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What To Do If You Are Declined for Life Insurance

I’ve heard many times someone say, “Since I was turned down by Company A, let’s apply to Company B and they won’t know about this issue.” Unfortunately, it doesn’t quite work that way. When you apply for life insurance, almost all of the time, you sign an authorization for the insurance company to report to the Medical Information Bureau (MIB). Details about your decline are there for all companies to see for 3-5 years. This doesn’t’ mean that you can’t get approved once declined, it simply means that full disclosure is not only required, it’s in your best interest. The more information you can give Company B or C upfront, the better.

In 2006, Donnie applied for a $500,000 life insurance policy with me. Shortly after he had completed his physical, I answered the phone to find that it was the underwriter for Donnie’s application. Now when things go as planned, I do not get calls from an underwriter, so I knew this would most likely not be welcome news. “Your client has an elevated PSA level, so we are going to have to postpone his application until he gets checked by his doctor,” she informed me. When I relayed this news to Donnie, he immediately scheduled an appointment. The news that came back was grim, Donnie had prostate cancer. He subsequently had his prostate removed and was given a clean bill of health from his doctor. Our game plan was to wait two years and then reapply, which we did.

The new insurance company declined him again. They cited:

  1. Increased liver function.
  2. That his medical records indicated he “drank heavily.”
  3. History of prostate cancer.

Now this could be enough to make most folks think that this was the end of the road and that they would not be able to get life insurance at all, but Donnie told me that the insurance company was simply mistaken about their interpretation of his so called “drinking problem.”

At a time like this, you need a game plan. Donnie went back to see his doctor, with the declination letter in hand from the insurance company. He asked his doctor to re-interpret the medical records and clearly spell out what the doc’s notes meant, particularly anything that related to a problem with alcohol. The doctor was happy to comply. In addition, a new round of tests were conducted and Donnie’s doctor in no uncertain terms stated that his liver functions were all normal and that nowhere in the records does he imply that he felt Donnie had an issue with alcoholism. Since the prostate cancer was over 2 years ago and his PSA readings were zero, this previous cancer should not have been an issue this time around at all.

We reapplied to a new company, with a letter from his doctor addressing each point and a full outline of our own, detailing the situation. This time, Donnie was approved at the most favorable rating that we could have expected. He happily accepted the policy and has been covered ever since.

I have had many declines turned into approvals, but only by working with an underwriter and letting them know we are giving them a complete an honest account of your situation. The moral of this story is to be upfront and open about your medical history with the underwriters. I have come to understand that insurance underwriters are more wary of open ended issues, including minor ones, than they are with resolutions to questions, even when the issue at hand is serious.

It’s always best not to be declined in the first place. If you have an issue that just might make approval difficult, tell your agent on the front end. This will allow him to place you with a company that will give you the best chance to have a policy issued. At findAterm.com, we’ll exhaust every avenue available to help you get the best coverage you can qualify for, even if you are declined on the first attempt.

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