When applying for life insurance, why do people get rated or denied?

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Asked April 20, 2015

1 Answer


Insurance companies used a rating system to determine the initial risk of insuring someone's life. If you are rated too high, you may denied traditional life insurance, while less heavily rated people can get insurance but must pay progressive higher premiums. Even those who are heavily rated can get life insurance, but may face a choice between higher premiums or specialized coverage.

For insurance companies, the way you are rated helps them classify your risks in a more statistical way. Each company uses a slightly different rating system, but the general approach is that the more health risks you pose, the higher you will be rated, until you reach a critical risk level that means you can only be insured through insurers willing to cover a higher than average risk.

When you apply for a life insurance policy, your health or preexisting conditions could lead to you being rated. If you have a high risk of heart attack, for instance, you would be heavily rated, while someone with a persistent or terminal illness might be denied traditional coverage. The more health risks you have, the worse your rating will be.

You could try shopping for life insurance through an independent agent or broker such as this website to save money on your life insurance. Since this site represents multiple insurance companies, it is better able to provide you with options for cost and coverage that an agent who works for a single insurance company may not be able to offer.

Even if you have been denied traditional life insurance, you are still insurable. You may have to customize the policy to exclude specific causes, such as a preexisting case of AIDS, or you may have to settle for a specific type of life insurance, such as a term life policy or a final expense insurance package. If you are determined to have a permanent life insurance policy, high risk insurers will underwrite you as long as you are willing to pay the increased premiums based on your rating factor.

Answered April 27, 2015 by Anonymous

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