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What to Do If You're Denied Life Insurance

There’s nothing worse than hitting a roadblock when you’re trying to do the right thing to protect your family, right? Like applying for life insurance only to find out your application has been denied. If this happens, what’s your next move? 

Don’t worry: There are options out there, and we’re here to walk you through exactly what you should do if your life insurance application is denied.

Ask for More Information

Opening that letter from the life insurance company and seeing, “Sorry, but . . . ” is enough to worry anyone—especially if you have a family who relies on your income. So if this happens to you, your first move should be to contact your insurance agent or company to find out why.

Insurance companies look at your medical and nonmedical risks when they’re running through your application to see if you qualify and figure out costs. Their reasons could be anything from a serious medical condition (like heart disease) or poor results from your life insurance medical exam to nonmedical reasons like bankruptcy, a criminal record, a positive drug test or even a dangerous hobby.

Review Your Case

Once you have the reasons why, you can make sure they have their facts straight—because no one knows your situation better than you! If any of the information they sent back doesn’t look up to date or is just plain wrong, now is the time to appeal.

Paper and Pencil

Compare Term Life Insurance Quotes 

If the reason you were denied is based on incorrect or insufficient medical information, you have the right to appeal. The best way to do this is by asking your doctor to provide the insurance company with as much up-to-date information from your medical file as possible.   

You can appeal nonmedical reasons too, like an out-of-date financial record, a lapsed driving offense, or incorrect details about your job and hobbies that put you in the high-risk category.

Check With Your Workplace

If it looks like your life insurance application is truly denied, it’s time to check with your employer. Your workplace could offer a group term life insurance plan that you could sign up for.

Here’s the deal: It won’t give you the 10–12 times your income coverage that we recommend, but it will offer something in the way of a death benefit until you can get your own term life insurance down the road.

A group plan usually doesn’t cost you anything either. If you want to increase its payout, you can “supplement” it, but this will cost you. Supplementing your group plan is an option if you need it and really have no other options. But don’t sign up for any extra “riders” you are offered by the company benefits representative—they are not worth it!  

Your workplace life insurance plan could help you get coverage in a pinch because they don’t ask for a medical exam. Just remember: If you leave your job, you’ll lose your coverage.

Reach Out to a Life Insurance Agent

If you haven’t done this already, it’s time to call an expert! An independent life insurance agent is a lifeline at a time like this.

And the good thing about agents is that they know the ins and outs of the life insurance underwriting process (all the behind-the-scenes stuff that decides if your application is approved or denied).

So, this means an agent should be able to pick up on—and work around—any red flags in your application that might have caused you to be denied in the first place. And it’s worth noting that just because you’re denied by one company, that doesn’t mean all insurance companies will deny an application from you.

Unlike just going online on your own (and hoping to find a company that accepts you), agents can search across a much wider market for a policy that’s worth it and works for you. They’ll also advise you on the next steps you need to take—which in some cases could mean they suggest you hang tight for a few months and apply at a later date.

Allow for a Waiting Period

Sometimes when you’re denied life insurance, you need to proactively play the waiting game to give yourself some time to correct any health issues that caused the denial. Take this opportunity to try losing weight or lowering your blood pressure or cholesterol if you need to. 

If you keep up healthy habits (like eating healthy, quitting smoking, and exercising regularly), it could make all the difference the next time you apply. Don’t give up! Try to change the things you can control.

And time could help with the nonmedical reasons for denial too—like letting enough time pass for those multiple speeding tickets to lapse. A short break might be all you need to get approved the next time you apply.    

While you’re in the waiting period, use that time to boost your emergency fund. Any extra amount you can save will give you more peace of mind while you’re searching for life insurance.

We know it can feel like the world’s against you at a time like this, but if you can make some small changes while you’re waiting, you’ll be in a stronger position moving forward.  

Apply Again, But for a Different Policy

If your situation is serious and other routes (like your employer-offered life insurance we mentioned earlier) aren’t available, there are a few no medical exam life insurance plans that you can consider. But they will still ask you all the same medical questions.

If you’re uninsurable, these plans offer you something—and that’s better than not having any coverage at all. But you should always speak to an insurance agent before applying to see which—if any—option is right for you:

Simplified Issue Life Insurance

These policies don’t need a medical exam, but you’ll have to fill out a medical questionnaire along with your application. The questions will ask if you have any serious medical conditions—so if you do, you probably won’t get approved for this type of coverage. Simplified issue premiums will cost you more, because the company is working from the questionnaire instead of a professional medical exam. Payouts are usually limited to $500,000 or less, but this type of policy could work if your health condition is not serious.

Guaranteed Issue Life Insurance

If you’re older or have a serious medical condition, a guaranteed issue plan allows you to get life insurance without a medical exam and without having to answer dozens of questions in a medical questionnaire. But the downside is the payout: It’s small—usually only up to $50,000.

And some policies will limit your benefits payout if you die in the first couple of years. So you might get back the premiums you paid—but nothing more. If you have a serious medical condition, you’ll need to weigh whether it’s worth paying a hefty premium for such a small payout (or none at all).  

Mortgage Life Insurance

Mortgage life insurance only covers your mortgage balance. You won’t need to take a medical exam for this type of policy either. If you already have a mortgage, you’ll need to answer a few health questions once your mortgage is issued. So this could work if you’ve been denied regular life insurance and don’t have a serious medical condition. You can also get this type of life insurance with no health questions if you’re refinancing your mortgage.

Bottom line: No-medical exam policies like these will cost more than regular term life insurance, and the payout won’t be as good. But they‘re worth considering if your options are limited.

The reason you get life insurance is to protect your income and provide for your family if anything were to happen to you. And when you struggle to get approved, it causes unwanted worry and stress. But there are ways to get back on the road to coverage—and people you can call on to help.

If you’re looking for help with finding a policy that works for you, we recommend RamseyTrusted provider Zander. They’ve worked for decades to match people with the right life insurance policy.

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Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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