What to Do if You’re Denied Life Insurance Coverage

Life insurance helps protect your family’s financial future. However, if you have been denied coverage, you may feel frustrated and uncertain about what to do next.

Thankfully, you’re not out of options if you have been denied coverage. Read on to discover the importance of life insurance coverage, examine some of the common reasons for being denied life insurance, and explore potential options if you have been denied coverage.

The Importance of Life Insurance Coverage

Life insurance coverage provides a cash payout to named beneficiaries in the event of the policyholder’s death. This benefit helps pay for expenses such as funeral costs and any outstanding debts of the deceased. Depending on the type of policy purchases, it may also include a regular stipend for living expenses. Some life insurance coverage also comes with the option to borrow against the policy’s value before the policyholder’s death.

In 2023, 52% of American adults owned a life insurance policy. Intent to buy new policies is rising; 39% of consumers plan to purchase life insurance within the next year. Moreover, 41% of current policyholders say they do not have sufficient coverage and are looking to increase their coverage amounts.

Recent research found that one of the primary drivers for purchasing life insurance is the desire for financial security. Insurance policies provide a measure of protection against financial hardships when policyholders pass away, offer a way for individuals to prepare for retirement, and in the case of cash-value life insurance policies, allow policyholders to borrow money if needed.

If you are denied coverage, however, it may feel like this security is out of reach. Thankfully, there are options in the case of coverage denial, which we explain below.

Common Reasons For Life Insurance Denial

If you’re denied life insurance, your prospective provider will contact you and let you know. This denial could be an email, letter, or phone call, but no matter how you get the news, you’ll be told why coverage was rejected. Here are some common reasons for life insurance to be denied.

Pre-existing Conditions

A pre-existing condition is an illness or injury that occurred before you applied for life insurance and that may impact your potential lifespan. Because these conditions increase the chance of premature death, they also increase the risk to insurers, who may deny coverage. Pre-existing conditions that may lead to denial of coverage include:

Cancer: Depending on the type and stage of your cancer, you may be denied coverage. For example, while a first-stage thyroid cancer diagnosis comes with an 87% 5-year survival rate, just 22% of people with stomach cancer live for five years after their initial diagnosis.
Diabetes: While both Type 1 and Type 2 diabetes are treatable, Type 1 is an autoimmune disease that causes the body to attack and kill insulin-producing cells. As a result, Type 1 requires more management and puts you at a higher risk of death.
Heart disease: One of every five deaths in the United States is caused by heart disease. The most common type is coronary heart disease (CHD), which causes a narrowing of the arteries in the heart and can lead to a heart attack.
HIV/AIDS: While treatments for HIV/AIDS have reduced mortality rates, the damage to human immune systems caused by the virus puts patients at higher risk of death if they become sick or injured.
Kidney disease: Kidney disease impairs the waste-processing functions of the human body. If the disease progresses far enough, patients can no longer process waste. While the progress of chronic kidney disease can be slowed, damaged kidneys cannot be repaired.
Mental health conditions: If you have a history of mental health conditions linked to self-harm, such as depression or severe anxiety, insurance companies may deny coverage.
Obesity: If you are significantly overweight, you may be at risk of cardiovascular issues, which could shorten your lifespan.
High blood pressure: If your medical records show a history of high blood pressure, you may be denied coverage

Age When Applying

The older you are, the greater your risk of dying. Consider that at age 40, the average chance of age-related death is 3% — at 65, it’s 18%. Some insurance providers may consider multiple factors, including your age, current health, and pre-existing conditions, while others may set an age limit at which they stop offering policies.

Occupation and Lifestyle

Your occupation and lifestyle may also impact your ability to get life insurance. This is because some occupation and lifestyle choices carry a higher risk to your physical health than others, putting you at greater risk of premature death. Occupations and lifestyles that could limit your insurance options include:

High-risk jobs: High-risk jobs include first responders, airline pilots, truck drivers, and fishing workers.
High-risk hobbies: Some examples of high-risk hobbies are bungee jumping, skydiving, and vehicle racing.
Tobacco usage: Tobacco usage can lead to lung cancer, which puts you at risk of premature death.
Substance abuse: Substance abuse of legal and illegal drugs can shorten your lifespan or cause permanent mental impairment.
Criminal records: If you have a criminal record, you may be more likely to find yourself in risky situations that jeopardize your life.
High-risk travel: If you have a history of traveling to countries with high rates of communicable disease or nations at war, your overall risk increases.

Poor Financial History

Your current income and financial history may affect life insurance decisions. Poor credit history, including defaulted loans or credit cards with high balances, may indicate a tendency to make late payments or miss them entirely. Meanwhile, low income may impact your total coverage amount and result in denial.

Issues With Application

Life insurance companies may deny coverage if there are problems with your application. This could be as simple as form fields not filled out or sections left incomplete. Still, it also covers intentional omission of information that could cause your application to be rejected.

While a simple mistake in form completion may not indicate deliberate deception, companies are not obligated to reaccept your application after it has been denied. As a result, it’s worth double-checking your application before you apply.

The Consequences of Errors and Omissions

Several consequences are possible if you deliberately omit information or purposefully provide false information.

First is the denial of an insurance claim under your policy. If companies determine that the information you provided is not valid, they can deny your claim even if it falls under the bounds of your current policy. While information such as the wrong zip code or phone number is not enough to cause claims denial, providing false information about your health, such as having a condition like heart disease but claiming you do not on insurance forms, invalidates your claim.

You could also face fines or criminal charges for insurance fraud.

Your Options If You’re Denied Life Insurance Coverage

Getting denied coverage can be frustrating, especially if you feel like you’ve done the work to prepare for the application process. But it’s not all bad news. If you’re denied coverage, some options may help bolster your chances of getting accepted on your next application.

1. Understand and Remedy the Cause of Denial

First, understand why you were denied and take steps to remedy the situation. Possible remedies include:

Improving your health and lifestyle: By trying to lose weight, stop smoking, or change your hobbies, you can reapply for life insurance successfully.
Improving your credit history: Improving your credit history by paying down your debts and making timely payments can reduce your risk to insurance companies.
Ensuring your application is complete and accurate: Double-checking your application can help you to avoid errors and limit the chances of rejection.

2. Consult With a Trusted Life Insurance Agent

Working with a trusted life insurance agent can help improve your chances. These agents have experience in the insurance industry and can help you evaluate multiple policies and providers, complete your application form, and double-check for any errors that might lead to denial.

3. Reapply for Coverage

Once your application is in order and you’ve found a prospective life insurance provider, you can reapply for coverage. Because records are kept of all denials, it’s worth waiting until you’ve addressed any outstanding issues before reapplying. This is because the more denials you have on your record, the greater risk you represent to insurance companies.

If you’re applying with the same company, it’s worth calling and asking if they have a minimum waiting period before re-application. You may also appeal the initial decision if you feel it was unfair. For example, if a medical exam showed evidence of a high-risk condition but the results indicated something more benign, you could have an independent exam conducted and provide different results.

4. Consider Other Types of Life Insurance

You may also want to consider other types of life insurance, such as group life, simplified issue, or guaranteed issue.

Group life insurance: Group life insurance is offered by an employer or association to its employees or members. While this type of insurance may have a lower coverage amount than traditional life insurance, it also has a lower approval threshold.
Simplified issue life insurance: Simplified life insurance does not require a medical exam. Instead, you fill out a questionnaire. While this type of insurance has higher premiums and a lower benefit payout than traditional insurance, it can provide at least some coverage.
Guaranteed life insurance: Guaranteed life insurance has no medical exam and no questionnaire but comes with smaller payouts. In addition, it may limit your benefits if you die within the first few years of owning the policy.

Putting it All Together

Getting denied life insurance can be frustrating and demoralizing, especially if denials are tied to conditions or circumstances beyond your control. However, if you’re denied your first life insurance choice, you’re not out of options. You may choose to remedy health or lifestyle issues and apply again, work with an insurance agent to find new coverage, or consider other types of life insurance to help provide financial security for your family.

Understanding Life Insurance Denials: Common Reasons and How to Address Them