Declined life insurance? Here’s what to do next.

According to the Vice President of Sales at Hunter McCorquodale, Michael Taylor, approximately 5 per cent of all life insurance applications are declined in Canada each year. This means to that around 35,000 insurance policies are denied annually. Here’s what to do if your life insurance is declined.

Reasons for Decline

People who hold occupations that are considered high risk or hazardous may be denied life insurance. For example, if an applicant frequently travels to dangerous areas across the globe, such as war-zones or high-risk areas in the Middle East, they may have a very difficult time securing life insurance.

Life insurance may also be declined based on a person’s health history. Insurance applicants can be denied if they have had or have illnesses like cancer, stroke, heart disease, depression, as well as a number of other medical conditions.

What do if Your Life Insurance is Declined

If you’ve been declined for life insurance, you may want to consider applying for either simplified issue coverage or guaranteed issue coverage.

Simple Issue Coverage vs. Guaranteed Issue Coverage

Simple Issue
For simple issue coverage, there is no medical test. However, applicants are asked to answer a short series of health questions. Guaranteed issue coverage, on the other hand, requires no medical tests and no health questions. As such, simplified issued policies are lower in cost than guaranteed issued policies and have higher face amounts. Simplified issue plans also come in term and permanent policies. Simply put, term policies start off lower in cost and expire at the end of the set term. The cost rises with each renewal. Permanent policies, on the other hand, begin higher in cost, but the premiums stay level.

Some simplified issue permanent plans offer applicants the choice to have insurance that covers them for life if the policy is paid in full in 20 years. Canada Protection Plan has a policy that is one such example of this type of plan. While this option allows holders to pay out quickly, it also carries a higher initial premium cost. One advantage of the simplified issue plan is that it offers coverage from day one, so applicants don’t have to wait any length of time before they are covered. However, if the applicant has been declined for insurance in the last two years, he or she may not qualify for immediate pay.

Guaranteed Issue
Guaranteed issue coverage tend to be higher in cost than simplified issue plans, sometimes as much as double the premiums. However, guaranteed issue coverage always comes with a deferred death benefit. That means that if the policyholder dies, typically within the first two policy years by a non-accident death, the insured is covered by the death benefit, which is limited to a return of premium plus interest.


As roughly 5 per cent of life insurance applications are declined in Canada each year, it’s important for denied applicants to research other life insurance options that are available to them. If you’ve been declined, the first step is to determine why your application is declined. While some insurance companies may not release this information to the applicants themselves, they may release it to the insured’s doctor.

Once you find out why your application was denied, contact a licensed insurance broker who is familiar with hard-to-insure clients, and he or she will be able to instruct you of other options available to you. You may qualify for a simplified issue plan or a guaranteed issued plan, depending on your health history and occupation.

Author's Bio: 

I'm a passionate writer, who is deeply involved with financial and medical topics.