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Denied life insurance
So why is life insurance denied?
The top reasons why your life insurance application may be declined and what you can do.
If you’ve been hit with a life insurance denial, there’s probably one question on the tip of your tongue: Why? The reality is that there are myriad reasons why a life insurer might deny your application for cover. Let’s take a closer look at some of the most common reasons and what your options are if you’re ever denied life insurance.
What options do you have if you are denied life insurance?
If your life insurance application has been rejected, there's still a few things you can do to find the cover you need:
1. Find out why and double check.
You have the right to know why your application was rejected. It may include your occupation type or because of medical exams. It's entirely possible that a mistake was made or a condition like smoking that can be addressed. Always run any medical records used for denial past your doctor for a second opinion. You may be able to prove some initial test results were incorrect or that your condition is manageable.
2. Work with an adviser.
A qualified life insurance adviser can help you find a different provider who may offer you insurance where another has denied you. Keep in mind they will only be able to help if the reason for denial is one that another provider will accept. If you have diabetes, for example, you may still be out of luck.
3. Get it through your super.
Because superannuation funds insure large amounts of people all at once, they're often willing to insure people who might be viewed as too risky by other insurers. If you can't get life insurance through a regular provider, see if your super fund will cover you.
The most common reasons for a denied life insurance application have to do with the applicant’s health. Some of the common medical issues that insurers could baulk at include:
- High cholesterol. Heart disease is a leading cause of death in Australia, killing 1 person every 12 minutes, while stroke is the third leading cause of death. High cholesterol levels can cause both of these conditions and could be enough for an insurer to reject your application.
- High blood glucose. High blood sugar levels lead to type 2 diabetes, a condition that causes a wide range of health problems and is the fastest growing chronic condition in Australia.
- Being overweight or obese. Being overweight puts you at a higher risk of a wide range of health problems and complications. While only carrying a little extra weight won’t necessarily mean your application is rejected, it could result in higher premiums.
- Positive drug test. If you return a positive drug test, don’t expect anyone to insure you. This is not only because of the many health risks drug pose, but also the fact that drug users are more likely to find themselves in hazardous situations.
- Mental illness. If you suffer from a mental illness, for example depression or anxiety, you may not be able to access cover. However, the insurer will consider the seriousness of your condition and the success of any treatment when deciding whether or not to provide cover.
- HIV/AIDS. HIV and AIDS are both seen as serious conditions that can have a major impact on your life expectancy.
- Cancer. If you’ve had cancer in the past, your chances of accessing life insurance are drastically reduced. However, the insurer will determine your level of risk based on the type of cancer you had, how far it progressed and how long you’ve been in remission.
- Positive alcohol marker or elevated liver function. The presence of carbohydrate deficient transferrin (CDT) in your blood is a telltale sign that you’re a heavy drinker. CDT not only causes serious damage to your body but also increases the likelihood of you getting into life-threatening situations. Signs of elevated liver function are also a red flag that you’re consuming an excessive amount of toxins.
- Hepatitis. If you test positive for Hepatitis B or C, your application may be rejected.
- Blood or protein in urine. The presence of blood or protein in your urine could be an indicator of serious kidney problems. However, it could also be a sign of something far less sinister, so further testing may be required if you want to qualify for cover.
Other reasons why you would be denied life insurance cover
Your life insurance application may also have been denied for a reason that has nothing to do with your health, such as if:
- You work in a hazardous occupation. If your working environment or regular duties expose you to a higher risk of illness or injury than the average job, there’s a possibility an insurer may not cover you. Examples of risky jobs that may not be covered by a life insurer include commercial fisherman, miner, farmer, tree lopper, defence force members, firefighters and garbage collectors. You can also check out the list of Australia’s most dangerous jobs, which is compiled based on data from Safe Work Australia.
- You participate in dangerous pastimes. When you apply for life insurance, you’re asked questions about the hobbies and pastimes you use to fill in your spare time. If you’re a keen BASE jumper, skydiver, pilot or scuba diver, or if you regularly participate in a range of other extreme sports, that could be the reason why your application was rejected.
- You have a poor driving record. Car accidents are a common cause of death for people who are otherwise in perfect health. With this in mind, if you’ve been involved in multiple accidents, if you’ve got a drink-driving or drug-driving conviction, or if you’ve ever had your licence suspended or revoked, it won’t look good on your life insurance application.
You could be missing out on additional super returns.
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