Buying life insurance is always beneficial. However, it is possible for you to be denied life insurance. Which is why it is important to know what are the factors which can lead to a disqualification from life insurance before you go on to purchase it.
Reasons life insurance won’t pay out
When life insurance policies get underwriting done, they look at many important factors that we may not pay much attention to when applying for life insurance. The insurer would want to determine what level of risk you are, which means they will look at everything, from your health to your personal hobbies.
- Chronic illness.
If you are suffering from a chronic illness, that automatically increases your chances of being denied life insurance policies. However, insurance companies like seeing individuals taking care of themselves. So if you show them that you are regularly taking your medicines and taking care of yourself by following a diet that will reduce the risk of that illness ultimately killing you, insurance companies will be more likely to accept you for a life insurance plan.
But for the acceptance to be made, you will have to be open with your insurance company and tell them upfront about any illness or disease you might have that could potentially put your life at risk or cause a premature death. This can be done on the phone or in person, depending on what your first meeting with an insurance agent is like. Once you have informed the insurance agent or insurance company of your condition, you will have to take a paramedical exam. This can either be a blood test or a urine test which will tell the insurance company about your health as well as any illicit drug use. These tests will be sponsored by the insurance company and will help them in determining the level of risk you would be to take on. Illnesses such as cancer, HIV, AIDS, Parkinson’s disease, diabetes and heart disease might lead to a disqualification from life insurance.
- Lifestyle choices.
Having dangerous lifestyle choices like being a smoker or consuming too much alcohol might not disqualify you completely by some life insurance companies. However, it can easily result in higher premiums for you. It’s also advised to make better lifestyle choices as this could be the deciding factor on whether you qualify for life insurance or not.
Smokers and alcoholics are high risk candidates as they could have a shorter life span than people with a healthy lifestyle. Insurance companies are not likely to invest in people through whom they know they would not be able to earn. If they did, no insurance company would be able to stay in business that way.
Insurance companies are also unlikely to accept candidates that are overweight or obese as these individuals tend to develop diseases like cardiovascular which again puts the insurer at risk. An individual’s weight or BMI is an overall indication of how fit that individual is. So even though being obese will not lead to a decline in life insurance, it can very likely lead to higher premiums. And if you are overweight and have other issues that are a no for insurance companies, there is a high chance of being denied.
It is quite common for people to be declined life insurance because of their ages. Life insurance policies are specifically designed to meet the needs of specific age groups and if those age groups are not the ones applying, they will be declined. You will always have options regardless of what age you are. However, all coverage options might not be available to you.
Some life insurance companies will not issue life insurance to someone whose income is below a certain level. This means they might not be able to provide premiums especially if they have health or lifestyle issues due to which their premiums are high. For people unable to pay for premiums, life insurance companies make the decision themselves and disqualify them. Insurance companies want to justify their policy and if you want coverage for everything but do not make enough, insurers will not see you as a possible candidate.
- Hazardous hobbies or occupations.
Some hobbies such as skydiving are deeply frowned on by insurers as this could potentially reduce your lifespan and put you at risk almost always. Again, you will be categorized as a high risk candidate which is not ideal for any life insurance company.
Occupation that requires a high level of risk is again, a big no-no for insurance companies. They might be reluctant in offering you a life insurance policy. You check Forbes’ list of 10 Deadliest Jobs to find out whether or not you have a hazardous occupation.
- Your driving record.
Having a driving record or driving recklessly in general can lead to a disqualification by insurance companies as it sends the impression that you live a rather dangerous lifestyle. This should not be taken lightly as driving accidents are one of the leading causes of death, especially in the younger generation. This is what will ultimately make you uninsurable for life insurance.
So all in all, now you know what will disqualify you from life insurance. However, once you have been rejected and you know what the reason for the denial was, you should immediately contact your insurance agent or broker. They can then guide you best on which insurance company to apply to. Insurance companies all have different policies. Where some are strict in their rules, there are some insurance companies that have a more lenient approach. You might be able to find life insurance policies with the above stated conditions, however, the premiums might be higher for you than they would normally be.
If you are not able to secure life insurance coverage in the policy you want, you should explore other life insurance options. For example, for people with medical conditions that are holding them back from purchasing a life insurance plan can opt for a guaranteed whole life insurance policy that has no medical underwriting and has been specifically designed for people with medical conditions.
The important thing to note is, you should not be demotivated if you have been rejected from one policy. Instead, you should talk to your insurance agent, contact other insurers and find an insurance company that is better suited to your needs.