time and money. But if your policy has been rejected, talking to an expert could help you find options available that are specific to your circumstances.
Consider another policy
Even if you don’t speak to someone, it’s worth exploring other forms of coverage. Permanent life insurance is the best option because it allows you to build wealth tax-free while you're still alive and leave a death benefit to your loved one. Plus, your premiums stay the same throughout the entire policy.
It’s not the only type of life insurance on the table, though. Term life insurance might not give you the same great benefits as a perm policy, but you’ll still get a death benefit for a set duration, and your premiums will stay the same throughout the term (though they increase should you wish to renew when your initial policy expires).
You may even be able to get a perm policy, just for less coverage or with a different insurer. Essentially, having some form of policy is better than having none at all, which brings us on nicely to our next section.
Workin’ 9-5
All is not lost if your individual life insurance application sees you running into a brick wall. You could check with your employer to see if coverage comes bundled with your workplace benefits. Many professional organizations offer group life insurance to their employees.
Even better, most of these policies don't require medical exams and are automatically included from the minute you start your job. That means you'll have a form of life insurance coverage for you and your family.
It's unlikely to cost anything extra, as group life insurance plans are typically bundled with work-related benefits. However, it's not all good news: the amount you're covered for can vary, though it's usually capped at $50,000 or a percentage of your income. You will only be able to use the employer's preferred insurance company and, if you leave your job, you'll no longer be covered for life insurance.
When all else fails, just wait
If you’ve really exhausted all the available avenues to get a life insurance policy, it may be that time is the best healer. What does that look like? It could involve waiting for a health issue to clear up or sorting out your finances.
You may need to wait between three to six months before being eligible for a policy. Use the time to create a better diet for yourself, lower your blood pressure or cholesterol–whatever you need to do to qualify for coverage.
Keeping up healthy habits like good eating or quitting smoking can make a significant difference the next time you apply. Or, if it's a financial issue, use the time to build your credit or sort out any potential money issues that led to your policy being rejected.
We live in an on-demand economy where consumers want everything right now. But sometimes, playing the waiting game is a smart option that can help you be successful in the future, especially if it comes to getting a permanent life insurance policy that helps you build wealth.
In conclusion: Turn that frown upside down
Being denied life insurance can be frustrating and even cause anger. But it doesn’t need to be the end of your search for a policy. By taking the right actions, you can still set yourself and your family up with protection and even the chance to build wealth while you’re still alive with a life insurance policy.