Common Reasons for Being Declined Life Insurance

Life insurance companies are very thorough in their approach to reviewing fully underwritten applicants.  They look at many different factors from your health to your hobbies to determine your overall health class rating.  If a life insurance company views you as too much of a risk to insure, it will will simply decline your application.  It is important to know some of the more common reasons why a life insurance company might decline your application. 

Common Reasons for Being Declined Life Insurance – With so many factors taken into consideration on your life insurance application that there are many reasons why you could be declined coverage.  Here are some of the more common reasons why you might get declined for life insurance.

Something Discovered During Your Paramedical Exam – This is probably the most common reason why you would get declined coverage.  If you’re applying for a fully underwritten life insurance policy, you will have to take a paramedical exam.  The life insurance company is going to take a blood and urine sample from you and maybe even a resting EKG, depending on the size of the policy and your age.  Blood and urine samples can reveal quite a bit about your health which is why many declines stem from issues found in blood and urine.  In many cases, you probably didn’t even know you had a problem.  Some common issues that are found in the blood and urine that could impact your health rating are:

• Elevated cholesterol levels – Your overall cholesterol level will be measured and compared against your HDL (good cholesterol) to arrive at a ratio. The lower the ratio between your overall cholesterol and your HDL, the better.  Most companies like to see a ratio of 4.5 or lower for preferred best health class ratings with overall cholesterol in the range of 220 to 250 depending on the company.
• Elevated blood or glucose levels – This could be a sign that you’re diabetic or at least borderline. In many cases, people don’t even realize they have an issue.
• Elevated liver enzymes – Elevated liver enzymes can signal many problems such as hepatitis, excessive alcohol consumption or even cirrhosis.
• Positive alcohol marker – Alcohol consumption is something that the insurance company will look at very closely. If your blood test reveals elevated liver function, it could signal a positive alcohol marker.  A positive alcohol marker will most likely lead to a decline.
• Elevated protein in the urine – Elevated protein in urine could mean a number of different issues such as kidney disease, heart disease or diabetes. If your protein levels are higher than 100mg/dl, it could lead to a decline in coverage

Any of these issues, depending on the severity, could result in an approved other than applied for, postpone or decline.

Something Discovered in Your Medical Information Bureau (MIB) Report – The MIB is a member owned nonprofit organization that allows insurance companies to exchange certain underwriting information on life insurance applicants.  The goal of the MIB is to prevent fraud or misrepresentation.  For instance, if you are denied coverage by ABC Insurance Company due to a health impairment, your MIB record will alert XYZ Insurance Company if you omit your existing health issue on a new application.

Something is Discovered in Your Motor Vehicle Record – If you decide to omit that DUI you got last year on your life insurance application, you can be assured that the insurance company will find it.  Life insurance companies look closely at your motor vehicle record since multiple speeding tickets, accidents, DUI’s or suspensions make you a much riskier applicant.  Recent DUI’s and multiple speeding tickets could lead to postpone or a decline of coverage.

You’ve Had a Recent Bankruptcy – If you are in the process of going through a bankruptcy, chances are you will be declined for life insurance.  In general, companies want to see that your bankruptcy has been discharged for at least one year before they will consider you for coverage.

You Can’t Financially Justify the Amount Applied For – There are limits to the amount of life insurance you can have based on your income and net worth.  Life insurance is primarily meant to replace lost income.  It is not meant to be used as a means to create new wealth.  You should be able to justify the amount of coverage that you need or else you will be declined.

You Weren’t Truthful on Your Application – Being truthful on your life insurance application can’t be stressed enough.  It is important to understand that any inconsistencies on your application when compared with your paramedical results or medical records (if requested by the insurance company) will immediately raise a red flag.  For instance, if you apply as a nonsmoker to try and get a lower rate and your blood tests positive for cotinine, you will have some serious explaining to do. In many cases, instead of being denied coverage, you might just be just approved at a lower health rating, but why take the risk.

Your Agent Didn’t Shop Your Case Properly – Unfortunately, this is very common. Every insurance company has its own underwriting guidelines.  If you have even moderate health issues, you could be declined by certain companies that have conservative underwriting guidelines.  Some agents out there will simply send in an application to one company with the hope that it gets approved.  This is common with certain captive agents who only have access to one company’s products.  Independent agents can access multiple insurers to find the company that will best underwrite your situation before you even fill out an application. Click here to see how we the best rates for our clients with health issues.

Conclusion – If you’ve been declined life insurance, you really should get a second opinion. It is best to work with an independent agent that can find the company that will view your situation most favorably. If you’ve been declined coverage and need a second opinion, email us or give us a call at 888-687-9444.   We will be happy to give you a complimentary consultation and explain your options.

About Us – Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients.  We are happy to answer any questions you might have about your life insurance needs.  If you have questions, feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.