Whether you are hard to insure or have been declined for life insurance in the past, getting the coverage you need may seem impossible, but there are a few things you can do to help maximize your chance of being approved for life insurance.

There are many reasons why insurance companies may decline coverage or why some people are harder to insure than others. Whether it is a high-risk lifestyle, health issues, prior/current drug use or mental health issues, insurance underwriters take into account many different risk factors to determine whether a person can be offered coverage.

Related: Health and dental insurance – Not really insurance

While many people are aware that by changing lifestyles or by improving their health they are more likely to be approved, there are four other life insurance application strategies that you can use to greatly improve your chances.

Preliminary Inquiries

One of the most important things all brokers say is that clients should be is honest up-front. Before the application process has begun, let your broker know of any major health or lifestyle issues that might cause your policy to be declined or rated.

Armed with this information in hand, the broker will contact the potential insurance company, explain the situation (leaving out the client’s name), and determine whether or not underwriting would approve the application.

This is called a preliminary inquiry, and it can save clients time and a decline on their files.

Multiple Applications

Like handing out multiple resumes while job-hunting, applying for coverage with more than one insurance company at a time can increase a person’s chances of being approved with a low premium.

Related: Do you need long term care insurance?

And because multiple companies will be competing for your application, the odds of being approved will go up.

Cover Letter

Exactly like in a job hunt, having your life insurance broker hand in a cover letter can help improve your odds of being approved.

Like employers, when an insurance application is handed in, for the most part, that is all the insurance company sees of a person, that is all they know of their history, etc.

Adding a cover letter can explain your unique situation and allow them to understand why they should approve your application. While normally done for clients wanting in excess of $1 million in coverage, this also works in situations where people are difficult to insure or have been declined in the past.

Ensure your life insurance broker is up to date

Like all industries, life insurance has it’s own trends, policy reviews and updates. Insurance company underwriting departments are changing their approval procedures (such as straight through processing), medical labs are taking an increasing role in insurance application processes and many companies are adopting predictive modeling in order to be better able to determine the risk a person presents.

Related: Review your insurance coverage

A good life insurance broker should be aware of what is on the horizon and should factor that in when determining which company is the right fit for his or her client. Each company does things differently and being on top of changing trends and aware of the different approaches can save clients money down the road.

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14 Comments

  1. Brian So on May 2, 2014 at 1:20 am

    Because of the question on the application asking if you are currently applying for coverage with another company, I’d suggest not submitting multiple applications at the same time.

    It can be confusing for the different carriers to try to coordinate the total amount of coverage you’re applying for, not to mention coordinating requests from these carriers for medical examinations, causing unnecessary delay in the whole process.

    If you must submit multiple applications to different companies, do it one after the other, and have your broker explain in the cover letter why company #1’s offer was not acceptable. It should also explain that you’re only looking for one company to offer you a fair premium, so it doesn’t look like you are being overinsured. You should also authorize company #1 to share information to the second company. This should help avoid any confusion and also speed up the process.

  2. bailey on May 2, 2014 at 9:05 am

    Brian, sounds like good advice. Robb, can you please elaborate on how you would advice a client to go about searching for the ideal carrier?

    Also, is this something that a client would specifically request or is it something that an agent/advisor would automatically do (because it hasn’t been my experience)?

  3. bailey on May 2, 2014 at 9:06 am

    *advise (hate making typos 😉

  4. LSM Insurance on May 2, 2014 at 9:48 am

    Good point on Multiple Insurance applications, especially among insurers who have different reinsurance companies.

  5. Syed Raza on May 2, 2014 at 12:27 pm

    Brian, you got some good points but I disagree especially with hard to insure cases.

    The problem with submitting applications one after the other is that if you are declined or rated on the first app, you’ll have to disclose that on subsequent apps. Regarding the total face amount, you just have to be clear with the underwriters that the applicant will only accept the best offer.

    I’ve never heard of underwriters having a problem coordinating medical results. This is where the cover letter comes in. Also, the broker can always put the details in the advisors notes section on the app if they don’t include a cover letter.

    I would argue that concurrent applications are a much faster process than subsequent applications, I’ve done both and have had much quicker and better results with concurrent applications.

  6. LSM Insurance on May 2, 2014 at 12:31 pm

    Brian – not to gang up on you. But I think Syed makes a very good point especially on the hard to insure cases. Happy Friday!

  7. Kathy waite on May 2, 2014 at 12:41 pm

    Look for a sales person who does not just sell the product of the company who sponsors their insurance licence . See who they suggest and ask who is sponsor. Remember they have targets some offer extra incentives such as travel . Are you being sold the best option for you ? Try kanetix and other online quote systems to see the top ten. Avoid loan insurance

  8. Teresa on May 2, 2014 at 8:15 pm

    For both life and long term disability my husband and I were able to get good coverage amounts for reasonable rates by contacting our professional associations. We were not hard to insure,no lifestyle or medical conditions. The amounts were dramatically lower for higher coverage.

  9. LSM Insurance on May 3, 2014 at 11:03 am

    @ Teresa – Keep in mind most Association plans are based on 5 year Term rate bands so the cost can up significantly as you get older. Also association plans are group plans so you do not own the policy like with an individual policy and changes can be made on a class wide basis.

  10. Teresa on May 3, 2014 at 11:16 am

    LSM insurance , yes that may be true but in our case we have had refunds every year since we started over 30 years ago.

    Though changes can be made on a class wide basis our experience has been that this was not a major concern. Like everything else you should review your insurance policies on a yearly basis.

    In comparison to an individual policy we always came ahead with our Association plans( cost and coverage wise).

    Yes costs do go up in five year increments. As part of a longer term retirement strategy is the concept when am I in a position to “self insure”.

  11. LSM Insurance on May 3, 2014 at 11:21 am

    Sounds like your a good planner.

    As long as you know risks – that’s the main thing. Someone who needs the coverage for an extended period of time may prefer a guaranteed premium.

    Like most purchases their are plus and minuses. Have a great weekend!

  12. Brian So on May 4, 2014 at 11:11 am

    Syed, LSM – fair enough, you make some good points. I just want the average consumer to know that buying life insurance is different than buying a microwave. There are lots of moving parts and factors that affect the efficiency of each method.

  13. LSM Insurance on May 4, 2014 at 4:26 pm

    Good point Brian! Agreed.

  14. fiscally fit on May 5, 2014 at 10:59 am

    funny enough if you break it down to the net cost of pure insurance, the cost between all Canadian carriers is actually within pennies. It is the different “options” that change the cost. what most people forget is that simple things like speeding tickets can create a situation that makes you un-insurable at the very least temporarily. the biggest thing is to make sure the insurance fits your needs and offers you flexibility down the road.

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