What To Do If You are Denied Life Insurance in Canada?

Your insurance application could be turned down for a number of reasons, such as:

Poor Health

Life insurers view customers as different levels of risk, and classify us into groups depending on our overall health. More than anything, any life insurance compaies do not like early deaths. This is because it means they must issue a payout before they could collect many premiums.

If your risk of early death is severely high, carriers may reject your application. Health conditions that could lead to denial include cancer and HIV, among others. For those with such health issues, simplified issue life insurance can be an option, as it involves fewer health questions and no medical exam, though premiums are typically higher to offset the risk.

Hazardous Occupation/Hobby

Not all jobs are created equal. Some occupations are more hazardous than others. Examples include pilots, flight engineers, and truck drivers. If your profession carries a higher degree of danger, you may find it hard to get coverage. Likewise, a dangerous hobby — like bungee jumping or skydiving — could lead to an application denial.

Fraud

Life insurance contracts are based on trust. But what if you break the trust by purposely lying or withholding information on your application? The consequences of lying can be severe, so you should not even entertain this idea.

If you get caught, the insurer will immediately reject your application. What is more, the incident will be logged into a central database. This means other insurance carriers with whom you may apply later will find out about your misdeed. Consequently, they may reject your application as well.

Driving Record

Reckless driving is linked to a higher risk of death. That is why an insurance company will also look at your driving record while evaluating your application. If your driving record is spotty, you may be denied life insurance coverage.

Criminal Record

A serious criminal record may discourage life insurers from offering you a policy. Likewise, your application will be rejected if you face felony charges.

Poor Financial Situation

Insurers look at your personal financial situation as part of their evaluation process. You may be denied if you:

• Are not able to afford the cost of insurance
• Have a lot of debt
• Previously filed for bankruptcy

What Can I Do If My Life Insurance Application is Denied?

There is no one-size-fits-all answer to this question. What you should do after you are denied life insurance coverage depends solely on why you were rejected in the first place.

But one thing is certain: having your application turned down does not automatically mean there is no way to get a insurance policy. In most cases, buying some form of life insurance coverage is possible.

First, contact the insurance provider or insurance companies to learn the logic behind your denial of insurance policy. Insurance carriers share detailed information regarding it upon request. Next, depending on the reason for disapproval, you can explore one of the options that many insurance and life insurance companies offer.

Request a Reassessment

Insurance companies evaluate your life insurance application based on the information provided by you and your exam results. If you made an honest error on your application, you can request the carrier to reassess the application with the right medical data.

Reapply After Some Time

Let's say you were rejected for an insurance policy due to uncontrolled diabetes. Try to make amends by taking your medication on time, regularly monitoring your sugar levels, and making lifestyle changes. Reapply once your diabetes is under control or at least not severely high.

Similarly, if you have too much debt, you may consider reapplying after you have paid off all or a good part of it.

Try to Get Coverage with Exclusions

In a few cases, insurers may agree to offer coverage with one or more exclusions. This could happen if, for example, you were turned down because of an underlying heart condition. A carrier may still be able to offer you coverage, excluding death due to heart complications. That is, the insurance company will not issue the death benefit if you die because of your underlying condition. Additionally, a life insurance claim may be denied if these exclusions are not disclosed.

A life insurance application denial stays on your record for as long as seven years. Furthermore, other insurers can see this information, along with the reason for rejection. Life insurance companies do share some information about applicants through the Medical Information Bureau (MIB). MIB provides fraud protection to insurers from applicants who would try to hide or withhold information when applying.

As you can guess, hiding or omitting crucial information on your application will get you nowhere. If there is some mismatch between the information provided and medical exam results, the insurer will likely scrutinize your application more rigorously.

There is a good chance you will be caught and turned down. Worst case scenario: Your beneficiary will be denied the claim if you die and the insurance company finds out that you lied.

What Options Are Available to Me After Having My Life Insurance Application Declined?

If you have received a denial, you may want to consider some of the following options:

Employee-provided Life Insurance

A group life insurance policy through work is guaranteed. That means people with serious health conditions can qualify. If your company offers life insurance as a part of the employee benefits package, sign up for it.

Look for a More Lenient Insurer

Just because one or two insurers have turned you down does not mean every insurer will. Some insurance companies are more lenient than others for certain medical issues. Speak to an agent or do online research to find out if there is an insurance company that may be willing to offer you coverage.

Consider Other Life Insurance Policies

If you do not make the cut for the term or permanent life insurance, check out other coverage opportunities. These options, however, are usually more expensive than term life. That said, having coverage will give your loved ones some financial protection and you some peace of mind.  

Guaranteed Life Insurance

A guaranteed life insurance policy neither involves a medical exam nor health questions. That means you can get coverage regardless of your health. The death benefit, however, is usually small. But, as they say, some life insurance is better than none.

So, what is the maximum death benefit?

Most providers do not offer more than $50,000. Also, premiums are considerably higher than a comparable standard policy.

Guaranteed life insurance is typically used for covering end-of-life and funeral expenses. Life insurance claims for guaranteed life insurance policies are generally reliable, with only about four percent being denied, often due to misrepresentation on applications or specific circumstances like suicide or illegal activities during the policy term. It is a good option for applicants who do not qualify for the standard coverage because of poor health.

Simplified Life Insurance

Simplified life insurance has more lenient criteria than standard life policies. Unlike the latter, it does not require a medical, and eligibility is assessed on the basis of your response to a few simple health questions.

The coverage, however, is lower than standard policies, and the premium is higher. But it is more affordable compared to a comparable guaranteed life policy, and the death benefit can still offer some financial protection for your loved ones. First, give simplified life a try if you are turned down for standard life insurance.

Mortgage Life Insurance

This life insurance company product ensures your family does not lose their home after your death. If you pass away, the policy will pay off the outstanding mortgage balance. Since mortgage life insurance companies do not involve a medical exam, most people qualify for it. You can buy it when you sign up for a home loan or shortly after it.

Can I Change Any of the Information if My Life Insurance Application Got Declined?

There are several things you can do to improve your chances of getting approval. For example, if you recently have had financial troubles, defer applying until you have cleaned up your credit report.

All insurers have specific rules for dealing with applicants who recently filed for bankruptcy. Try to find out this information before you apply for coverage with a life insurance company. Some insurers will not consider your application until 12 months have passed since you filed for bankruptcy.

Also, make sure all information provided by you during the application process is accurate. Life insurers use this information to decide your eligibility, and an unintentional mistake can lead to a denial.

At times, a health issue may affect eligibility or the premium rate. In either scenario, delaying the application until you have improved the underlying issue is a good idea.

A spotty driving record is another red flag, as it points toward a higher risk of death. While a poor driving record is not easy to clean up, you can adopt safe driving habits from now onward to avoid collecting any further demerit points. You may also consider taking classes to give your driving record a boost.

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Finding the Right Insurance Company

Finding the right insurance company can be overwhelming, especially if you’ve been denied life insurance coverage in the past. Consider the following factors when selecting an insurance company:

• Reputation: Research the insurance company’s reputation and read reviews from other customers.
• Coverage options: Consider the types of life insurance coverage offered, such as term life insurance, whole life insurance, or universal life insurance.
• Premiums: Compare premiums from different insurance companies to ensure you’re getting the best rate.
• Customer service: Consider the level of customer service offered, including support for claims and policy changes.

Canadians can achieve their retirement goals by understanding retirement costs, assessing their retirement needs, and implementing effective retirement planning strategies. Additionally, finding the right insurance company can provide peace of mind and financial security in the event of unexpected events.

How Much Life Insurance Will I Need?

You need enough life insurance coverage to pay off your outstanding debts and cover your financial obligations. Usually, 10-15 times the yearly income is a sweet spot. That said, you may have unique responsibilities and may require more coverage. Speak to an insurance expert if you are unsure about the amount of coverage you need.

Who Can I Talk to After Having My Life Insurance Application Declined?

Rejection can be hard to deal with — be it a denied college application, a job rejection, or a declined insurance application. We cannot offer you much help with the first two, but we can provide you with the right answers if life insurers are turning down your application left and right.

At Dundas Life, we will first assess your situation and summarize all the options available to you, including their pros and cons. Once you have decided on the coverage that works best for you, we can help you get the lowest possible premium rate. Reach out to us today and talk with our life insurance advisor, ask us anything.

Conclusion

Having your life insurance application declined does not mean you will never be able to get life insurance. Or that you will not get any life insurance at all. Each insurer follows different underwriting guidelines. If one provider turns you down, there is a chance you may still be able to get the desired coverage from another insurer.

First, learn the reason for rejection. Next, speak to your insurance agent or broker to find out the available options. You may have to make lifestyle changes to get a re-evaluation. Or they may suggest waiting for a certain period before approaching the insurer again.

If you have a serious underlying health condition, see if you can get group life insurance through your work. If not, a simplified life or guaranteed life policy may be your best option.

Speaking with an independent broker and life insurance advisor like Dundas Life is the best way to ensure you get the right coverage at the right price.