Life Insurance Reasons for Refusal
Having life insurance is a way for individuals to provide financial security for their families if they were to die prematurely. However, there are several reasons why an applicant may be denied coverage.
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The Facts
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About 3 percent of life insurance applicants are denied life insurance. Eight in 10 refusals are due to health conditions while the remaining number of denials are from hazardous occupations and hobbies, according to MSN.
Health
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The health of the applicant is a major factor for insurance companies when determining to extend coverage or not. If the applicant has a medical condition such as a terminal illness or has a history of high blood pressure, heart problems, obesity or other similar health problems, they may be deemed uninsurable. An applicant who was diagnosed with a mental illness could also be denied coverage. Use of alcohol and tobacco will also make it harder to obtain life insurance.
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Occupations/Hobbies
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If the applicant has a job that is considered hazardous, insurers are not likely to grant life insurance. Such employment occupations include being a race car driver, pilot or being in the military. Applicants may be denied life insurance if they engage in dangerous hobbies like skydiving, hang gliding and mountain climbing.
Considerations
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When a person is denied life insurance, it becomes a part of their medical record. Therefore, denied applicants cannot falsify information to other insurers in order to obtain coverage. Anyone who is denied life insurance can request a copy of their medical records from the Medical Information Bureau (MIB).
Misconceptions
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If an applicant is denied life insurance from one insurer, they may be able to get coverage elsewhere. Insurance companies have different guidelines and some cover risks that others do not. However, this may bring higher premiums or lower benefit limits as a result. Also, if your medical condition is not as healthy as it will be months later, it may be beneficial to delay applying for life insurance until then.
Warning
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If an applicant is issued life insurance the death benefit can be denied if it is found that information on the application has been misrepresented. The insurance company can contest any death within the contestability period which is two years from the issuance of insurance. If it is proven that the applicant knowingly lied to get insurance, such as omitting that the insured smokes or is a skydiver for a living, the insurance contract can be voided by the insurer.
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