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.
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.
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.
| Response | 75+ yrs | 65-74 yrs | 55-64 yrs | 45-54 yrs | 35-44 yrs | 25-34 yrs | 18-24 yrs |
|---|---|---|---|---|---|---|---|
| I've never lied on an insurance policy | 8.62% | 14.29% | 28.49% | 26.94% | 30.96% | 22.48% | 11.34% |
| I lied on my current policy | 0.58% | 0.52% | 1.83% | 2.06% | |||
| I've lied on a past policy | 0.46% |
The most common reasons for a denied life insurance application have to do with the applicant’s health.
Your life insurance application may also have been denied for a reason that has nothing to do with your health, such as if:
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:
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.
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.
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.
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.
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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