Yes, life insurance applications can be denied (declined), though it is less common than many people fear. Carriers decline applications when they determine that the mortality risk is too high for them to offer coverage at any rate, or when the application contains disqualifying factors. Understanding the common reasons for denial helps you prepare and explore alternatives.
Common reasons for life insurance denial include serious or terminal health conditions (advanced cancer, end-stage organ failure, AIDS), recent drug or alcohol abuse, dangerous criminal history (recent violent felony, currently incarcerated), extremely hazardous occupation or hobby (without available flat extra), severe obesity (BMI above 45-50), and material misrepresentation on the application. Each carrier has different thresholds for these factors.
Being declined by one carrier does not mean you cannot get coverage. Different carriers have different underwriting guidelines, and an applicant declined by one carrier may be approved by another at standard or table rates. This is why working with a licensed agent in our network who represents multiple carriers is particularly valuable — if one carrier declines, the agent can identify alternative carriers with more favorable guidelines for your specific situation.
If you are declined by all traditional carriers, guaranteed issue life insurance is available with no medical questions or exam. Coverage amounts are limited (typically $5,000-$25,000) with graded death benefits during the first two to three years, but it provides basic protection. Employer group life insurance also typically does not require individual medical underwriting, offering another potential source of coverage.
A denial does not have to be permanent. Health conditions can improve, time since events increases, and carrier guidelines change. Many applicants who are declined at one point successfully obtain coverage later. All coverage is subject to underwriting approval by the issuing carrier.