When Can Life Insurance Be Denied Based on the Application?
When you apply for a life insurance policy, the application includes a series of questions about areas such as your health history and lifestyle. Depending on how you answer these questions, the insurer's underwriting department could deny your application if it appears you pose too great of a risk. Coverage may also be denied when your beneficiary files a claim if the insurer can prove you obtained coverage under false pretenses.
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Adverse Health History
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Current or previous serious medical conditions you list on the application may result in the denial of life insurance coverage. Common conditions that may prohibit coverage include cancer, diabetes, stroke, heart disease and HIV infection. In some cases, companies may issue a policy if you have been free of a disease for a specific amount of time prior to applying. A company may also decide to issue a policy with a rider that excludes coverage for the condition should it reoccur.
Hazardous Occupations
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Insurers analyze statistics that indicate the likelihood that you will be killed on the job, so certain occupations may result in the denial of coverage if the company considers them as hazardous. If you work with explosives or in a job involving heights such as skyscraper construction or washing office building windows, you may have greater risk of suffering a fatal injury than an office worker or retail employee.
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Hazardous Avocations
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Life insurance applications include a question about whether you engage in hazardous activities or hobbies. Typical forbidden activities include skydiving, hang gliding, vehicle racing, bungee jumping and anything else that poses the risk of a life-threatening mishap. If you engage in a hazardous occupation or avocation, you may need to seek coverage from a specialty life insurance carrier that covers these types or risks. Another option is to accept a policy with a rider that waives coverage for these activities if your company offers this.
Misrepresentation
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If you provide misleading or incomplete information on the application, the insurance company may have grounds to deny coverage if it discovers this during its claim investigation upon your death. If you failed to disclose information about a dangerous hobby or a previous medical condition that would have resulted in the insurer not issuing the policy had it known about it, you may be guilty of committing insurance fraud. In some cases, a statute of limitations applies to the denial of coverage for misrepresentation.
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References
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