There are a number of factors that come into play during the underwriting process. This process is when the life insurance company determines how much of a risk you are to insure.
Let’s take a look at the five most common reasons why underwriters may decline your application or place you in a higher rate class.
1. You have a significant health condition.
A pre-existing health condition is the most common reason why an applicant may receive higher rates or be declined.
There are several health conditions that carry high risk for the life insurance company.. Having one of these conditions doesn’t necessarily mean you will be declined, but it could result in higher premiums.
This list doesn’t encompass all health conditions that may be viewed as high risk, but some of the most common:
- Heart Disease
- Liver Disease
- Parkinson’s Disease
- Kidney Disease
- HIV or Aids
2. You have a dangerous job.
For some, going to work every day is hazardous. Life insurance companies may look at your occupation and deem you high risk. It’s possible to be declined for life insurance because of your line of work.
According to Business Insider, here are the 10 most dangerous jobs:
- Hunting and fishing workers
- Logging workers
- Construction trade helpers
- Trash and recyclables collector
- Structural iron and steel workers
- Truck drivers
- Underground mining machine operators
- Farmers and ranchers
If you work in one of these industries and are offered life insurance through your employer, take advantage of the benefit.
It’s important to obtain your own individual coverage as well, but in the event you are denied life insurance, you at least have your policy through your employer.
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3. You engage in risky hobbies.
Some people knit for a hobby while others go skydiving. Insurance companies view some hobbies as dangerous and, therefore, may be considered high risk.
Some of these activities include:
- Racing (cars, boats, motorcycles)
- Rock climbing
- Hang gliding
- Flying (recreational pilot)
- Scuba diving
Every situation is different. And carriers will look at them on a case-by-case basis, but if you engage in any of these hobbies, they may affect your pocketbook or even your eligibility for coverage.
4. There’s a financial reason.
There are some income requirements when applying for life insurance. Different insurance companies have different limitations, but you can’t expect to be able to take out a $1,000,000 life insurance policy if you make $25,000 per year.
You can expect to get coverage of 10-30 times your annual income, depending on your age. If you don’t work and depend on your spouse, you can typically get the same coverage as your spouse. But, if you have no income and no justification for life insurance, you will most likely be declined.
» Learn more: How Much Life Insurance Can I Get?
5. You have a DWI/DUI history.
If you’ve had more than three DUIs in the last 10 years, you will be denied coverage. Some insurance companies will decline your application for having one or two DUIs over the last 10 years, while other companies will work with you on coverage.
Every life insurance company has different practices when it comes to taking on risk. Some are more lenient with conditions, while others are strict.
If you get declined from one company, it doesn’t mean it’s the end of the road for you. There may still be options for coverage with another company.
Shopping around for life insurance is the best way to find the most affordable coverage. But you don’t need to do it yourself.
Work with an experienced broker that has access to high risk underwriters and multiple carriers, increasing your chances for approval and the best prices.
At Quotacy, we do just that. We’ll shop your case for you. We work with several insurance companies which increases the odds of finding you a great product at a fair price.
Don’t let your fear of being declined prevent you from applying for life insurance.
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