Personal finance – second opinion

Has your application for insurance cover been rejected? Don’t despair, says Isaiah
Opiyo – there are other options to consider…

SecondOpinionHave you ever had your application for insurance cover rejected after a long spell of underwriting? A rejection of an application for insurance cover can be stressful and confusing, especially if the regret note does not reveal the reasons behind the decision.

Sometimes rejection of an application happens after one has undergone various medical tests, paid for the initial premium and filled in application forms submitted for underwriting. This was the scenario that characterised the insurance market many years ago, when some conditions, such as HIV, were deemed to have a high risk factor and were therefore not insurable. Today with the introduction of competitive insurance products in the market, the rejection of an application need not cause a lot of distress. It simply implies that your perceived risk is beyond the level of risk provided by that particular insurer.

Certainly, you may be rejected by one insurer and accepted by another in the same cover, though at different premium rates. This means that insurance companies have different underwriting guidelines on the level of risks that they can cover.

During the application process the applicant is required to fill in an application form and may even undergo a medical test as directed by the insurer. These procedures help your insurer to examine your pre-existing conditions which may have an effect on the insurance premium. Depending on various factors, such as the amount of cover you require and your age, the insurance company may request that you undergo additional medical tests.

If the pre-existing conditions relating to your medical history, height, weight and occupational hazards do not pose severe risks, the insurance company will usually accept your application and approve your policy. A rejection may imply that your pre-existing conditions have some related risks not covered by that particular insurer. Nevertheless, if your medical check-up reveals adverse health conditions, do not lose hope, for you still have the following options for insurance coverage:

1 Choose products that do not require medical tests
Such products are readily available even though they have high premiums and low sums assured compared to the conventional whole life insurance covers. Other forms of insurance that also do not require medical underwriting such as accidental death cover, accidental disability cover and physical impairment cover will provide you with benefits in case of death or disability resulting from accidents.

2 Explore the Group Cover
If you are employed and your employer provides a group life plan, you could access insurance coverage without being subjected to individual medical underwriting. In group life plans, the insurer relies on the general experience of the whole company in terms of claims and not individual underwriting.

3 Change your lifestyle
Perhaps it is either your health or your lifestyle that makes you uninsurable? You need to address any health or lifestyle concerns that could be your barrier to affordable cover. Losing weight, exercising more and stopping smoking may all reduce your long-term health risks, for example.

4 Window-shop widely for cover
Next, try to apply the second rule of life insurance, which reads: “Shop around and never buy the first policy that is offered to you.” This rule is vital because, just like investors, insurance companies have different risk tolerances.