If you find yourself in need of a new life insurance provider, it’s important to know that you are not always automatically accepted. Life insurance companies want more than a monthly premium from you. They need you to be more of an asset than a liability. Check out these five reasons life insurance is denied.
- Diagnosed with a Terminal Illness
A terminal illness diagnosis, such as cancer, is one main reason a life insurance provider would deny coverage. You are a high-risk client for an insurance provider because the amount you pay into the policy may not be near your death benefits. It’s sad to say, but you would gain more than they would. If a company were to consider you, they would look at the stage and grade of your illness. Then, they would look at an increased rate or fewer coverage options for you.
- Excessive Alcohol or Drug Use
Drinking socially is seen as acceptable by most life insurance carriers. What’s not so acceptable is the excessive abuse of alcohol or drug use. Alcohol poisoning is a real occurrence. And, besides that, there are many risks associated while under the influence, such as a DUI or injuring yourself at work if you use heavy machinery. The long-term effects of alcohol are alarming as well. You could develop cardiovascular, liver, or psychiatric problems.
Legal and illegal drug use is causes for automatic denial. Illegal use is, of course, obvious. However, the legal drug use in America is to help with a medical condition, such as cancer. So having a prescription to use it is a red flag, and the insurance provider will monitor your health records accordingly.
- Dangerous Hobbies
Skydiving, rock climbing, and auto racing are fun, but insurance providers don’t see the humor in these dangerous hobbies. They view this as a higher probability that you could injure yourself or die during these activities. If you only participate in these activities once or twice a year, they may sign you up for coverage, just at a higher rate.
- Foreign Travel
Frequent travel outside of the country could cause for automatic decline for life insurance. There are many risk factors such as injury while out adventuring or catching a foreign disease. Especially with the high alarms of Ebola cases, insurance providers are monitoring their applicants. Don’t think that you can grab insurance coverage and then hit the road. You are required to note any travel plans coming in the near future. If you do not report this, it’s possible the provider will drop you from coverage due to omitting or falsifying on your application.
- Traffic Violations
Taking traffic school to fix points on your license will not help when applying for life insurance coverage. If you have traffic violations, accidents, or two DUI’s within the past 10 years, you’re likely to be declined for coverage. You pose a threat to receive more of these in the future, again, proving to be a liability to the insurance company.
Financial professional and online entrepreneur, I'm best known as The Financial Blogger. I want to make money because I like enjoying life the way it should be; with a lot of great food and wine! I also love to spend time with my lovely wife and 3 kids!
