WASHINGTON, May 31, 2013 — For one reason or another you may have had coverage declined to you by a life insurance company. Or, worse still, you may be refraining from even trying to get life insurance because you assume you will be declined based on your medical history or current lifestyle habits.
Stopping the search after getting declined, or not attempting altogether, leads to many families being underinsured and at risk of financial disaster. It is important to start or continue your search with multiple companies, not just one or two who might have similar underwriting guidelines.
Every life insurance company is different, and where one might give you a terrible health rating or decline you outright, another might approve you with a better rate because they operate with higher risk. Shopping around and digging through different policies is a tedious prospect for the average person who doesn’t know the industry.
It is beneficial to find an independent life insurance agent you can trust who knows the industry and do the legwork for you to find the right policy. Much like a good mechanic, an independent life insurance agent is fair and doesn’t have their hands tied to make a big buck for any company.
Denied Everywhere? You Still Have Options
Unfortunately there are those who get denied coverage across the gamut, but if you are one of these people, you still have life insurance options; they just won’t be the traditional kind of policies. Here are the two most likely options if you get denied for traditional whole or term life policies.
Graded and Guaranteed Policies
Turning away from standard policies, graded and guaranteed life insurance policies are a great way to get coverage. Neither will provide the amount of coverage that a standard policy would, but they are much easier to get. Typically the policies consist of a questionnaire up to about 10 questions, and no medical exams or physicals are needed. The only time you will be turned down is if you are undergoing extensive medical procedures such as chemotherapy.
A graded policy means that the policy will pay limited coverage on a sliding scale as the policy ages. That means your beneficiaries would only collect a percentage of the total coverage until the policy has matured, which typically takes two to three years.
Some people need to take out multiple policies when using graded and/or guaranteed policies in order to get the coverage they feel comfortable with, and these policies are usually higher than a standard policy because more risk is associated with them. This can add up to much higher payments when compared to standard policies, but if you can’t get coverage any other way then this is often the best option.
Being denied coverage is never a fun experience, especially if it’s unexpected. But you should take note that it’s rarely a one size fits all matter and there are dozens of companies and options that you can explore to get coverage.
Liran Hirschkorn is an independent agent representing term life insurance companies through his company, ChooseTerm. He also specializes in high risk life insurance; helping previously declined applicants get coverage. He started the column, Rest Insured, because he is trying to make life insurance a more accessible topic to everyday Americans rather than something that is avoided.
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