Declined life insurance applications leave most clients befuddled and the average agent not knowing what to do next. Was your life insurance declined for a reason that doesn’t make much sense to you?
I’ve studied this end of the business pretty extensively. I really had to since it is where most of my business comes from. Most of my clients have been declined at least once before they came to me and one set the record for my personal business at having been declined 6 times before we were able to help him get approved.
Most of those who have been declined multiple times are treated that way because their agent doesn’t learn anything from the first experience and keeps throwing it against the wall and hoping it will stick. No pulling medical records to see what might have swayed the underwriter. No review of all the pertinent facts pertaining to the reason for the decline. No cornering the underwriter to find out why it was declined and what might have made a difference. No shopping the case before slapping another application through the system.
Most agents perceive those steps as too much work but if you keep failing for your customer, to me at least, that’s too much work. I’m not saying that all declines can be avoided, but I am saying that most of them can be avoided and easily 75% of declines can be turned into life insurance approvals. Here’s a few steps that I take when someone comes to me in need of success.
1. Find out what company or companies declined to offer coverage. It’s important to know. There aren’t more than 30 or so life insurance companies that will approve even a moderately impaired case. It’s just not in the business model for State Farm or Farm Bureau, or for that matter USAA or New York Life, to aggressively underwrite a type 1 diabetes case or a bipolar disorder life insurance case. Even if an approval is squeaked out of them it will be disproportionately high. Knowing that a decline came from a company who really doesn’t want the business, makes it easier to shop.
2. Find out exactly what the reason for the decline was. Don’t let your agent stop at “declined due to lab results or declined due to information in medical records”. Find out what lab results weren’t normal and get a copy of the labs. Find out what the information was in the medical records and if the underwriter won’t give it to you (they don’t have to), ask them if they can help you out with the date of the entry in your records.
3. Go over all the details and make sure your medical records are factual. Medical records like credit reports are subject to error. Make sure your medical records indicate compliance with your doctor. If you decided to quit taking medication, did your doctor agree? If your doctor told you to follow up on something in six months, did you? If you took some action that your doctor never signed off on, you either need to get a second opinion that supports your position or you need to get used to getting declined. Underwriters consider a doctor’s orders valid unless something supports a change.
4. Have your agent shop it with all of the details. Review the request for quotes before it goes out so you’re both in agreement that you are asking for an underwriting opinion on the facts.
Bottom line. A life insurance decline is a call for a plan of attack if you want to turn it around. Don’t just keep throwing applications at the problem with the expectation of a different outcome unless you truly do your homework.