What reasons can a term life insurance policy be rejected?
Term life insurance is definitely worth considering if you are thinking about the future of your dependents. Do you take out your own term life insurance? Then you are protecting your dependents from financial problems by paying a premium during the term of the insurance. The insured amount will be paid out to your family after your death, for example to pay off a home mortgage.
Although many people would like to purchase term life insurance, it is not always possible. In fact, there are certain situations in which a term life insurance policy is rejected by the insurer. For what reasons can a life insurance policy be rejected? read here.
Possible reasons for a rejection in a term life insurance policy
As already mentioned, there are usually onerous arguments behind a refusal for a term life insurance policy. Now, what are some possible reasons for not being accepted for whole life insurance? Below are common situations:
1. Your health condition is not good
When you apply for mortality insurance, you, the policyholder, must complete what is known as a health statement. This is a questionnaire with questions related to your health condition that your insurer uses to assess your general health. This is often done in consultation with a medical advisor, such as a doctor.
The worse your health is (for example, because you smoke, have type 2 diabetes or suffer from some other chronic condition), the more likely it is that either your monthly death benefit insurance premium will be higher or your death benefit insurance will simply be rejected.
2. You are too old
In addition, many insurers use a maximum age limit for death benefit insurance. This is due to the fact that older people have a much higher risk of dying. Someone 60 years old will therefore pay a lot more premium than an 18-year-old, to cover the extra risk for the insurer.
The maximum age is around 75 with most insurers, as the risk of death is too high in that case. That's why it's a good idea to take out death benefit insurance as early as possible. You will then pay a lot less each month, and there is also a much lower chance that you will be refused for death benefit insurance.
3. You travel abroad a lot
Next, death insurance can also be denied if you travel abroad a lot. Why is that so? Because the risk of dying in another country is simply greater. Just think about contracting a disease like Polio or Malaria in exotic, faraway countries.
The insurer realizes that you are less likely to be able to pay off your whole life insurance policy if you travel frequently to other countries. In many cases, therefore, this is a valid reason for refusing the term life insurance.
4. You practice a dangerous profession or hobby
Finally, an insurer may also deny you death benefit insurance based on your job or a hobby you have. For example, if you are active as a stuntman or collect poisonous animals as a hobby, this is often reason enough for the insurer not to offer you life insurance.
Skydiving, scuba diving and underwater welding, for example, are also occupations in which it is often more difficult to obtain death benefit insurance. After all, the probability of death is a lot higher - and thus the risk to the insurer.