If you have ever had life insurance declined there is no doubt in my mind that you have an opinion as to whether that was a fair decision or not. If you were declined life insurance there is a very good chance that the decision is not one that is shared by all companies.
So, was it fair? As much as I would like to say it is unfair to decline a life insurance application, each company has that on its’ list of options every time it reviews a new case. They can award their grand prize, the preferred plus, preferred best, super preferred, or preferred elite rate. Whatever they call it, it’s what all of us would like to be paying. They can rate you with what are called table ratings. Get this! If preferred plus was say, $1000 a year for what you wanted, before they start table rating they change that to a standard rate that would be, for instance, $2000 a year. Then each table is 25% above the standard rate. So a table 2 would be 50% above standard, or $3000 a year.
If they have in their head that your present health has kind of a high perceived mortality risk they might rate you at table 8, 200% above standard, or $8000 a year. At this point you may be wishing they would just decline you but my rule of thumb is that any approval is worth considering, after a second opinion. I would get a second opinion even if you think the high rate that was offered was fair. No two companies underwrite the same. Underwriting guidelines never quite get set in stone and underwriters come and go and change philosophies like the seasons changing.
And the next step beyond table ratings is why we’re here today, declined life insurance. My rule of thumb takes a sharp turn here. I would never accept a decline as the final word on the subject, at least not until the war was over. I would cross that company off my list and probably the agent too, and take what I had learned about the decline and start shopping. The best way to put a decline behind you is to switch directions and go get approved.
The good news is with the decline comes all of the information you and a good agent need to find an approval.
Bottom line. I know this puts me in the minority, but I think life insurance underwriting is almost always fair. Might not be very good, but for that company it is fair. If you want fair and good then you have to find the right company.