7 Common Reasons for Denial of Life Insurance Coverage
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Many people are worried that their life insurance might be denied at some point, which is the main reason why many of them give up on this kind of protection. There are a lot of reasons why someone’s policy can be denied, but that shouldn’t stop you from trying to get one. Life insurance is a great way to protect your loved ones or the business that you worked really hard for, which makes it a great element to almost every good financial plan. No matter the situation you are in, you have nothing to lose if you try to get the coverage that you need. Therefore, to be on the safe side, here are 7 common reasons for denial of life insurance coverage that can be of great use if you are planning to get life insurance policy in the near future.
Meet the 7 Common Reasons for Denial of Life Insurance Coverage
Starting from the beginning, make sure you complete your application fully before anything else. Make sure you state all the relevant information about yourself and your condition before you apply for desired life insurance. Think about all the things that can be an obstacle for you to get life insurance coverage you paid for. In other words, think about if there is anything that could be important to an insurer to know about you, especially about your health, your hobbies or dangerous occupation and such. If the insurance company finds out something new about you when you are gone, they have the right to call out your application as incomplete, which will most certainly lead to a coverage denial.
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Invalid or Wrong Information
The second reason is closely connected with the previous one – do not lie on your application. People often think that they might get away with small lies when it comes to life insurance. However, don’t forget that insurance companies’ job is to underwrite your situation accordingly. Therefore, if you think about lying about your smoking or the seriousness of your medical condition, be ready to get your life insurance declined. It is very important if you truthfully informed the company of your health because if you lied, the company has a right to deny a claim.
Not Reading the Conditions Carefully
There is a reason why it is said that you should understand how life insurance works before you actually buy one. Many specialists remind us to spend some time reading through all those boring but yet crucial information about the policy that you are interested in. All life insurance companies underwrite differently, but also, they all put a number of exclusions for certain policies, situations where coverage will be denied. One of them is suicide. Therefore, before you actually sign the document, make sure you understand all the conditions that come with it. These exclusions are worded very carefully by life insurance companies, and some of them routinely deny claims in certain situations.
Failed to Pay Premium Regularly
Amongst many things that one proper life insurance policy should have, one of the most important ones is that it is affordable. If you have found the perfect policy, it all falls apart if you can’t afford it. Lapse of policy is one of the most common reasons why people stay without their coverage. Neglecting or failing to pay the premiums may cause a policy to lapse or be terminated by the insurer. A life insurance policy is only active for as long as premiums are up to date, therefore make sure you can follow the payments before you actually buy the life insurance.
Having bad habits can affect not only the price of your premium, but also it can be a reason why your life insurance is declined. If a person is alcoholic, their liver functions are high, and there is a great damage to health and the potential for engaging in a life-threatening activity. This makes it a reason enough for many life insurance companies to issue a denial. Same goes for drug use.
Very Poor Health Condition
If your health is seriously damaged, or you have a medical condition that is not common for your age, it can cause your policy to be denied. The same goes for not treating your condition accordingly, as it will make you a high risk in insurer’s eyes. If you are older than 80 years and have poor health, read this post.
The last but not the least, the 7th reason for denial of life insurance coverage is a hazardous occupation or hobby. This, however, depends on the life insurance company itself, and whether you mentioned it on life insurance application or not.
Keep in mind that these are the most common reasons why your life insurance coverage can be denied. However, most of them depend on the insurer you choose and whether you will get caught in a lie or not. It is highly advised to be truthful to the insurer as this is the only way to keep the coverage you agreed on.