What to Do If You Are Denied Term Life Insurance

Why Are Some Applicants Denied Life Insurance?

While auto insurers look at your driving record, life insurance underwriters look for factors that suggest a potential policyholder has a high mortality risk. Underwriting, the process of evaluating an insurance application, uses strict, objective standards for approving or denying an application. So if a risk factor shows up while your application is in the underwriting process, such as an odd liver reading on a blood test that might suggest you have hepatitis, you could be denied coverage.

What's Considered Risky?

Here are several reasons some applicants are turned down for term life insurance:

• Age
• Diagnoses of an incurable disease, such as cancer
• A family history of a medical condition, such as Huntington's disease
• Dangerous occupation
• Frequent travel to dangerous destinations
• Dangerous hobbies, such as hang gliding
• A history of drug use or drunk driving

What to Do When You Are Denied

If you're turned down for term life insurance, ask the insurer why. It's possible there was a mistake made during your medical examination. Many insurance companies collect health information from the Medical Information Bureau, which maintains a database on 16 million US and Canadian insurance customers. If the bureau has made a mistake, you can demand that it be corrected.

It's also possible that your doctor can explain the abnormality to reassure the insurance company and convince them that you're healthier than they thought.

You can also try another insurance company--obtaining competing life insurance quotes from qualified agents can be simple. Some insurers are more willing to accommodate certain medical conditions than others. You can also consult an independent insurance agent who works with many different insurers, rather than an agent that works with just one company.

You can also seek help from an "impaired risk specialist," an agent who specializes in finding insurance for applicants with uncommon medical conditions.

Applying the Second Time Around

It's important not to hide the fact that you were turned down by another insurance company. That kind of misrepresentation could get your policy rescinded in the future.

You can also wait and apply for coverage again at a later date. If the medical condition improves and tests reveal that you are healthier, the underwriter may give you the green light.

If you do try again, make sure you're adequately prepared for the medical examination. Go in well hydrated and rested, and skip the coffee and alcohol in the days leading up to the exam. Some medications--such as aspirin or ibuprofen--can also affect the results, so avoid them before your exam.

What Other Options Do I Have?

Many large employers provide life insurance for their employees, often with the option to increase coverage at an additional cost. Because the risk is spread out over many employees, these policies usually don't require a medical examination.

Another option is guaranteed issue life insurance, which requires no medical exam. Most people within a certain age range can get this type of policy--provided your answers to questions about height, weight, smoking, and other basic health questions don't raise any red flags.

However, premiums for guaranteed issue policies are higher and the face amounts tend to be lower. Additionally, this type of policy may not pay out the full benefit right away. For instance, should a policyholder pass away within the first year of coverage, the beneficiaries may only receive what was paid in premiums.

Keep in mind that it is illegal to refuse to sell insurance to anyone due to their race, color, sex, religion, national origin, or ancestry. Many states have added to this list by saying marital status, age, occupation, language, sexual orientation, physical or mental impairment, or the geographic location can't be used to deny coverage.

Term Life Insurance and the Guaranteed Insurability Rider

Term insurance is an affordable life policy that provides coverage for a specified period of time, including 10, 20, or 30 years. When the policyholder passes away, the insurance coverage amount is paid to the beneficiary.

If you purchase term insurance early on in life, down the road you may find that your insurance needs grow with life events.

For example, you might purchase term life insurance right after you are married. After a few years, you and your spouse decide to have a child, or perhaps, you receive a promotion at work with a significant raise. Either of these life changes is likely to increase your life insurance needs.

Guaranteed Insurability Rider

A rider is an attachment to an insurance policy that amends the policy's coverage or terms. When you purchase life insurance, you usually have the option to add one or several riders to your policy.

The guaranteed insurability rider alters the parameters of your policy by giving you the right to purchase additional insurance at specific option dates, usually up to age 40. This rider may also allow additional insurance to be purchased at alternate dates, such as after a marriage or the birth or adoption of a child.

Additional Insurance Coverage Regardless of Insurability

Typically, insurability refers to the health of a policyholder. The terms of most guaranteed insurability riders stipulate that you can purchase additional insurance regardless of your insurability. Additional insurance coverage is charged at premium rates based on your attained age. Because your insurability declines with your health, the guaranteed insurability rider can be especially valuable should your health decline as your insurance needs increase.

Convenience of the Guaranteed Insurability Rider

The guaranteed insurability provision can be a convenient way to purchase additional insurance. Oftentimes, when policyholders insurance needs grow, they opt to purchase a new term policy. This rider allows you to meet your growing insurance needs, without having to undergo the underwriting process again.

Compare quotes from multiple insurance companies to choose the best term life insurance policy for you and your family.

Hazardous Hobbies: How They Affect Your Life Insurance Premiums

If you are regularly in pursuit of an adrenaline rush, you may pay for your penchant for thrill seeking when it comes to taking out a life insurance policy. Certain hazardous hobbies and activities represent a much greater risk of payout to life insurance companies, and when seeking life insurance quotes you may pay for that increased risk through higher life insurance premiums.

Someone who deep-sea dives or pilots a personal aircraft regularly places his or her life in much greater danger than those who pursues less risky hobbies. When buying life insurance, expect to answer detailed questions about your activity choices.

Hobbies Considered Risky by Life Insurance Companies

Some of the activities labeled as high-risk by life insurers include:

• Aviation
• Climbing or mountaineering
• Diving
• Motor sports
• Sky diving

Hobbies that may attract greater scrutiny from insurers include:

• Big-wave surfing
• Bungee jumping/BASE jumping
• Caving or spelunking
• Hang gliding
• Skiing/snowboarding
• White water rafting or kayaking

Regardless of your overall health, your hobbies may place you in a higher risk class and can eliminate you from the best insurance rates. Some companies may exclude you from coverage altogether, preferring to avoid the risk you represent.

Dangerous Hobbies--What Your Insurer Wants to Know

Your life insurance provider is going to want a thorough explanation and detailed assessment of how often and to what degree you partake in a hazardous hobby.

For pilots, insurance providers want to know:

• How many hours did you fly in the past year?
• How many hours do you expect to fly in the coming 12 months?
• What type of aircraft do you pilot, and where do you fly it?
• Do you participate in high-risk flying, such as stunt flying for airshows?

For mountaineering, you may be expected to answer the following questions:

• How long have you been climbing?
• How many climbs do you make annually?
• What heights do you ascend?
• What type of terrain do you climb, ice or rock?

Motor sports enthusiasts can expect to answer:

• How many races do you compete in during a calendar year?
• What type of racing do you compete in--cars or motorcycles?
• Which class/level do you compete in?

Divers can expect to answer similar questions--how many dives and to what depths? Sky divers should expect to answer questions about how many jumps, and total jumps they have made.

Answer Honestly to Avoid a Dispute With Your Insurance Claim

In event of a accident-related claim or premature death related to a dangerous hobby, your insurance company is more than likely to investigate before making a payout. You don't want your coverage disputed or denied, especially in your family's time of need, because you failed to disclose your love of a dangerous hobby.

How Your Hobby Hits Your Pocketbook

Qualifying for the best insurance rates requires more than just good health. Your passion for a hazardous hobby most likely eliminates you from "preferred" or "preferred plus" categories, and as a result your insurance premium could cost you double the expenditure over the life of the policy.

Whole Life Insurance and the Waiver of Premium Rider

Whole life insurance provides financial security for you and your family. Once you purchase a policy, you don't want to lose the coverage. But if you become injured and are unable to work, and as a result cannot pay your premiums, your whole life insurance policy may be put in jeopardy. Adding a waiver of premium rider to your policy may safeguard your life insurance coverage.

Waiver of Premium Rider

A rider is an attachment to your insurance policy that changes the terms or coverage of your policy. There are many different types of riders, which can be added to your policy for an additional fee. The waiver of premium rider stipulates that while the policyholder is disabled, according to the rider or policy's definition of disabled, the insurance company shall give up the right to collect premiums.

Understand the Insurer's Definition of Disabled

A key to understanding the waiver of premium rider is understanding your insurer's definition of disabled. Insurance companies typically use two different definitions:

1. Established Profession Disability. You are disabled if you cannot perform the duties required to accomplish tasks in your established profession
2. Any Profession Disability. You are disabled if you cannot perform the duties of any profession

A rider that defines disability as the inability to perform the duties of your established profession has its advantages. For example, if you are a trained mechanic and suffer back injuries that prevent you from participating in the physical labor of your job, you are disabled under the "established profession" definition. You may be able to find work that is not as physically demanding, but it's not the occupation in which you were educated and trained--nor is it the occupation you were employed in when the injury occurred.

You should always carefully read the terms of any life insurance policy you are considering, and you should also be sure to check which disability definition your insurer uses for the waiver of premium rider.

How the Rider Works

In order for this rider to go into effect, you must be disabled for a consecutive number of months (outlined within the terms of the rider). Some insurers set this minimum at three or four months, but most set it at six months.

Once you meet the minimum time length, your life insurance company waives your premium as long as you are disabled--whether it's a year, several years, or the rest of your life. Typically, any payments made during the waiting period are refunded.

If you do overcome your disability and are able to return to the job in which you are educated and trained, you are typically required to begin paying your premiums again. However, you should not be responsible for any past payments.

If you are interested in including the waiver of premium rider in your new whole life insurance policy, you can obtain life insurance information, advice, and competing quotes from a qualified life insurance agent.

3 Reasons You Should Choose Term Life

If you are thinking about purchasing a life insurance policy, here are three reasons you should consider term life.

1. Simple Life Insurance

Term is pure life insurance coverage. This type of policy provides financial protection for a certain amount of time--the length or term specified in the policy--and has a predetermined benefit. Should the policyholder pass away within the time period specified in the policy, the beneficiary receives the benefit stated within the policy.

Although you can add features to your term policy through clauses called riders, a term policy is simple life insurance coverage. Other life policies, such as whole life, universal life, or variable life, are more complex because of their structure and investment features. Term insurance is different because it's just straightforward life insurance coverage.

2. Versatile

The beauty of term insurance is its versatility--you can tailor the length and amount of your policy to fit your needs.

Choose Your Term Length

Your policy can be as short as one year and as long as 30 years; you can select nearly any term length to fit your needs. The most common term periods are 10, 20, and 30 years.

Term life is meant to cover your temporary needs; however, temporary does not necessarily mean short-term, it just means your need is not permanent. For example, you may be considering a term policy to provide financial security through your youngest child's expected college graduation date, which you anticipate to be within the next 12 years. In such an instance, you might select a 15-year term policy.

Select the Financial Benefit

You can also choose almost any insurance coverage amount to fit your needs. The face value, the amount beneficiaries receive in the event of the insured's death, can range from under $100,000 to several million dollars.

If you are looking for a way to roughly estimate the amount of coverage you should purchase, you should consider the needs you are trying to meet. Are you looking to replace income? What about your mortgage or other debt? Most likely you want to provide financial security for a variety of reasons. Write down your current debt obligations, your income replace needs, and your current and future financial obligations.

This may provide you with a good starting point, but to determine a more accurate face value for your insurance needs, you should consult the life insurance calculator, or seek advice from a qualified agent.

3. It's Cheap

Because term insurance usually doesn't have fancy bells and whistles, such as an investment feature, this is the cheapest type of life insurance. Term life insurance provides coverage only, which is why it is so affordable. Other life policies, such as whole life, are meant to cover a policyholder for a lifetime and includes an investment feature.

Term life insurance provides insurance coverage for a predetermined length of time or a stated face amount. Insurers can provide this coverage at relatively cheap rates because they have a calculate risk for a specific benefit amount and specific length of time.

In order to keep your term insurance policy affordable, you should only purchase a policy with the term length and coverage you need. The shorter the term and the smaller the face value, the cheaper your life insurance premiums should be.

With all of its benefits--affordability, simplicity, versatility--term life insurance is an excellent way to protect your loved ones. Because it is so affordable, it is wise to buy a policy with a death benefit that covers your family's monetary needs for the appropriate number of years. Compare quotes from multiple insurance companies to choose the best policy for you and your family.

Whole Life Insurance Could Be an Essential Part of Your Financial Plan

A sound financial plan for your family can help ensure the proper protection of your assets, efficient growth, and the distribution of your wealth. The financial planning process can be divided into three phases: foundation, accumulation, and retirement.

Whole life insurance is a financial instrument that can address the needs and concerns in each of these three planning phases. A permanent whole life policy may provide you and your family with substantial benefits at each stage of the process.

The Foundation Phase

The foundation phase provides a secure base upon which to build assets. This starting point in the financial planning process is meant to protect the assets you currently have, and the assets you may accumulate in the future. Foundation planning should begin with insurance protection, including:

* Life insurance
* Disability and health insurance
* Long-term care insurance
* Homeowner and auto insurance

A basket of insurance products is necessary to protect you and your family against a loss of assets, as well as the loss of your ability to gather assets.

Whole Life Insurance and the Foundation Phase

Your annual premium for a whole life policy should be secured while you are young and healthy. Typically, whole life insurance premiums remain unchanged throughout the life of the policy. Obtaining the policy when you are young is a wise decision because the older you are when purchasing life insurance, the more expensive the premiums.

The Accumulation Phase

The accumulation period starts today, and lasts until you begin retirement. Make sure you know how much you should save to allow for a comfortable lifestyle during your retirement. Consider the following questions:

* At what age do you want to retire?
* How much income do you expect to generate annually from your investments during your retirement years?
* What is your investment profile?
* What rate of return do you expect on your investments?
* How long do you expect to live?

Whole life insurance can play an important role in the accumulation phase of your financial plan, as the cash value feature can help meet significant accumulation needs.

In a whole life policy, your premiums have a dual purpose. They pay for the cost of life insurance coverage, and then the excess premium amount (beyond the cost of insurance coverage) is established as savings and placed into a cash value account. The cash value grows at a conservative, guaranteed rate, offering an alternative or diversification option to an overall stock-based investment approach.

If you intend to supplement retirement with the cash value accumulated in your whole life policy, then an earlier start gives you more time for the money to grow.

The Retirement Phase

The retirement phase is intended to manage and protect your assets in life and in death. Give thought to the following questions as you consider your retirement needs:

* What standard of living do you want to maintain in retirement?
* What assets do you want to pass on to your heirs or charity?
* What is your investment profile during retirement?

During retirement, the cash value can be converted into a retirement income producing annuity that guarantees regular payments for life, or for a specified period of time.

Whole life insurance also offers tax advantages that make passing wealth on to future generations more efficient, especially in comparison to other retirement accounts, such as a traditional IRA.

If you are interested in using a whole life insurance policy as part of your financial plan, take some time to compare life insurance quotes.

How to Use the Rating Agencies as a Guide When Buying Life Insurance

Buying a life insurance policy is a long-term commitment, for both you and the insurance company that issues your policy.

On your part, you agree to pay your premiums for the duration of the policy, however long that may be. On its part, the insurance company agrees to pay any eligible claims during that time period.

Both parties sign a contract consenting to uphold their side of the agreement, most of which extend for many years.

Check the Insurance Carrier's Financial Stability

As a client purchasing a significant product for you and your family, you should spend a good deal of time reviewing the financial stability of any insurance company before trusting or committing money to them.

Insurance is under the jurisdiction of each individual state, not the federal government, and often rules and regulations vary from state to state. While some states have funds set aside for companies that encounter financial difficulties, keep in mind that unstable organizations may not honor their commitments to clients who file claims, even if the clients have been paying premiums for several years.

Size Does Not Always Matter

Do not simply assume that any large or well-known company is financially stable. There are some highly dependable small insurance companies who are known to pay their claims in a timely and honest manner.

Rating Agencies

To help guide your decision about which company to use, check the ratings assigned by five independent agencies:

* A.M. Best
* Fitch
* Moody's
* Standard and Poor's
* TheStreet.com.

These five organizations review numerous companies' claim-paying histories and abilities. They then make a judgment, based on their own standards, and assign each carrier a rating. The ratings are in the form grading letters (A, B, C, D, F).

Not only does each agency have its own way of arriving at a rating, but the value of the letter ratings differ from one organization to another. An "A" may be the highest rating from one agency, but another agency may use "AA" or "AAA" as their highest level ratings.

Comparing Companies

To best interpret each rating agency's grades, examine each grade and its accompanying description. For example, "A" and "AAA" may both be described as "excellent" by separate rating agencies. If your insurance company's grades meet that description at all five agencies, it is likely a dependable choice.

Remember, these grades are not ironclad guarantees. They are based only on what the agency knows at the time the ratings are assigned. Companies do get upgraded and downgraded over time.

Go Online To Compare Life Insurance Quotes

To shop around for the best life insurance policy that can effectively protect you and your family, check online and compare quotes from multiple insurance companies. Make sure you get the most appropriate and affordable policy for your needs.

Life Insurance Calculators: Estimating How Much Coverage You Need

Life insurance calculators walk users through a process called a capital needs analysis--insurance jargon for determining how much life insurance you should have. A life insurance calculator is a great tool to help users determine two main variable factors in case of death:

* How much money is needed to meet immediate financial obligations
* How much money is needed to keep the household financially sound

When buying term life insurance, it's important to purchase enough coverage to ensure your family has the money it needs to cover funeral costs and to maintain their current standard of living.

Life Insurance Calculators: What They Ask

Questions asked by these online tools vary, with some life insurance calculators asking for more information than others--a well-rounded survey may provide greater accuracy and a clearer assessment of your term life insurance needs.

Questions from the Life and Health Insurance Foundation for Education's (LIFE) insurance needs calculator, one of the insurance industry's most inclusive needs assessment surveys, include:

* Final expenses needed upon your death
* Outstanding debts
* Total mortgage remaining
* Funds needed for your children's' college tuition
* Annual income needed by family members upon your death
* Years income is needed
* Current savings and investments
* Retirement savings
* Value of current life insurance policy
* Spouse's annual income
* Years spouse is expected to continue working
* Spouses tax rate

Social Security benefits are not factored into the life insurance calculator.

Life Insurance Calculators: What It All Means

Life insurance calculators usually segments financial needs into several categories. Here are the most common categories, and the needs they cover.

* Immediate Expenses Incurred at Death: Expenses for funeral services typically run between $4,000 and $10,000. Administrative expenses, or probate costs, to handle the affairs of your estate can cost as much as 5% of your family's assets
* Outstanding Debts and Mortgage: Consider auto loans, home equity loans, mortgage, credit cards, and any other debt burden you'd like to lift from your family members' shoulders
* College Expenses: A rough rule of thumb is to figure $25,000 for each child headed to a state college or university, and $75,000 for each child headed to a private college or institution
* Annual Income Needs: Will your spouse work after your death? How much might your spouse earn? How long will your spouse continue working? How much money does your household need to stay solvent? These are questions you should take into consideration when assessing your family's ongoing income needs
* Current Assets: Includes retirement accounts, home equity, personal investments, and checking and savings accounts. However, some life insurance calculators do not consider this information in order to simplify calculations

Life insurance calculators are self-help tools that assess your life insurance and financial needs, and do not constitute professional financial planning. They are best-guess estimates to provide you with an idea of future financial needs and the amount of necessary coverage. When purchasing term life insurance, ask your insurance agent about life insurance calculators.

Whole Life or Term Life Insurance? Considering the Benefits of Both

There are two basic differences between term life insurance and whole life insurance. Term life insurance is pure life insurance coverage, with premiums paid in exchange for death benefits over a specified period of time or term. When making life insurance comparisons, this is the most affordable form of insurance.

Whole life insurance, on the other hand, combines a policy with an investment component. For that reason, whole life insurance is also known as permanent or cash-value insurance. The investments can include, but are not limited to CDs and Treasury bills.

Whole life premiums tend to be expensive because you pay for insurance coverage, as well as the investment portion of the policy. With the excess premiums (the funds that exceed the cost of life insurance) the insurance company establishes an investment known as an accumulation or cash value account. A whole life insurance policy builds value that can be borrowed against; however, any outstanding loans are deducted from the money that beneficiaries receive upon the insured's death.
Whole Life Insurance As an Investment: Pros and Cons

Because of the investment component, many people use permanent life insurance as an investment vehicle for retirement planning. There are benefits to this type of financial plan--mainly in the tax treatment of the cash value account. The funds that accumulate in the account grow tax deferred, so that capital gains and income taxes are postponed till a later date.

However, due to the higher premiums associated with whole life insurance policies, debate swirls over whether it's better to buy term life insurance and invest the funds saved on what a whole life policy would have cost. Money gurus often frown on whole life policies and say it's better to purchase affordable life insurance while you are young and premiums are inexpensive, and invest the difference on your own.
Factors to Consider: Whole Life or Term Life Insurance

1. How much insurance do you need, and can you afford the higher premiums? Determine the amount of life insurance coverage you need, then compare premium costs between term and whole life policies. Buy the policy that most closely meets your needs and that you can afford
2. What are your state and federal tax brackets? Examine your tax brackets--the benefits of the deferral on the accumulation account are only as much as the amount of taxes deferred
3. Can you still buy affordable term life insurance as you age? As you age, you are categorized differently by insurance underwriters and pay higher premiums. Compare the costs of a guaranteed term life policy versus the cost of whole life

If you have a higher tax bracket and have a long time to wait until retirement, a whole life insurance policy may be a good bet for you. Consider your choices carefully when shopping for an affordable life insurance policy.

Even Your Business May Need Life Insurance

You know you need life insurance to provide your family with financial security, but did you know that you might need life insurance for the financial security of your business?

Why Small Businesses Should Consider Life Insurance

Two or three individuals jointly own many businesses--particularly small, family run businesses. If one of the owners should pass away, the heirs may either be unprepared or unwilling to take over the responsibilities of running their share of the company.

It's also possible that most of an owner's net worth is connected to the company. In such a situation, even if the heirs want to keep their share of the business, they may be forced to sell the shares to settle estate taxes or to divide the inheritance among several heirs.

Another possibility to consider--when one business owner passes away, the remaining owners may be faced with the less than ideal prospect of having to share control of the business with new owners.

Buy-Sell Agreements

A buy-sell agreement can provide a solution to these possibilities. An agreement is reached between all of the owners, which stipulates that should any one of them die, the remaining owner or owners have the first right to purchase the others' shares at a preset price.

Fund the Buy-Sell Agreement with Whole Life Insurance

In order to have the funds to do this, whole life insurance policies might be purchased on the life of each owner. The other owners are named as beneficiaries.

When one owner dies, the other partners collect the policy proceeds. The insurance benefit is then used to buy the heirs' share of the business. The heirs get their inheritance and the other owners get to keep control of the small business.

Whole Life Is the Best Way to Fund an Agreement

Because it is not known how long any one of the owners may stay with the business, you should consider a whole life policy, which is meant to provide insurance coverage for a lifetime. A term policy may be the most affordable insurance choice now, but if the term expires and the owners are still active in the business, new policies that are likely to have higher rates would then have to be purchased.

Key Person Insurance

Small businesses are also likely to have one or two individuals who are the driving force behind the company's success. Should that key individual die, life insurance on that person can provide the funds needed to keep the business running until a replacement is found.

Just as with a buy-sell agreement, a whole life policy might be best to ensure that the business always has the funds needed to sustain it. A term policy, unlike a whole life policy, may expire before the needs of the business are met.

Going Online to Get Whole Life Insurance

If you feel your business is vulnerable to either of these situations, speak with a knowledgeable agent. You can get competing whole life insurance quotes and find the best life insurance policy that meets your needs.