6 Reasons Why You Were Denied Life Insurance In Canada

Being declined from something is inevitable at some point in your life, but can be avoidable with some help and guidance. Even more so, finding the right life insurance policy can be tough, especially when there’s a lot of life insurance options for different needs, and being denied a policy from a life insurance company can mean that you didn’t find the right life insurance policy and company for you. Here are the most common reasons why you may have been denied life insurance.

In this article:

• The process of getting life insurance
• What to consider when applying for life insurance
• 6 reasons you were denied getting a life insurance policy
• What to do if your life insurance was declined
• 4 Reasons why a life insurance claim was denied
• Life Insurance Options
  • Traditional Life Insurance
  • Simplified Life Insurance
  • Guaranteed Issue Insurance
• Frequently asked questions (FAQ)

The process of getting life insurance

When one applies for life insurance there is a process before you receive the policy. Note, when applying to different life insurance companies, each company has their own process and guidelines that they follow. For example, you will be asked different questions and to provide different information depending on the company. But overall, the process is fairly the same: you apply and provide the required information the insurance company asks for, it goes through review by the underwriter and company, then you will receive a decision from them. 

The information you provide goes to the underwriting, where the underwriter will then review the information you gave them and determine whether to give you a policy or not. They decide this by grading you on the risk scale, which predicts how high risk you are to insure based on the information they have. This risk factor is not only to determine if you get a policy, but to also determine how much you should pay monthly. This monthly rate is also called a premium. 

Remember, each company has different products and policy types available for you that have different requirements for the amount of information they require from you. For example if you are applying for traditional life insurance, it requires a medical exam and sometimes more, depending on the insurer. Whereas if you were to apply for a no medical policy such as a simplified issue or guaranteed issue life insurance product, it doesn’t require a medical exam but some insurers will ask other health related questions.

For more in-depth look and explanation of Guaranteed, Simplified, and Fully Underwritten (traditional) policies, read our blog Guaranteed Issue vs Simplified vs Fully Underwritten Life Insurance Policies. 

What to consider when applying for life insurance

There are many things that underwriters and insurance companies consider when you apply for life insurance, and these things will affect your rates, and if you are approved or denied a policy.

These factors include:

• Age
• Gender
• Profession
• Hobbies
• Your driving record and criminal record
• Any pre-existing health conditions

These different considerations describe the risk you are to passing away early or during the period you’re covered by the insurer. The higher risk you are, the more likely you will be denied traditional life insurance or have a higher premium.

Each life insurance company has their own underwriting guidelines, meaning although one company may have denied you life insurance, another company may approve your application. For example, one company may deny you for a specific health condition like asthma, but another company doesn’t deny you and instead, raises your premium to compensate for that risk.

Finding the right company and life insurance policy for yourself can be tough especially after being denied, so it’s important to understand everything the life insurance underwriting looks at when you hand in your application.

6 reasons you were denied getting a life insurance policy

Life insurance companies are businesses, so, it is actually very common for life insurance companies to deny your application if they think you are too risky to insure. If you are applying for traditional life insurance, the most common reason for being denied is if you have any underlying health conditions.

As mentioned, when you apply to a life insurance company, each company has their own underwriting guidelines that they follow, for example, one company might deny you for the mere mention of diabetes while other companies will write you a policy.

Some other reasons why life insurance companies could deny you a life insurance policy is:

1. Age
2. Underlying or pre-existing health conditions you have
3. Your lifestyle including your occupation and any hobbies
4. Your criminal or driving record
5. Any financial issues
6. Or not providing correct documentation

1. Age

There are age limits on every type of life insurance, although this age limit may differ depending on the company. Overall, once you are over 65 years old, the options for life insurance policies only get less and less as you grow older. For example, you could be 75 years old trying to apply for a 20-year term life insurance with a company that has an age limit of 70 for term insurance, they would deny your request due to your age. Although it may be difficult for seniors to find life insurance, it’s still possible!

If you are a senior or over 60 years old and are looking for life insurance, try reading our Guide to Life insurance for Seniors.

2. Underlying or Pre-existing Medical conditions

It is very common for life insurance companies to deny you a policy if you have health conditions including but not limited to: asthma, cancer, diabetes, heart or lung conditions, and much more. No matter what health conditions you may have, it is possible for you to get life insurance – there are insurance plans that require medical information like traditional and simplified life insurance, but guaranteed or no medical life insurance don’t ask any medical questions or require a medical exam. If you have a medical condition and want to learn more about your life insurance options, read our blog about Life Insurance with a Medical Condition.

3. Life style (high-risk professions, participation in extreme sports)

Examples of high-risk professions include:

• Race Car Drivers
• Pilot
• Roofers

Examples of high-risk hobbies include:

• Rock and Mountain Climbers
• Snow Sports
• Scuba Diving and Skydiving

Therefore, depending on the type of job and hobbies you participate in, it can not only have an effect on your premium (by increasing the monthly rate), but also the life insurance company can deny you life insurance entirely. Also note that the company may not provide coverage if your death was caused by the high-risk activity if there is an exclusion. For more information read our blogs about life insurance with a Dangerous Occupation or for Hazardous Activities.

4. Criminal or Driving Record

Having a criminal or driving record can indicate to the underwriters that you are high risk, and they may deny you life insurance for that very reason. When businesses like life insurance companies see that you have a criminal or driving record it indicates to the underwriting that you have a higher chance of your passing away because you’ve done risky things in the past. And as a business, they would prefer to avoid risks as much as possible, but that doesn’t mean anyone with a criminal or driving record cannot review a life insurance policy, it just means you would need to look in the right place. If you are someone who was denied life insurance from having a criminal or driving record like a DUI, read our blog about Getting Life Insurance with a Criminal Record.

5. Financial Issues

You can not get more coverage than what your life is worth, otherwise you would be worth more dead than alive which would create a risk for both yourself and the life insurance company. Therefore, if an insurance company sees you as someone who couldn’t afford the monthly premium, they may not want to do business with you. If this is the case for you, you can ask the company what information they would require to see you to be suitable for the policy or you may need to find business elsewhere.

6. Not providing required documentation

Not providing required documentation could mean that you are asked for documentation like a doctor’s evaluation note or attending physician’s statement, any identification, or any other information required by the underwriting, and either you did not provide them with the documents asked or the documents given were not considered valid. The documents may be considered not valid if you sent the wrong document, the information given to them doesn’t match the information on the document, you’ve given a invalid type of document, or even if the information on the document was not legible. To ensure a smooth underwriting process, it’s essential that any documents you scan or send are clear and easy to read. If you’re unsure why your life insurance application was denied, the best way to avoid future rejections is to reach out to the company and inquire about the specific reasons for the denial.

What to do if your life insurance application was declined

If your life insurance application was denied, it could mean that you didn’t apply to the right company or policy type for you to suit your needs and situation. There are steps you can take in order to help you find the right life insurance for you, starting with finding out why you were denied the policy, then understanding your life insurance options and possibly speaking with a life insurance advisor to help create the perfect plan for yourself, and finally applying to your perfect company!

1. Find out why you were denied life insurance

This is very crucial, as maybe the reason you were denied was from a mistake or misunderstanding, or if it’s not, then you know that that company with the type of policy you applied for denies application for a certain reason that is part of your life.

2. Work with an insurance advisor to understand your options

You now know why you were denied a policy, but need to still find a policy within your budget. This is where it is extremely helpful to work with an advisor. At Protect Your Wealth, our life insurance advisors help you find the best policy at no extra cost. We help compare multiple companies’ quotes at once for you, whereas compared to a specific life insurance company, they can only give you quotes for products their company offers. So, by working with the life insurance advisor you are able to provide them with the reason you were denied and out of experience, the life insurance advisor would recommend you options based on the reason you were denied and what kind of coverage you are looking for.

If you are not looking for help from an advisor, you will need to do research on life insurance companies, their coverages, and guidelines, in order to find the right life insurance policy for you. Our guide to the best insurance companies in Canada can help with that.

3. Apply to traditional, simplified, or guaranteed life insurance

If applying to traditional life insurance doesn’t work no matter what company or how much you try, then, a no medical policy such as a simplified issue or guaranteed life insurance will probably be your savior. This is because no medical life insurance has less requirements and is more open to people considered medium to high risk – although it comes at a higher cost in premium. To learn more about if no medical life insurance is right for you, check out our blogpost.

Reasons a life insurance claim was denied

On the other hand, if you were trying to claim life insurance for a loved one and were denied, that would mean that the contract in order to get a death benefit was not fulfilled correctly. This is commonly caused by the cause of death not being covered by the life insurance policy, or not providing the correct documents required.

Note, most life insurance policies will not give a death benefit if the insurer:

• Passed away by suicide
• Failed to disclose a medical condition before the policy started
• Passed away due to alcohol consumption or drug use
• Passed away from committing a criminal act

Life Insurance Options

Now you may be wondering, what options do you have after being denied? The answer is, you still have plenty!

Traditional (Fully Underwritten) Life Insurance

If you were denied when applying to life insurance, you most likely applied to traditional life insurance. The main reason people apply to traditional life insurance first is because it has the cheapest premiums. Traditional life insurance includes two different types: term life insurance and permanent life insurance.

Permanent life insurance is also known as whole life insurance because it lasts your whole life, while term life insurance lasts for a term period such as 10 years, 15 years, 20 years, 25 years, or 30 years. Traditional life insurance is the type of life insurance that will not only ask about you and your family medical history, but also requires medical examination from you. A medical examination is required because the life insurance company rates you between high and low risk to death based on any health conditions, family medical history, and your overall health.

Simplified Life Insurance

Simplified life insurance is a great option if you were denied traditional life insurance. Simplified life insurance will only ask a few medical questions, the amount of questions depending on the company, but simplified life insurance does not require a medical examination. This means, the underwriting will be more open to you having certain health conditions, lifestyles and such. Since traditional life insurance is more difficult to be accepted for a policy, simplified life insurance is easier, faster processing, but has slightly higher premiums.

Guaranteed Issue Insurance

If you are denied both a traditional and simplified life insurance policy, then guaranteed issue life insurance is a great option for you. Guaranteed life insurance highlights the fact that no medical questions or medical exam is required. Therefore, those with any health conditions will not be denied for health related issues, which is perfect if the reason you were denied traditional or simplified life insurance was due to a health condition. Applying to guaranteed issue life insurance should be used as the last option, because it tends to be the most expensive type of life insurance policy and has the least coverage amount available, although it overlooks any medical conditions you may have.

Frequently Asked Questions (FAQs) about When Your Term Life Insurance Expires

Finding the right life insurance for you 

If you are looking to secure your estate, your business or make sure that your loved ones are not financially burdened in the event of your death, having life insurance can be extremely important. It doesn’t matter if you’ve been denied before, you can still get life insurance. We’ve worked with clients that are lost after being denied life insurance in the past, and are more than happy to help you get the coverage you’re looking for! 

At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to create the best solution for you and your needs. We’ve been providing expert life insurance solutions since 2007, including no medical life insurance, term life insurance, and permanent life insurance, to build the best package to give you the protection you need.