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Probably one of the most common misconceptions about life insurance and the application process has to do with how a decline from one company will impact another application. Clients often worry about the fact that virtually all life insurance applications ask whether you have been rated or declined for insurance before.

It helps to understand that all life insurance companies, whether you answer the question yes, or if they note negative health information from the MIB, medical information bureau, still underwrite each application on its’ own merits. That is precisely why I never take a decline by one company as the final word. The truth is that one company’s decline very often turns into another company’s approval, often at very good rates.

It doesn’t seem like that ought to happen, but each company sets their own guidelines which are generally in line with a company marketing and risk philosophy. Some companies just stick to the letter of the law as laid down by reinsurance companies. Other companies set their own boundaries based on their capacity for risk retention.

Bottom line. Again and again I say, “don’t take a decline as the final answer”. For many of my clients it’s just a place to start.