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Top 5 Reasons People Get Declined for Life Insurance

When most people think about why someone may have been turned down for life insurance they typically think that health reasons are the reason why. While health is a major contributor to why people may get declined for life insurance, it isn’t the only reason. In this article, I’ll cover the top 5 reasons people are turned down for life insurance, and also provide tips for what you can do to get approved for a life insurance policy.

Getting Declined for Life Insurance Due to a Health Condition

The most common reason that people get declined for life insurance coverage is because they have a specific health condition that gets them declined. For example someone who has cancer, or has had a heart attack recently might get declined for a traditional life insurance policy. There are however people who get declined for life insurance simply because they applied with the wrong insurance company. Not every life insurance company deals with high risk life insurance, and if you applied with companies like Allstate or State Farm and they declined you, it is possible you may get approved by another company. If you do have a health condition, I recommend that you work with a high risk life insurance agent that can help figure out what the best course of action is to get you approved for life insurance. If you can’t get approved for a traditional policy, there might be alternatives, such as a graded death benefit policy.

Declined for Life Insurance Due to High Risk Activities

If you are involved in high risk activities you may get declined for life insurance. For example while most insurance companies will insure scuba divers, it all depends on the type of diving you do (open water vs cave diving), the amount of times you dive a year, where you dive and how deep you dive. If you travel internationally, or live abroad for a certain time of the year, some insurance companies will not want to insure you. Actively deployed military personnel may have a hard time getting approved for insurance, unless you are working with insurance companies that would still insure you, such as Prudential or Metlife. If you participate in high-risk activities, we can help you find an insurance company that will cover you. Contact us here.

Declined for Life Insurance for Financial Reasons

To get approved for life insurance, there has to be financial justification. For example, someone earning $25,000 per year would most likely not qualify for a $1,000,000 life insurance policy since you can typically get coverage of anywhere between 10-30 times your annual income, depending on your age. If you don’t have an income, but your spouse does, you can typically get as much coverage as your spouse. If you don’t have income and can’t financially justify the need for life insurance, you might get declined for a life insurance policy.

Declined for Life Insurance due to Bankruptcy

If you have filed for a Chapter 7 bankruptcy, you will typically get declined for coverage until the proceedings have been discharged for at least 12 months. If however you are in the midst of a chapter 11,12,or 13 bankruptcy proceeding, you might be able to qualify for coverage if you are making regular debt payments.

Declined for Life Insurance because of a DUI

It is possible that you may get declined for life insurance with a history of one DUI or more. If you have had more than 3 DUIs in the last 10 years, every insurance company would decline you. However if you have one or two DUIs over the last 10 years, some insurance companies will decline you, while others may not. If you have been declined due to a DUI it is possible you applied with the wrong insurance company. Contact Us if you have gotten a DUI and we can help you obtain coverage.

Declined for Life Insurance with a Criminal Record

If you have a criminal history you may get declined for life insurance. Typically the difference between an approval and a decline is dependent on a couple of factors. First, how long has it been since you were convicted, and second what kind of conviction was it. If you have had multiple felonies, you will likely get declined. If however you have had one felony, or one or two misdemeanors, you might be able to get approved for coverage depending on how long ago your probation ended.

Declined for Life Insurance for Drug or Alcohol Abuse

If you currently abuse drugs or alcohol, you will get declined for life insurance. If however you have been drug free for 3 years or more, or have stopped abusing alcohol for over two years, you should be able to get approved for a life insurance policy.

What to do if You Have Been Declined for Life Insurance

The first step you should take is find out why you were declined for coverage. The insurance company that declined you should send you a letter in the mail. While one company declined you, it doesn't mean that every other life insurance company will decline you as well - especially if you applied with companies that have strict underwriting guidelines, like State Farm, or Allstate.
I recommend speaking with a high risk life insurance agency to see if they think you can get approved with another life insurance company. You will want to work with an agency that has access to multiple life insurance companies, and understands high risk life insurance - such as ChooseTerm.com. If it is determined that you might be able to get approved with another company, go ahead and apply for coverage.

What If You Can’t Get Approved With Another Life Insurance Company?

If its been determined that you can’t get approved for a life insurance policy, you still have options. You can look to apply for a Graded Life Insurance Policy or Guaranteed Issue life insurance policy.

What is Graded Life Insurance - Simplified and Guaranteed Issue.

 
A graded life insurance policy is designed for those that can’t get approved for a regular life insurance policy. Simplified Graded life insurance policies ask you a series of questions needed to qualify for coverage. Qualifying for coverage is likely for most people that have been declined for a regular policy, although there are certain times when you wouldn't get approved for a Graded policy - for example if you are currently getting treatment for cancer. In cases where you can’t get approved for a Simplified Issue policy, you can try for a Guaranteed Issue policy. Guaranteed issue policies also have an initial waiting period, but are “guaranteed issue” - meaning anyone can qualify for coverage.
Besides the initial waiting period that graded policies have, they typically also have a limit of how much coverage you can get. While one company may offer up to $25,000 of coverage, another may offer $100,000 - but you generally won’t find graded policies for over $100,000. If you need more coverage than that, you might need to get multiple policies.

Accidental Death Benefit Life Insurance

Another alternative to a traditional life insurance policy is getting an accidental death benefit policy. As the name implies, accidental death benefit policies only covers death in cases where death results from injury or accident. However there are no qualifications needed to be able to get an accidental life insurance policy and if you have exhausted options for getting a traditional policy, or want more coverage than available with a graded death benefit policy, look to get an accidental life insurance policy. They are fairly inexpensive compared to a regular life insurance policy.

Getting Approved for Life Insurance with a DUI

You might be reading this article because you have been declined for life insurance due to a DUI. It’s very likely that the reason you got declined is that you applied with the wrong life insurance company. It isn’t your fault. The agent you were working with was probably not knowledgeable on how to get you approved for life insurance with a DUI. When it comes to life insurance and a DUI/DWI, choosing the right company to work with is the key difference between getting approved or declined for life insurance.

Prudential Life Insurance with a DUI Life Insurance DUI

While several life insurance companies won’t insure you if you have had a DUI in the last 12 months, even the ones that will insure you will charge you an extra fee called a Flat Extra. Rather than discussing those companies, I’ll go over the one company that will be the best choice for life insurance with a DUI, and that company is Prudential Life Insurance (source).
I’ll now discuss the underwriting guidelines of Prudential when it comes to a history of a DUI and also gives some examples of pricing, so that you have an understanding on how their ratings affect the pricing of a life insurance policy with a history of a DUI.
Before I get into the kind of pricing you can expect, here are some factors that will affect the pricing of your policy and the ability to get approved at the best rates.

Factors that Affect Pricing for Life Insurance with a DUI

  • Your Current Age
  • DUI History- How Many DUIs have you had? When?
  • History of Alcohol Abuse? Treatment?
  • Results of a Liver Enzyme Test – The insurance company will test for level of liver enzymes.
  • Driving Record – History of moving violations, speeding tickets?
  • Criminal Record?
  • Any Health Conditions?

Assuming that the above items aren’t a factor, here is what you can expect with Prudential for life insurance with hisotory of a DUI.
If your DUI is over 10 years old, it won’t negatively impact you with Prudential, as well as most other life insurance companies. Also if you have had more than two DUIs over the last 10 years, you won’t get approved for life insurance with Prudential, or any other company. If that is the case, we will need to explore a Graded Death Benefit Life Insurance Policy. Here are the guidelines for Life Insurance with one DUI, and Life Insurance with 2 DUIs over the last 10 years.

Life Insurance with One DUI

  • If your DUI has been in the last 12 months you can expect a Table 2 (also called a Table B) rating.
  • If Your DUI has been over 12 months ago, you can expect a Standard Plus health rating.
  • If your DUI is over 3 years old, it is possible for you to get a Standard Health Rating.

What does this mean in terms of pricing for term life insurance? Here are some examples:

Term Life Insurance with a DUI

Let’s take a look at an example of a 35 year old Male applying for a $500,000 20 year term life policy:

  • $500,000 20 Year Term Life for 35 Year old Male at Table 2 Rating = $98.10 Month
  • $500,000 20 Year Term Life for 35 Year old Male at Standard Plus Rating = $51.75 Month
  • $500,000 20 Year Term Life for 35 Year old Male at Standard Rating = $65.70 Month

Life Insurance with Two DUIs

If you have two DUIs in the last 10 years, Prudential will offer you the following ratings:

  • If the most recent DUI is within the last 5 years, you can expect a Table 5 (or table E) rating.
  • If your most recent DUI is over 5 years old, you can expect a Table B (or Table 2) rating.

What does this mean in terms of pricing? Let’s go back to the example of our 35 year old male with a $500,000 20 year term life insurance policy.

  • $500,000 20 year term life for a 35 year old male at a Table E Rating: $159.30 Month
  • $500,000 20 year term life for a 35 year old male at a Table B Rating: $98.10 Month

The difference between getting approved for term life insurance with a history of a DUI is the difference between working with the right insurance agent or wrong insurance agent. At ChooseTerm.com we are experts in helping people with a history of a DUI in getting approved for life insurance.
Fill out our Contact Us form and we can help you get approved for life insurance with a DUI.