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What Can You Do if You Have Been Turned Down for Life Insurance

Let’s face it, no one likes rejection. And being turned down for an insurance policy can be very disheartening. It can cause you to wonder about your health and even your future. But it doesn’t have to be the end of the world.

“Nothing is certain except death and taxes.” Benjamin Franklin

“Nothing is certain except death and taxes.” Benjamin Franklin

 Here Are Some Options If You’ve Been Turned Down For Life Insurance 

If you’ve been turned down for life insurance before, take heart! There are things you can do to make sure that you CAN get a policy issued in your name when all is said and done. Some life insurance agents will make it clear over the phone or by email whether or not they’re willing to take on a high risk customer. Tell them to “give it to you straight”, and not sugar coat it. There are hundreds of life insurance companies to choose from in the USA, so the quicker you get to the bottom of what’s what, the better. Each company has its own “niche”. Some want to be the “low cost provider” of course they are not able to accept much risk. They only want people who are in excellent health and will pay premiums for a long time. Other companies are willing to accept a bit higher risk in exchange for a slightly higher premium and finally there are the companies advertised on late night TV that accept everyone (for a higher fee of course).

Let’s look at the case of Mary who has diabetes. She decides that she’s going to take out a life insurance policy for herself, so her kids won’t be stuck with her medical bills if she dies. She searches on line for insurance and the insurance company tells her flat out “No, we are not willing to insure a high risk customer at this time.”  A second insurance company tells her “No,” and gives her a similar explanation. At that point Mary believes she is “uninsurable”. Then one night while watching TV she hears about a “guaranteed issue policy”, the once handsome, (now senior citizen) actor who used to play a Doctor on TV says, “you can not be turned down”…  if she agrees to pay a high risk life insurance premium.

So you see, being turned down for life insurance doesn’t mean that you can’t get life insurance. It simply means that you’ll have to dig a little deeper and pay a bit more to get insured.

Get Life Insurance Coverage Long Before Tragedy Strikes

When you are young no one expects to become seriously ill with a disease or medical condition at a later date, but if you have a family history of obesity, heart disease or cancer, one of the smartest things you can do is to get life insurance now, so that if you do succumb to a serious disease, your family and children will be covered. This is one case where not getting “term insurance” but instead paying a bit more for “whole-life” might be wise. By getting a whole life policy when you are young you can lock in a low rate for your entire life no matter what your health turns out to be.

As long as you’re young and in fairly good health, you can get a medical evaluation you can present to the insurance company. More than likely, they’ll be happy to issue you a policy and along with it you’ll finally have the peace of mind of knowing that your family will be taken care of.

A Little More About Guaranteed Issuance Policies

Some life insurance companies offer what’s called “guaranteed issuance” policies, wherein the insurance company is obligated to issue the policy regardless of your current state of health or disease. Often these types of policies can be purchased through organizations such as AARP, AAA, or your Credit Union. A simple search online for “guaranteed issue life insurance” will result in about 5 million results including policies by Gerber, Colonial Penn, USAA, Globe, etc. But even the more “upscale” companies like New York Life, Mutual of Omaha, and MetLife offer these type of policies.

Guaranteed issuance policies generally have limitations such as a relatively low maximum coverage such as $10,000 or $15,000. Obviously they don’t want someone with terminal cancer taking out a multi-million dollar policy. This is often referred to as “burial insurance” since the payout will barely cover the cost of burial and a funeral but won’t provide much for the family afterwards.

Another limitation might be “Limited benefits for first two years” this is another way for them to cover themselves against losses due to terminally ill people applying for coverage. But before settling for a high priced guaranteed issue policy you should try to get a regular policy because even if you don’t qualify for their “preferred” rate you may still qualify for a slightly higher rate with a higher coverage limit rather than the absolute worst rates which are associated with guaranteed acceptance policies. If you choose an insurance agent who handles multiple companies and are up front with about your health, he will be able to find the best policy for your needs.

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Image courtesy of Chris Chidsey / sxc.hu