Many people are declared uninsurable by insurance companies. Due to certain circumstances, the insurer deems the risk of accepting them too high, so they deny the applicant a chance to underwrite a life insurance policy.
If you are in this situation, you may think that acquiring insurance is impossible. However, there are some paths that will allow you to take out life coverage. In this article, we explain what you should do in order to obtain life insurance even if you have been declared uninsurable.
Are You Uninsurable?: Table of Contents
Reasons Why You May Be Uninsurable
If you have been declared uninsurable, it is because you have a condition that entails such a great risk to your life that insurers do not want to grant you life insurance. In actuality, no one is completely uninsurable, and as you will see, there are ways of getting around this designation and obtaining a policy. The first is being very familiar with the reasons behind a declaration of uninsurability.
There are many reasons why you may not pass the life insurance qualification process and be refused all insurance. The most important reasons are the following:
- Pre-existing health conditions. The most common reasons for not being able to access life insurance have to do with health problems. So-called pre-existing conditions are ailments you were diagnosed with prior to taking out insurance that pose a significant risk to your health. The most serious conditions include cancer and HIV. However, there are many other diseases that could disqualify you from life insurance, such as liver dysfunction, high cholesterol, or kidney problems. Even obesity or being significantly overweight may be a reason for refusal.
- Severe mental disorders. People who show serious psychological disorders also tend to be excluded by insurers. In particular, this includes anyone with a mental illness that may cause them to put their own life at risk.
- Low income level. Insurance companies review the credit histories of aspiring policyholders. If they believe that you do not have sufficient credit or think that your income is too low to be able to finance a policy, they will deny you.
- Tobacco use, alcoholism, or drug addiction. Being a smoker or abusing alcohol or drugs is more than enough reason for losing your right to life insurance. In many cases, the insurer may even require specific tests, such as drug tests.
- Dangerous job activity. This is less and less common, but there are still some high-risk professions that result in refusal from insurers. Some roles are especially dangerous, such as fishers, airplane pilots, firefighters, servicemen and servicewomen, oil platform workers, or lumberers.
- Dangerous hobbies. The same thing applies to risky hobbies, such as rock climbing, parachuting, scuba diving, or car racing. But, similar to the trend seen with dangerous jobs, insurers are becoming more and more accepting of extreme sports athletes and put up less obstacles towards granting life insurance.
- Bad driving history. People who have had many accidents or a long record of traffic violations may have significant trouble obtaining life insurance.
- Prior refusal from other insurers. Insurers heavily consider the quote history and qualification processes of the people requesting life insurance. Having been rejected by other companies is a reason not to trust you, and therefore, disqualify you.
How to Obtain Insurance If You Are Uninsurable
If you have been declared uninsurable for any reason, do not give up. There are ways to access life insurance, even under these circumstances. Most importantly, you have all the necessary information to face these complications and find a solution. Below are some ways to get around the main reasons for denial of insurance coverage.
- Keep looking for insurance companies. If one firm tells you they will not insure you, keep trying. Ask for more quotes and start new qualification processes. Some companies are more tolerant of habits like tobacco use or hobbies like risky sports than others, for example.
- Prove good health. Often, your health could be better than what medical reports may claim. You may no longer suffer from a pre-existing condition or perhaps it has become less serious and is no longer an impediment for obtaining life insurance. In any case, you need to provide proof. Investigate, ask for new reports from other doctors, collect diagnoses and treatments. With all of this data, an insurance agent can suggest the most appropriate insurer and product to you so you can avoid being uninsurable. Do not lie, of course. You must be as honest as possible during the quoting and qualification processes. Lying about the information you give the insurer on your health status is one of the biggest mistakes you can make when taking out life insurance. If they catch you in fraud, an insurance company could void your policy.
- Stop smoking, drinking, or using drugs. If you are denied insurance due to alcoholism or tobacco or drug use, it is in your power to eliminate these obstacles. Try to quit using these substances and obtain reports attesting that you are no longer consuming them. In the case of drugs, you may need to be clean for at least three years in order to demonstrate that you have overcome addiction.
- Explain the risks of your hobbies and sports. In many cases, insurers change their opinion if they see that the risks associated with extreme sports are not as high or as frequent. Carefully explain how often you practice your favorite sport, your level of expertise, if you have a federal license, and if you have adequate and modern equipment. With this information, the insurer will be able to newly evaluate the risk of your extreme sport.
- Work with a specialized agent. Look for professional help. An insurance agent who knows the market and your options well can help you to find a policy even if you have been told you are uninsurable.
Types of Life Insurance for Uninsurable People
If despite all this, you still cannot get around a declaration of uninsurability, there are other options. There are some types of insurance that will accept you no matter what, or ways to get yourself on the policies of others. The main options are as follow:
- Guaranteed acceptance life insurance. Most likely, your best option is to turn to guaranteed acceptance life insurance. There is no qualification process, so no obstacles to obtaining a policy. However, in exchange for this advantage, the insurer will impose much higher premiums and offer coverage or a death benefit that is much lower than what may be obtained through conventional temporary or permanent policies. In addition, this type of guaranteed acceptance insurance also tends to have an exclusion period of up to two years. This means that if the insured dies before the end of this period, the payout is not made.
- No medical exam insurance. If you are having trouble accessing insurance because of medical complications, you can turn to no medical exam life insurance. The type of policy explained above, or guaranteed acceptance, is the most well-known, but there are other options, such as simplified issue, that simply require an interview. They tend to be available for people between 21 and 65 years old and can cover up to one million dollars.
Other interesting options may be whole life insurance with a level death benefit or whole life insurance with a graded death benefit. And there is one last possibility: final expense insurance.
- Spouse rider. A simple option for an uninsured person to obtain life insurance is to be included in her spouse’s insurance with a spouse rider. These riders can sometimes be converted into traditional permanent insurance.
- Group insurance. For many people who cannot access a life insurance policy of their own, group life insurance is the simplest path. These are collective policies taken out by companies, unions, or other institutions for their employees or members. They are easy to obtain because the insurer does not ask the insured any questions, but in exchange, they have somewhat low coverage. Of course, improvements can be negotiated using riders paid by the insured party, and when applicable, the insurance can be converted into a personal permanent life insurance policy, separate from the company.
As you can see, there are many ways to get a life insurance policy even if you have been declared uninsurable. You must keep trying and consult with an expert. Insurance agents are the people best suited to help you if you have been labeled as uninsurable.