Risks associated with term insurance plans are huge. Your insurance company will pay your family a huge amount of money in case you are no more. In return, you pay your insurance company a very small amount while you are still alive.
Hence life insurance companies follow stringent underwriting process and may decline your term life insurance proposal if they find it to be too risky.
Here is a list of some less-known reasons why your term insurance proposal might be declined.
- Smoking Habits – Do you need to mention this in your term insurance proposal form? Yes, if you are a smoker at the time of applying for a term insurance plan. The insurance company will screen your application and most likely extend you a term life cover with an extra premium.
- Blacklisted Pincode – This is quite rare but it happens when your residential address has a pin code which is blacklisted. Insurance companies may blacklist those pin codes where their past claim experiences are not favourable. In that case, either your term insurance cover will be declined or it will be offered to you only if you fall in a higher income bracket.
- Decline Bucket – It might be possible that you have applied for term insurance from one insurance company and your proposal was declined for some reason. Now you apply afresh with another company thinking that this company might provide you cover. But most likely, your proposal will again be declined as the insurance companies might share the decline bucket list with each other for an easy screening process.
- Risky profession – Term insurance cover is not for all professionals. If your profession involves a life risk, it might be difficult to get a term life insurance cover. Some of the risky professions can be in industries such as aviation, mining, oil exploration, large-scale construction, power line installers and repairers etc. These are some more common reasons why an insurance company might decline to give you term life cover.
- Educational Qualification – Most life insurance companies require graduation as a minimum qualification for extending term life cover to its customers.
- Medical Conditions – If you are suffering from lifestyle illnesses such as diabetes or hypertension then your term insurance proposal is most likely to be declined or be issued with an extra premium. That is why it is advised to buy term insurance at an early age before any of these illnesses kick in.
- Income – Generally, the minimum annual income for applying a term insurance needs to be Rs. 5 lakhs for salaried people. But, the minimum income for self-employed people or business professionals may go to Rs. 10lakh.
Disclaimer: This information is intended for general awareness purposes only and should not be construed as professional financial advice.
If you are planning to protect your family now with a term insurance policy and need any advice, book a call with us and tell your query at www.algatesinsurance.in