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Reasons Why You Could Be Turned Down For Life Insurance

Updated On Aug 27, 2021

A life insurance policy is one of the best ways to protect your family or dependents financially in the event of your untimely death. However, there are a number of conditions that can lead to an insurance company refusing to fund a claim. The following are five of the most prevalent reasons why your life insurance application may be denied. 

Reasons Why You Could Be Turned Down For Life Insurance

The reasons mentioned below can lead to life insurance claim rejection. 

  • Non-Payment of Premiums 

Purchasing a decent life insurance policy is only the beginning; you must also pay the premiums on time. Only timely premium payments keep life insurance coverage operational. If you don't pay your premiums on time, your policy may lapse, and the insurer may refuse to pay a claim under a lapsed policy. When policyholders mistakenly fail to pay their premiums on time, insurers usually notify them via email or text. Insurance companies typically provide a grace period of 30 days. When policy lapses, all premiums paid are lost, and there is no way to get it back.

  • Hazardous Occupation 

Since some professions involve a higher level of risk and danger than others, life insurance companies are hesitant to approve coverage for those who work in what is considered a particularly dangerous field. Airline pilots and flight engineers, logging workers, fishermen and related fishing workers, electrical power-line installers and repairers, construction labourers, truck drivers and farmers, ranchers, and other agricultural managers are some of the occupations that fall into this category. Anyone working in one of these fields is likely to be turned down for life insurance.

Must read: Why is Buying a Life Insurance Plan Always a Smart Decision?    

  • False Details 

The insurance industry is built on the foundations of trust and full disclosure. Even if it seems insignificant, concealing facts might result in a claim being rejected. When filling out an application for a term insurance plan, people frequently conceal their smoking and drinking habits. It may lower your insurance rate, but when your family needs it the most, your claim will be refused. Even omitting facts like age, height, and weight can cause problems later. When insurance is purchased through an intermediary, agents or bank executives fill out the application and may inadvertently input incorrect information due to a lack of cross-checking. Some people even claim a fictitious salary to obtain a larger amount of guaranteed benefits. In order to spare your family from unwanted problems, it is crucial to be honest, and alert while filling out the application form.

  • Hazardous Adventurous Activities

Extracurricular activities, like hazardous vocations, are deemed harmful and pose a higher risk of a premature demise. Mountaineering, skydiving, rock climbing, and other adventure sports participants may find it difficult to obtain life insurance. For example, most insurance companies will insure scuba divers, but it depends on the type of diving they undertake, the number of times they dive each year, or the location and depth at which they generally dive.

  • Delay in Claim Application 

When it comes to filing a claim, insurance companies allow plenty of time. Although claims are rarely rejected as a result of late filing these days, it is possible if the delay is for a considerable amount. Moreover, it must be noted that insurance companies have been told not to reject claims due to delays by India's Insurance Regulatory and Development Authority. Family members of policyholders, on the other hand, should file the claim as soon as possible. Insurers may not outright reject a late claim, but they may take a long time to pay it.

Take Away

Each life insurance company has its own set of underwriting rules, and the final decision to cover life is dependent on a variety of factors based on the risk appetite of the organisation.

Also read: 

How To Customize Your Life Insurance With Riders

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.    

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