
Why Was My Insurance Application Postponed or Rated?
Understanding Why Life Insurance Applications Aren’t Always a Simple Yes or No
Life Insurance Applications should be straightforward—fill out the forms, complete a medical exam, and get approved, right? Not always. Many Canadians find themselves in a frustrating situation where their insurance application is either postponed or comes back with a higher-than-expected premium, known as a rating. Others may experience outright rejection, leading to the dreaded “life insurance denied” outcome.
Understanding why this happens can help you navigate the process and increase your chances of securing insurance in Toronto or anywhere else in Canada. Let’s explore why insurers rate or postpone applications and what you can do about it.
Why Do Insurers Rate or Postpone Applications?
Insurance companies operate on risk assessment. Their job is to evaluate how likely it is that a policyholder will file a claim. To do this, they rely on strict underwriting guidelines, actuarial data, and risk models. If you have certain health conditions, lifestyle factors, or other risk elements, you may find your application postponed, rated, or denied.
The rating will often depend on the severity and stability of the condition. Carriers can adjust the pricing for an increase in risk. What carriers don’t like is “uncertainty” as it’s difficult to know how the condition may evolve over time. This is why they often want a condition to be stable for a year or more before they will even consider a rated offer.
There are also some “lifestyle” situations that can lead to an rating such as aviation or high risk sports. Carriers could also “exclude” certain high risk sports if you have a history of participating.
Let’s break down some of the most common reasons:
1. Pre-Existing Medical Conditions
Certain medical histories make insurers cautious. Some conditions might lead to a rated policy (higher premiums), while others could result in a postponement or outright denial. Common medical reasons for ratings include:
- Obesity or Build Issues – Insurers use build charts to assess weight-to-height ratios. If you fall outside their preferred range, your policy may be rated.
- Sleep Apnea – Untreated or severe sleep apnea can increase risk, leading to higher premiums.
- History of Cancer – Depending on the type and stage, insurers may postpone your application until you’re in remission for a set number of years.
- Heart Disease – A history of heart attacks, high cholesterol, or hypertension can lead to an increased risk rating.
- Crohn’s Disease & Ulcerative Colitis – Chronic digestive diseases can trigger higher premiums, especially if they have led to hospitalizations or surgeries.
- Diabetes – Type 1 and Type 2 diabetes often lead to rated policies due to long-term complications.
- Stroke – A history of strokes or mini-strokes significantly increases risk, leading to higher rates or postponements.
A smoker isn’t technically considered ‘rated,’ but their premiums are much higher than non-smokers. Why? Because actuaries know that smoking decreases life expectancy and increases claim probability. The same logic applies to weight, medical conditions, and other risk factors.
2. Lifestyle and Occupational Risks
It’s not just your health that affects your life insurance policy—your lifestyle and job matter too. Here are some factors that could impact your application:
- Smoking & Substance Use – As mentioned, smokers pay significantly higher premiums, and some insurers may rate or postpone applications for those using recreational drugs.
- Dangerous Occupations – If you’re a firefighter, pilot, or deep-sea diver, your job may be classified as high-risk, leading to higher premiums.
- Extreme Hobbies – Love skydiving, scuba diving, or motorsports? Expect an insurer to rate your policy accordingly.
3. The Importance of Working With a Broker
One key takeaway from this discussion? Not all insurance providers assess risk the same way. Some insurers are more lenient with certain medical conditions than others. For example:
- One insurer may approve an applicant with controlled sleep apnea at standard rates.
- Another insurer may apply a rating, increasing the premiums.
This is why working with a knowledgeable life insurance broker can make all the difference. Brokers have access to multiple carriers and can shop around to find the best policy for your situation. Additionally, they can help present your case in a favorable light by submitting a cover letter that provides context for borderline decisions.
What Can You Do If Your Life Insurance Application Was Rated or Postponed?
If you’ve received a rating or postponement, don’t panic. Here are a few proactive steps to take:
1. Understand the Reason
Request clarification from the insurance company or your broker. Was it due to medical history, lifestyle, or another factor?
2. Improve Your Health Where Possible
If weight, blood pressure, or cholesterol played a role, work on improving these numbers and reapply in the future.
3. Explore Other Insurance Providers
A different insurer may assess your condition more favorably.
4. Consider Specialty Insurance
Some insurers offer guaranteed or simplified issue policies that don’t require medical exams but come with higher premiums and lower coverage amounts.
Final Thoughts
If your insurance application has been postponed or rated, it doesn’t mean all hope is lost. Each life insurance provider assesses risk differently, which is why working with an expert broker is a smart move. By understanding why policies get rated, maintaining good health, and shopping the market, you can increase your chances of securing the coverage you need.
If you’re navigating the world of life insurance in Toronto and want expert guidance, consider speaking to an advisor who can help you find the right policy at the right price.