By Chantal Marr, LSM Insurance
Special to the Financial Independence Hub
For some people, getting the life insurance coverage they need is not easy. Factors such as health conditions and lifestyle choices play an important role in determining whether or not a company sees you as a qualified candidate. Lying on your application to hide potentially damaging facts won’t help. It might get you a great policy at prime rates, but when it comes down to filing a claim, the insurance company will discover the truth, and your claim will be denied.
We reached out to Gisèle Babineau, Chief Underwriter with Assumption Life, for the most common reasons a person may be denied life insurance coverage. The reasons for being declined vary from one company to another, and there is also a significant gap between a re-insurer and insurer because many insurers do not shop their declines with their re-insurers. However, in general, these are the most common reasons why an application may not be approved.
A medical condition under investigation
If you have some symptoms of an illness or disease, but all of the results aren’t in yet, your medical condition is considered under or pending investigation. During this period, you are considered a high risk applicant and the insurance company may deny coverage or delay their decision. Once you are cleared of any possible long-term illness or disease, the company will probably approve your application or ask you to re-apply with the new doctor’s report.
High grade cancers
Cancer can develop in any part of the body. Where it occurs determines its type. For example, lung cancer develops in the lungs. All types begin as a tumor and how the affected tissue looks under a microscope indicates how quickly the tumor cells will grow and spread. Based on the appearance and other factors, doctors can assign a numerical “grade.”
The grade of the cancer is not the same as the stage. Stages refer to the size or extent of spread. Malignant tumors are very low grade and almost always can be completely removed. High grade cancers tend to grow quickly and spread rapidly, putting your life at a higher risk.
A nervous disorder or anxiety can be caused by stress or many other factors. It is usually defined as excessive worrying, apprehension, unexplained fear and nervousness. These disorders affect your emotions and behavior, and may manifest into real physical symptoms. Most people will experience mild anxiety at some point in their lives, but a nervous disorder can become a serious problem when the symptoms begin to interfere with normal functioning. This can affect your work, your ability to control a motorized vehicle and other situations that can put your life in danger.
Heart disease and other cardiac disorders
Heart disease affects millions of Canadians; however, the fatality rate has dropped considerably. People can now live normal, relatively healthy lives with a wide range of cardiac disorders and the chances of recovering after a heart attack or stroke have greatly increased over the past few decades. But, according to life insurance companies, these people are still a high risk and may deny coverage even if you have been symptom free for several years.
With the right care, like a healthy diet, regular exercise program and proper medical supervision, and maybe an insulin regime if necessary, most diabetes can be controlled quite effectively. However, in rare cases a patient can lose control due to various circumstances, such as emotional stress or tragedy. If you have been recently diagnosed, you might not yet have control of the disease. These situations put you at risk and therefore your application for life insurance may be declined. Once you have your diabetes under control, you can reapply.
Alcohol consumption and drug use
Alcohol consumption and drug use affect the way you think and react to situations, which can seriously impair your judgment and your safety. How much you drink or use drugs is a lifestyle choice and should be reported on your application for life insurance. Hiding these facts may help you get approved, but the truth will come out eventually. A glass of wine with dinner or a sleeping pill before bed might be harmless enough, but it should still be reported.
Motor vehicle infractions
When you drive recklessly, you are not only putting your own life on the line, but you are also jeopardizing the lives of everyone else on the road. Multiple speeding violations or other infractions classifies you as a reckless driver. If you have a drinking and driving charge on your record, you are considered an even higher risk.
Most criminals aren’t too eager to report illegal behavior. You may be very tempted to leave that part of the application blank or to answer “no” to any questions about criminal activities. One quick check into your record and the company will know, so you might as well be honest. Insurance companies have to consider the possibility of incarceration and how that can affect your health. The stress of incarceration itself can take a heavy toll on your health, but there is also the chance of contracting a disease that could lead to death, getting killed by another inmate or starting heavy drug use. Any one of these scenarios put your life at serious risk, and that’s a risk the insurance company does not want to take.
These are just a few of the reasons why an insurance company may decline an application. If any of these situations apply to you, you can change your lifestyle choices and get your medical condition under control.
You may also want to look into a No Medical Simplified Issue application. This is a non-medical type of life insurance policy, which means you don’t need a medical exam. You will still have to answer some health-related questions and some restrictions may still apply, but you have a good chance of getting the coverage you need.