We’ve been talking a lot about the importance of life insurance in our recent blog articles – how it’s vital to have for the sake of your loved ones, especially if you live in an area like Northern Virginia, where the cost of living requires solid financial planning. However, the unfortunate truth about life insurance is, many people wait too long to get it. When we urge you to get life insurance sooner rather than later, we’re not saying that to try to make a sale. It’s regrettable, but the longer you wait, the more likely you may be ineligible or financially unable to obtain it. In today’s blog, we explain why.
Life Insurance Application: Three Possible Outcomes
When you apply for life insurance, one of three possible things will happen: You’ll be approved as proposed, denied, or expensively rated. If you’ve already been approved as proposed, then great! No need to read further. And if it’s expensively rated, the carrier may approve you with a much higher price/rate and/or ask for more information to underwrite further on what you need to do next in order to qualify and get the policy you want. If you’re denied, however, there are several reasons that could be behind that decision. More often than not, these are issues that tend to crop up later in life, as we get older. When you are already insured, you become “locked in” and don’t have to worry about developing medical conditions that would make you ineligible for life insurance. And once insured, you stay insured, which is precisely the reason why we urge you to get coverage as soon as you’re able…before medical conditions may develop.
Your Cholesterol Levels May Disqualify You from Getting Life Insurance
Believe it or not, high cholesterol can disqualify you from getting the kind of life insurance policy you’re looking for. Insurance companies typically look at whether the applicant has both high LDL cholesterol and low HDL cholesterol. If you have both, you’re at an elevated risk for heart disease and stroke. Ultimately, whether or not the carrier still approves you will depend on:
- When you were diagnosed
- The medications you take
- Your total cholesterol number
- Your HDL ratio
Out of these four factors, your HDL ratio is the most important. This is the most likely to affect your “rate class,” which in turn affects if you qualify, or how much extra you end up paying if you are approved to purchase a life insurance policy.
Your Glucose and Blood Sugar Levels May Disqualify You from Getting Life Insurance
This one can really surprise the person applying for life insurance. It can also get a little confusing. Different insurance companies will often have different rules depending on whether an applicant has type 1 diabetes versus type 2 diabetes. Some companies will also take a close look at the levels themselves and have their own scale based on those levels. For reasons like these, you may want to “shop around” for a carrier based on how they look at your test results. (If you use Freeman & Sherburne, we can shop for you.)
Your Weight May Disqualify You from Getting Life Insurance
This is another one that will vary with each carrier. Some carriers are stricter about weight than others, and this is another instance where you may want to shop around or have us do it for you. Typically, carriers look at your “build” or “body type,” which is your height to weight ratio. You’re going to want to know what this magic number of yours is from the start when you do your research.
Your Finances and/or Driving Record May Disqualify You from Getting Life Insurance
Insurance companies will also take a look at your finances and driving record when you’re applying for life insurance (and sometimes, other kinds of insurance as well). Once again, every carrier is going to have their own standards and scales. Insurance carriers have set ratios based on your income and total net worth. Sometimes, they’ll reject you outright if they determine you don’t earn enough, as this may cause a moral hazard. This type of hazard exists when you apply for a high level of coverage, but don’t earn the income to warrant this high level coverage. It brings scrutiny from the carrier. There are times that an application may fall outside of the norm and must be explained further to the life insurance underwriter during the underwriting period.
Carriers also look at driving records to see if there are DUI, reckless driving or other habits that may cause more risk. Even with safer vehicles on the road, our age of electronic devices causes attention issues on the road. Health issues can also factor into driving risks. All this has created more accidents on the roads, which we see in Northern Virginia, especially, where there is so much traffic. Therefore, applicants’ driving records have recently become a bigger review item for underwriters evaluating risk level.
The above only mention some underwriting issues, but other factors are also reviewed by life insurance underwriters and are too numerous to discuss in this blog. This is one more reason why you want professionals to help you navigate the system – so you can find the best coverage at the best rates that make sense for your budget and income.
Since 1875, Freeman & Sherburne has been serving the insurance needs of clients by coupling a small-town approach with the most current tools to serve you best. We are licensed in Virginia, Maryland and Washington D.C.
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