Being denied life insurance doesn’t mean every insurer and product will decline you. However, it’s a good idea to find out why you were denied before applying elsewhere so you don’t waste your time.
To explain what a decline means and how to approach the next application, our editorial team reviewed the Financial Consumer Agency of Canada’s insurance-application guide, MIB’s Canadian consumer-file guidance, FCAC’s life insurance guide, and FCAC’s guide to optional mortgage insurance.
Can You Get Life Insurance After Being Denied Coverage?
Life insurance can be available even after a denial of coverage. First, what type of adverse decision did you receive? Was it a decline or a postponement? Did your rates increase or your coverage decrease? Was it an acceptance but with an exclusion? Identify why you received the adverse decision, correct any incorrect information, and apply for insurance that fits the situation, not just apply to several to see what happens.
| Decision | What it usually means | Useful next step |
|---|---|---|
| Rated offer | Coverage is offered at a higher premium. | Compare the basis of its rating, and the overall cost, with other viable alternatives. |
| Modified offer | Amount, term or a policy condition differs from the request | Also good idea to ask what changed, and if it’s temporary or a contractual limitation. |
| Postponement | The insurer wants time or more stable evidence. | Asking about future events or timescales that would trigger a reevaluation of the decision is a positive next step. |
| Decline | This means that the particular insurer does not want to provide the type of insurance that was applied for at this time. | Before moving on to your next application, make sure you’ve identified why. |
Why A Life Insurance Application May Be Declined
Insurers determine who to cover by looking at various factors that help them understand the likelihood and timing of a claim. FCAC points out that, depending on a product’s rules and the jurisdiction, insurers can use factors like Age, sex, medical history, previous claims, and the amount of insurance applied for. Tobacco, alcohol, drug history; occupation, driving record, travel. Participation in risky/dangerous hobbies, other insurance.
| Possible issue | Evidence that can change the assessment |
|---|---|
| New diagnosis, test or treatment | Completed investigations, specialist report, stability and follow-up |
| Smoking or substance history | Evidence that can change the assessment includes the insurer’s required period of change; accurate dates; treatment records. |
| Hazardous work or activity | Duties, frequency, safety training, location and whether participation has ended |
| Driving or legal history | Current abstract, offence details and elapsed time. |
| Application inconsistency | Acceptable proof to revise the evaluation is medical documents, an alteration letter, and a description of what happened. |
| Coverage amount | A needs calculation supporting the requested benefit |
For example, there’s a difference between you having a particular disease and having a family member with it, and between having one with a condition that’s well controlled versus one that was recently diagnosed or unstable. If you’re wondering why an insurer declined to issue a policy, don’t assume the reason. Ask for specifics on what led to the decision.
What To Do After A Life Insurance Decline
1. Get The Decision And Reason In Writing
Don’t settle for a brief explanation from a salesperson about why you weren’t approved. Keep a copy of the letter of decision and application. Determine whether it’s a postponement or decline, what medical information drove the decision, whether they’ll release that information to your physician, and what information could lead them to reconsider.
2. Check The Underlying Evidence
Review the application, preferably while details are fresh. Call the doctor’s office or clinic if the medical evidence contains errors. Do not change the health records if the information is accurate, even if it adversely affected underwriting. Correct any honest mistakes and send the insurer the supporting evidence it asked for.
Read More: See How Health Records Affect Life Insurance Underwriting
3. Request And Review Your MIB Consumer File
If you have applied for individually underwritten life or health insurance from a servicing member insurance company in the past seven years and information was reported, you may have a file in its possession. MIB notes that no member can make coverage decisions based on that consumer-file information alone; additional investigation is required. Canadian consumers are entitled to a free copy of your MIB consumer file once a year, and you can request changes if the information isn’t complete and/or accurate.
4. Decide Between Correction, Reconsideration And Waiting
Ask for reconsideration if the original decision was made in error or if relevant information was missing when it was made. Ask for review based on some specific criteria such as a certain amount of stability, completion of an investigation, etc. If unstable or changing measurements, incomplete testing, recent medical care, or a required recovery or stability period means the applicant can’t be judged fairly today, wait. Be careful about calling a review of an underwriting decision an appeal. Many insurers have no appeal process for underwriting decisions.
5. Target The Next Application
Tell a licensed agent why the previous coverage was declined and provide supporting documentation. Ask them which insurers or types of policies fit the issue and if there is a way to do an informal check before applying. Don’t hide previous declines. Answer all questions accurately, as written, relating to declines, ratings, postponements and medical information.
Read More: Review How Life Insurance Underwriting Works in Canada
Coverage Options After A Decline
| Option | Underwriting | Trade-off to check |
|---|---|---|
| Fully underwritten life | Thorough documentation of medical and lifestyle issues, possibly including a physical. | Usually broader choice, but approval and price depend on the case |
| Simplified issue | Medical exams usually not required. Fewer health-related questions asked. | Trade-off to check: some options could result in higher costs. Others could mean less coverage or lower maximums. A yes answer can still make you ineligible. |
| Guaranteed issue | There are no medical questions if you are eligible according to the stated requirements. | Low limits; age or residency restrictions; graded benefits or waiting periods, consider trade-offs when evaluating insurance products. |
| Group life | Coverage from your employer or association (basic coverage only) may have limited evidence requirements. | Trade-off to check: total amount of insurance and its portability, or whether it continues when membership ends. |
| Mortgage life | Eligibility for insurance and claim review is dependent upon the terms of the certificate. | The beneficiary is the lender, and typically, the benefit will decline as the mortgage balance declines, which is a trade-off to consider. |
No-medical, simplified, and guaranteed issue coverage are not synonymous; they are different options. Consider all aspects of the coverage, including specific questions, amount, premium, exclusions, waiting periods, and the first-year death benefit. The most convenient insurance may not meet your needs. Ask yourself if you need the amount of coverage, if you’ll get it when you need it, and who will receive the money.
Mortgage life insurance is never required. FCAC reminds consumers that the coverage doesn’t pay the family the amount they borrowed; it pays the bank the remaining amount owed. This type of insurance decreases over time as you pay off your mortgage and isn’t available to everyone.
Read More: Review Life Insurance Options for Higher-Risk Applicants
Read More: Explore No-Medical Life Insurance Options
How To Compare A New Life Insurance Offer
- Make sure you know who will receive the benefit, the length of the term and the benefit itself.
- When comparing offers, make sure you’re comparing the same length of term and the same death benefit amount.
- A lower-cost approval that’s for less coverage is not better.
- Some rates are temporary while others are permanent.
- Read your contract to see if there’s a difference in premium. Don’t rely on plan names; read up on waiting periods, graded benefits, renewability, future premium changes, conversion options and exclusions.
- Keep a copy of your application, and check everything over during the review period to make sure everything in the issued policy matches what you applied for.