Liza is a marketer and blogger who focuses on financial and insurance issues. She is also a contributing writer for a company that provides life insurance quotes online.
The principle behind life insurance is that by having many people insured, the risk is spread. Insurance companies have people who are called actuaries that calculate what rates should be for people of various ages. Here are the five most common reasons an insurance company might deny your application for coverage. A discussion of these reasons follows the list.
• Pre-existing conditions
• Insurance company underwriting standards
• Applicants risk factors
• Failure to pass required medical examinations
• Denial of application by another insurance company
Conditions that existed before you applied for insurance, called pre-existing conditions, are a common reason for denial. Depending on what the condition is, your application may be rejected or you may be offered insurance at a higher premium. Another option, for the insurance company, is to offer a policy with the same premium as a person who does not have the pre-existing condition, but with a lower amount of coverage. You must answer all questions on an insurance application truthfully. If you try to hide a pre-existing condition and your insurer finds out, they may not pay benefits under the policy. For life insurance, the way to avoid this problem is for parents to take out life insurance policies on children when they are very young. A policy that has options for increase of the amount of insurance would protect against any conditions that arise later in life.
Some insurance companies have rules that govern who they can insure. These are called underwriting guidelines. Many companies will not insure a person for life if they have ever had any type of cancer, or they may allow you to have the insurance and start paying premiums but will not pay any benefits until after one year of continuous coverage. Other companies may have restrictions based on a ratio of weight to height. These types of insurance coverage restrictions are not consistent from one insurance company to the next. Your only option, if denied, is to look for a different insurance company with less stringent underwriting conditions.
All insurance companies consider certain risk factors when reviewing your application for life insurance. They consider things like your past health, your current weight, have you ever used tobacco or drugs, do you drink alcohol, what is your profession or job, your record for driving and what recreational activities you have. The only way to avoid rejection for these risk factors is to take care of your health and restrict your activities to things not restrictive in the eyes of an insurance company.
Depending on your age and the amount of insurance requested, you may be required to take a medical examination. This will be paid for by the insurance company and done by a medical professional of their choice. Even though some medical conditions cannot be hidden, something you should not do anyway, there are ways to prepare for the medical examination. For at least one day before the exams make sure you severely restrict the amount of salt or cholesterol laden food. Make sure no alcohol has been used and do not drink any beverages with caffeine for one day before the test. That means no coffee, tea or cola drinks. There may be additional medical tests done as well, depending on your age.
Learning about what insurance companies look at in consideration of your request can help you adjust your lifestyle in advance. This will help maximize your chance for acceptance. This is also important because if one company rejects you, the next one you apply to may ask if any other insurance company has rejected your application for life insurance. Depending on the insurance companies involved, this may or may not be a problem that can cause denial of life insurance coverage.
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