Rejection can be hard to take and that's certainly true if you've been turned down for life insurance. If you've been refused insurance, it's important you understand exactly why. The good news? There are a number of ways to help ensure a future application is a successful one.
What you need to know
Your medical history is a key reason why a life insurer may reject your application. Lifestyle factors can also play a role.
It could be worth checking to see if you were turned down owing to an error.
An experienced insurance broker can help you source a policy that is matched to your needs.
Understanding how underwriting works
Before you can get insurance, you'll need to go through a process called underwriting. Underwriting is how risk is set for an applicant. It leads to a decision on whether an underwriter will offer you life insurance, and the price you need to pay for it.
Your age, job, health and family medical history are all key factors weighed up by an insurer during underwriting.
There are also lifestyle factors, such as whether you smoke or if you take part in high-risk hobbies such as sky diving or racing. All of this, and more, is weighed up by an underwriter that is calculating how likely it is you'll make a claim on your insurance.
An insurance provider – the brand you get your policy documents from, and the one you pay a premium to – works on behalf of its underwriter. It is the underwriter that issues the policy and takes on the risk of you making a claim.
Let’s take a closer look at 4 of the most common reasons people are denied life insurance.
The most common reasons for a denied life insurance application have to do with the applicant’s health.
- 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.
- Being overweight or obese. Carrying too much weight puts you at a higher risk of a wide range of health problems and complications. At best, being overweigh could lead to higher premiums while it's possible you may not be able to access cover at all in some cases.
- Positive drug test. In addition to the many health risks drug pose, it's also the case that drug users are more likely to find themselves in hazardous situations.
- Mental illness.People with a history of significant mental health challenges may struggle to access life cover in some cases. An insurer will consider the seriousness of any condition you have, and the success of any treatment when deciding whether or not to offer you insurance. Read more on depression and life insurance.
- 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.
Your life insurance application may also have been denied for a reason that has nothing to do with your health, such as if:
- 1. 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.
- 2. 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.
- 3. 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.
Before buying her first home 3 years ago, Kelly Vieira wanted to make sure her life insurance would cover half her mortgage, for financial protection in case of the worst happening to her or her partner.
"Back in 2010, I'd had a successful brain and spine surgery to correct a birth defect," explained Vieira. Happily, the procedure was fully effective. It was only when she tried to increase her insurance that problems began.
"I wanted to increase the default life insurance I had in my super fund," said Vieira. "My insurer mentioned that I'd visited my neurologist in the past 10 years. This was true; I had some follow-up scans.
"I had to forward the insurer correspondence from my neurologist to prove everything was going okay."
But Vieira was asked to share further information on every medical visit she'd had since.
"This included one visit to a GP where I had an inflamed nerve in my ankle and couldn't walk," she said.
"It was inflamed because I had a cold. I get this every so often if my immune system is compromised, but it isn't related to my surgery.
"They also brought up that I'd seen a nutritionist to find out if I was intolerant to anything.
"I am lactose intolerant; this isn't something I'd ever tried to hide. In fact, I put it in my application.
The 31-year-old added: "But they just saw 'nutritionist visit' on my history and wrongly assumed it was for Irritable Bowel Syndrome (IBS).
"They also said I'd insufficiently explained the minor nerve issues in my feet. Neither of which are true.
"It took months of back and forth emails and calls to get anywhere. I lodged an appeal, turning my application from 9 months to past a year. My request was denied.
"In the end, I gave up. I kept my current level of cover and just ended up getting a joint account with my partner instead."
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 something that can be addressed, such as a smoking habit.
Speaking with the insurer who's turned you down is a good starting point. Also, you could run any medical records used for denial past your doctor for a second opinion, and potentially source more details about how a condition you might have 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. Look for insurance via 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.
Direct life insurance and underwriting explained
With direct life insurance, only a handful of providers ask you to go through underwriting at the point of application. If they do, it'll mean the policy is fully underwritten as an assessment has been made upfront, before the quote. On the other hand, a policy that isn't fully underwritten is assessed at the time of a claim.
How long does underwriting take? Underwriting and policy approval can be completed within an hour. However, it can take weeks or even months if more information is required.
Good to know: In some cases, you'll receive a follow up phone call from an underwriter. It may ask you to complete a further questionnaire. You may need to provide medical documents and undergo a medical examination.
At the time of writing, 3 of the 16 life insurance providers compared on Finder offer fully underwritten life insurance cover. These were: NobleOak, RAC and Zurich.
For direct policies, the application process will differ from provider to provider.
NobleOak told Finder it sets a pre-screening where you'll answer 4 basic questions on cancer, heart conditions, diabetes and mental health. Based on your responses, you may need to take a further pre-assessment. This can include speaking with an underwriter in more detail about your health, job, lifestyle and medical records. You may also need to undergo a medical exam, and NobleOak will usually cover any associated costs.
We tried Insuranceline's online application and it is straightforward: You answer a short series of questions, including whether or not you've smoked in the past 12 months; your income; and how much cover you're looking for. You then leave your details and you'll be contacted about your application.
ahm asks a longer upfront series of more than 20 questions, before it makes a decision on whether or not to offer cover to a new customer.
If you have been denied cover in the past, or you think it likely you will be denied in the future, it can be helpful to speak to a life insurance broker. These experts will be able to help you navigate insurance brands and offer you the best shot of successfully taking out cover. Fill out the form below to speak with a broker.
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