Reasons You Might Have Been Denied Life Insurance
Life insurance policies are a smart choice for many life situations. However, not everyone will necessarily qualify for coverage. There are a number of reasons why an application for life insurance may be declined, which are commonly referred to as high-risk factors.
Below, you can learn some of the most common reasons why a life insurance application may be denied. These reasons are in no particular order, as they are all important considerations when insurance companies evaluate risk factors.
1. Income Limitations
Some insurance companies may require applicants to have a certain income level based on the policy they are applying for. This level may vary, so it is always a good idea to compare offers from different insurance companies.
The restriction can be linked to the life insurance policy sum. For example, if you are applying for a million dollar life insurance policy, but are only making $20K a year, your application would likely be denied.
2. Hazardous Occupation or Activities
Some occupations are riskier than others. Insurance companies may choose to decline a life insurance policy application to people working in high-risk occupations.
The same goes for high-risk extracurricular activities. These activities carry a higher risk than some life insurance companies may be willing toinsure.
The occupations considered “hazardous” will vary from one insurer to another, but some common ones include 1:
- a) Logging workers
- b) Roofers
- c) Fishers and related fishing workers
- d) Airline pilots and flight engineers
- e) Electrical power-line installers and repairers
- f) Drivers/sales workers and truck drivers
- g) Farmers, ranchers and other agricultural managers
- h) Construction laborers
- i) Structural iron and steel workers
- j) Refuse and recyclable material collectors
As far as extracurricular activities go, the most common ones include scuba diving, skydiving, flying helicopters, rock climbing and base jumping.
Each insurance company has a risk scale for hazardous occupations and activities based on multiple factors, including safety precautions and qualifications. An applicant will be asked about lifestyle choices during the application process, and it is important for the applicant to be honest and upfront about any and all dangerous extracurricular activity in order to appropriately move forward.
3. Obesity
Obese and overweight people are generally considered high-risk groups for life insurers. Obesity can result in severe health complications, notably cardiovascular issues. The height-to-weight ratio2is a fairly good indicator of a person’s overall health.
This doesn’t mean that all overweight or obese people will be denied life insurance. It is likely premiums would be higher due to increased risk factors.
4. Alcoholism or Recreational/Illegal Drug Use
Confirmed excessive use of illegal drugs or excessive alcohol consumption is grounds for a denial of a life insurance application. Therefore, it is best to not use illegal drugs or engage in excessive alcohol consumption.
5. Poor Driving Record
A troublesome driving record is often observed in a similar way as hazardous extracurricular activities, since it is indicative of a potentially dangerous lifestyle. Consider the facts: auto accidents remain one of the leading causes of death, 3particularly among younger people.
A history of multiple car accidents, for example, may be sufficient cause for life insurance companies to deny a life insurance application.
Of course, you can always re-apply after you have demonstrated a clean driving history.
6. High Blood Sugar, Blood Pressure and Cholesterol
Any of these conditions may be indicative of a serious health condition. If hypertension can be controlled (especially in the case of younger people), a life insurance application may be approved. A HDL ratio of below 4.5 may result in either a policy denial or higher premiums, depending on whether you’re taking necessary measures to improve the cholesterol ratio. To qualify for lower premiums, you’ll need to lower the LDL- and boost your HDL levels. Finally, high blood sugar often accompanies Diabetes, which is, in turn, linked to an array of other serious health conditions. Some insurance companies may approve coverage if you’re a diabetic who is managing your condition.
7. HIV/AIDS
Even though HIV and AIDS can nowadays be managed well with the help of medication, these conditions are still considered high-risk for some life insurers. If you have tested positive for HIV, you may wish research life insurers that may offer coverage to people living with HIV.
8. Blood/Protein in the Urine
If either blood or protein 4is found in the urine, the condition may be indicative of a kidney disease. These conditions can be temporary, for example, after an extreme physical exercise. TIP: Maintain regular medical check-ups to make certain there’s no serious health condition.
9. Severe Mental Health Conditions
Some life insurers may decline a life insurance application to applicants with severe mental health conditions. Severe schizophrenia, for example, may fall into this category.
In addition, some life insurers may also decline applicants with Alzheimer’s disease, as the condition is characterized by a progressive decline in cognitive functions.
It is important to understand that people with well managed mental health conditions that are may be approved for a life insurance policy.
Conclusion
These are some of the most common causes that may pose challenges when applying for a life insurance policy. Much depends on the particular life insurance company, so you may wish to compare offers before finalizing a life insurance transaction.
Generally speaking, when a life insurer judges that a risk is too high – an application may be declined.
Fortunately, many of these conditions, activities habits can be improved/terminated over time. If you’re planning to apply for a life insurance policy its best to be as healthy as possible.
Most importantly, be well-informed, so that you can make the best decisions for your specific needs.
Are you ready to get a quote?
This is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney. 21-4133
1 Forbes.com, America’s 10 Deadliest Jobs, Jacquelyn Smith, 2013 accessed 1/31/21.
2 Medicalnewstoday.com, How Much Should I weigh for My Height and Age?, Daniel Bubnis, 2020, accessed 1/31/21.
3 CDC.org, Transportation Safety, CDC, accessed 3/20/24.
4 WebMD.com, Protein in Urine, WebMD, accessed 1/31/21.