Possible Reasons For Denial of Life Insurance Plan

One of the best methods to ensure your spouse or dependents have financial security in the event of your untimely passing is to have a life insurance policy. However, there are a number of variables that the insurance company can consider when denying coverage. Here are some of the most typical explanations for why your application for life insurance can be denied.

Reasons for Denial of Life Insurance Plan

Below are some possible reasons why your life insurance plan can be cancelled.
 

1.     Income Restriction

A person whose salary is below a specific threshold will not be approved for a policy by a life insurance company due to economic or income criteria. The chief factor for this limitation is that it could lead to the issuance of a high number of tiny policies that result in lower premium flows. That amount may vary amongst life insurance providers. The insurance companies require the policy owner to demonstrate their capacity to bear the expense of insurance coverage, which is another reason why having a lesser income may prevent you from being approved.  

2.     Dangerous Profession

Because some occupations are more dangerous and risky than others, life insurance companies are hesitant to offer policies to those who work in what is regarded as a particularly risky industry. Aviation pilots, flight engineers, loggers, fishermen and linked fishing workers, construction labourers, installers and repairers of electrical power lines, motorists workers and truck drivers, are a few professions that fall under this category. Anyone employed in any of these professions will not be surprised if their application for life insurance is rejected.
 

3.     Specific Illnesses and Disorders

The life insurance industry's truth is that if you accurately provide all the requested information and go through all necessary screenings, your claim won't be denied. Even if the likelihood of this happening is extremely unlikely, it is nevertheless true that assertions can be denied. However, think about what would happen to your loved ones if you were one of the 0.001percentage points of the population whose claim was denied.
 

4.     Declines on Life Insurance Requests in the Past

At its foundation, insurance is a company that underwrites risk. According to a very crude model, the premium for an insurance policy is mostly determined by the insurer's estimation of the likelihood of claims. It makes sense that if an insurer hires someone with a past of having applications denied, the risk level will rise overall. Having said all that, the new insurer's final judgement will typically be heavily influenced by the facts and the reasons why the previous application was rejected.
 

Conclusion

Please note that the aforementioned list is not exclusive to a specific Life Insurance provider and is instead a general compilation. Each insurance provider has its own distinct underwriting standards, and whether to insure a life or not depends on a wide range of variables based on the insurance company’s  risk tolerance.

Also Read: Understanding the Common Term used in Buying Term Insurance