A Life Insurance policy is one the most ideal ways to provide financial security for your family or dependents in the case of your unfortunate demise. However there are several factors depending on which one can be denied coverage by an Insurance Company. Here are five of the most common reasons why your Life Insurance application might be turned down-
· Specific health conditions and Illnesses: High-risk life insurance is not something that every insurance company offers so if you do have a health condition, such as cancer or diabetes might get declined for a traditional life insurance policy. Elevated Cholesterol, Lipids and Triglycerides which puts people at higher risks for heart diseases and strokes are also a main reason for denial of an insurance policy. Elevated liver functions are also a major concern for life insurance companies along with diseases like Hepatitis B or C and HIV/AIDS. Weight or more specifically the height-to-weight ratio which is a strong indication of overall health and fitness level is also a main criterion for obtaining a life insurance policy. Being overweight or obese may not be a cause for a decline but it might usually result in a policy with higher premiums.
· Hazardous Occupation: Some professions carry a higher degree of risk and danger than others and this make life insurance companies reluctant to approve policies for people working in what is considered a particularly hazardous occupation. Some occupations that belong to this category are Airline pilots and flight engineers, Logging workers, Fishers and related fishing workers, Construction laborers, , Electrical power-line installers and repairers, Drivers/sales workers and truck drivers and Farmers, ranchers, and other agricultural managers,(this is not an exhaustive list and neither is this list specific to Canara HSBC OBC Life Insurance) It won’t be surprising for any one working in one of these occupations to be denied a life insurance application.
· Hazardous Extra-Curricular Activities: Like hazardous occupations there are also extracurricular activities that are considered hazardous, and carry a higher risk of premature death. Participants of such activities like mountaineering, base jumping, rock climbing and other adventure sports may find it difficult to get life insurance. For example, in the case of scuba divers, most insurance companies will insure them but it depends on the type of diving they do, the amount of times you dive a year, or the place and depth that they usually dive.
· Income Limitations: Life insurance companies have a certain level of economic or income criteria and a person whose income is below that level will be denied a policy. That level might vary between insurance companies and the main reason for this restriction is that it can result in issuing a large number of small policies that produce reduced premium flows. Yet another reason that lower income can impede your approval is that the insurance companies need the policy owner to justify their ability to sustain the cost of insurance cover. This follows the principles of ‘Insurable Interest’. For example if someone wants a 2 crore rupees life insurance policy but has no assets or supporting commensurate income, there is a high probability that he or she won't be approved for coverage.
· Previous Declines on Life Insurance Applications: Insurance at its core is a business of underwriting risk. In a very simplistic model, the premium that one pays for an insurance cover depends largely on probability of claims factored in by the Insurer. It follows logically, that an individual with a history of declined applications is taken on board by an insurer, then the overall risk increases. Having said that, the circumstances and the reasons behind previous application rejects would normally play a significant role in the final decision by the new insurer.
Keep in mind that the list above is a general compilation and not specific to Canara HSBC Oriental Bank of Commerce Life Insurance. Each Life Insurance Company follows their own unique underwriting guidelines and the final decision (to cover a life or not) is based on a multitude of factors based on the company’s risk appetite.
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