7 March 2014 0 Comments

Declined for life insurance? Now what do you do?

shutterstock_108992549You applied for life insurance, had a medical exam and your agent says you have been declined.  Now what do you do?  First, ask the agent why you have been declined.  Is it due to a medical condition or life style?  If it’s a medical condition that you were not aware of, then ask the insurance company to send their findings either to you or your doctor and seek medical advice before taking any further action.  Often a declination for medical reasons is not due to a life threatening condition, but to your not having followed through with treatment or diagnostics recommended by your doctor.  The underwriter cannot be certain of the severity of a condition until they determine that correct care is being followed.

If the declination is due to life style as opposed to medical reasons, your agent may not be privy to reasons for the underwriter’s action.  It may be alcohol abuse, use of illicit drugs, criminal record, current bankruptcy proceedings or emotional disorders.  Get as much data as you can from your agent and then honestly access your life to determine if there is any real reason why an insurance company should have concern.

Next, ask your agent if they have “shopped” your application with more than one insurer.  Many times during my career even though one insurance company has declined to make an offer, another has issued a standard, or even preferred, premium class.  Be candid with the agent regarding your condition so they can find the companies most likely to make an offer and know how to present your file in the most positive light. If your agent is not doing the job, then ask a friend or me for a referral to an agent to assist you.

Check with your employer to see if any life insurance programs are offered for employees on a guaranteed or simplified issue basis.  If you are self employed and have employees working for you, consider adding group term life for your employees.  Some guaranteed issue amount may be available at the cost of your having to provide coverage for your employees, but this might be less costly than paying a huge surcharge for your personal policy, or not qualifying for immediate coverage at any price.

The course of last resort is to apply for guaranteed issue, graded death benefit whole life offered by several insurance companies.  These are very expensive policies whose death benefit for the first two or three years will be limited to a return of the premium paid (possibly with interest added).  Typically, unless death occurs within the first 8 to 12 years, the cumulative premium will exceed the death benefit.  None of these policy types require that you take a medical exam; some ask a few limited health questions and some ask no questions.  My blog sponsor, SelectQuote, is a resource as well as AARP (New York Life), MetLife and AAA Life Insurance Company.

The best advice: purchase life insurance before you encounter health problems.  Act now!

Next…exactly what to do when the premium offered is higher than you were quoted.

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