Author Topic: Life Insurance policy declined due to low income?  (Read 1935 times)

redrocker

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Life Insurance policy declined due to low income?
« on: December 20, 2016, 04:17:59 PM »
I applied for a life insurance policy (through Haven, a subsidiary of Mass Mutual). They approved me temporarily for the 20 year $500k policy I applied for. Did the medical exam, questionnaire, etc, and now they're telling me that "due to age and income" the max policy they'll write me is $300k.

I'm 33 and my household income is $40k. WTF does it matter how much money I make if I'm paying their GD premiums?

Anyone else with a low(ish) income have this issue?

Greenly Spirits

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Re: Life Insurance policy declined due to low income?
« Reply #1 on: December 20, 2016, 05:00:58 PM »
I would look elsewhere. A couple years ago, my husband took one out for $500k/20 years and income wasn't a factor. I wonder if that varies by state or if it's a recent change.

terran

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Re: Life Insurance policy declined due to low income?
« Reply #2 on: December 20, 2016, 05:28:59 PM »
I have heard that most companies will only give you a certain multiple of income. I'm a little surprised that it's only 7.5x in this case, but I think basically they don't want you to be worth more dead than alive because that would be risky for them. I would look for an independent agent to help you, and when you first talk with them walk if they push whole life after your initial insistence that you're only interested in term. We had a good experience with an agent we found listed on https://www.term4sale.com/.

redrocker

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Re: Life Insurance policy declined due to low income?
« Reply #3 on: December 20, 2016, 07:40:16 PM »
I did a quick Google search to see if there's a rule of thumb for required income. Only page that we worthy of note was a recommendation to get a policy at 10x income. Irony.

katsiki

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Re: Life Insurance policy declined due to low income?
« Reply #4 on: December 20, 2016, 07:45:03 PM »
Not sure of income requirements but Fidelity was easy to work with.  I did a 20 year term policy for 500K.

Prairie Stash

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Re: Life Insurance policy declined due to low income?
« Reply #5 on: December 21, 2016, 09:28:22 AM »
Why do you want/require such a large policy? Can you get 2 policies from 2 insurers? My wife has a work and private policy, its pretty common here. You can even get laddered policies; 30, 20 10 year terms if you need to.

redrocker

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Re: Life Insurance policy declined due to low income?
« Reply #6 on: December 21, 2016, 12:24:49 PM »
Why do you want/require such a large policy? Can you get 2 policies from 2 insurers? My wife has a work and private policy, its pretty common here. You can even get laddered policies; 30, 20 10 year terms if you need to.

I didn't realize that was a large policy. I've received recommendations to get at least a million or more so I felt like I was already shooting below average.

Two reasons I don't want to combine: simplicity and the apparent fact that price per $100k coverage decreases when you get a larger policy.

But the reason for that amount, high or not, is that's the amount I have in mortgage balances on my primary and two rentals.
« Last Edit: December 21, 2016, 12:38:59 PM by redrocker »

dycker1978

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Re: Life Insurance policy declined due to low income?
« Reply #7 on: December 21, 2016, 12:32:46 PM »
Insurance agents are sales people.  They will recommend huge policies to everyone.  They want to make as much money as they possibly can.  When I purchased my policy, I figured out what I owed, factored in the cost of a funeral, and enough to all me or my spouse to have 6 months off of work, to be able to grieve.  This is the amount I bought.  The agent did not like the fact that we only bought a $350k each policy instead of the $1.3MM each recommended.  But neither my wife or I would want to not ever work again if the other passed.