Can’t Qualify for Life Insurance? Do These 3 Things Now
Written by
Laura Gariepy
Edited by
Zuri Anderson
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You want to make sure your family is taken care of when you die, but your application for life insurance got denied.
Thankfully, you don’t have to give up on protecting your loved ones. Keep reading to learn what steps to take next.
Learn Why You Were Denied
“The first thing to do is get the exact details as to why you were declined. Was it due to a known condition, unexpected lab results or information from your medical records? The insurance companies have to provide details,” said Michael Horbal, founder of RiskQuoter, a life insurance brokerage specializing in high-risk underwriting.
To see exactly what data the insurance companies used to make an application decision, “you can [also] request your Medical Information Bureau and Milliman Intelliscript files directly from those data bureaus. If you’re getting declined for incorrect information, you can correct it with those organizations (sort of like correcting an issue on your credit report),” explained Matthew Gratt, founder of the CoverSavvy Agency.
Fix the Issue (If Possible)
An application rejection may not be a permanent denial of coverage. For instance, if you were declined due to your build, you may qualify after losing some weight.
Some issues also resolve themselves with time. For example, many insurance companies won’t issue you a policy if you’ve had major surgery or a certain medical diagnosis within a specific timeframe. Once that period has ended, you may be able to obtain coverage.
Find a Life Insurance Broker — And Apply Again
A life insurance broker has deep industry expertise and partners with many insurance carriers. They can advise you on which type of coverage to apply for and with which insurance company, based on your odds of approval and budget.
”In many cases, people declined for life insurance just applied to the wrong company. Some companies are better than others for conditions such as cancer history, heart disease, HIV, diabetes, etc,” Horbal said.
Getting declined for coverage can be a red flag to other insurers (especially if it happens multiple times). You should only apply for a policy if you or your broker is reasonably confident you’ll get approved.
Explore Other Options
If you’re truly ineligible for a traditional life insurance policy, consider these options:
- Workplace policy: Coverage through your employer generally won’t follow you if you leave your job, and it typically only pays out one to two times your salary. However, you won’t need to go through a medical exam, and the company may pay the premium.
- Guaranteed-issue final expense policy: Coverage through a guaranteed-issue final expense policy is usually capped at $25,000 and may be expensive, depending on your age. Your beneficiary may only receive the premiums you paid if you die within two years of policy issuance. However, your application WILL be approved regardless of your medical condition.
- Accidental death policy: Coverage is typically capped at $500,000, and the policy generally only pays out if you die in an accident or become disfigured in certain ways due to an accident. However, as long as you’re within the insurer’s age limits, you can qualify for coverage even if you have a serious medical condition.
You can also self-insure by amassing enough cash and assets to provide for your family, so you don’t need an insurance policy. You could also prepay for your funeral.
“You can save your money in a safe instrument like [a certificate of deposit] or a bond index. Make sure the beneficiary designation on the account matches how you’d set up your life insurance beneficiaries, so the account will pass to your heirs when you pass away,” Gratt said.
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