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Table of Content
Reason for declining cover 1: Medical history
Decline reason 2: Outside the eligible age range for cover
Reason for decline 3: Occupational restrictions
Declinature Reason 4: Policy not signed in Hong Kong
Decline Reason 5: Financial Circumstances
Reason for declining cover 6: Suspicious motive for taking out insurance.
Reason for Declining Cover 7: No Insurable Interest
Reason for refusal 8: Person with a mental illness
Solution 1: Negotiate with the insurance company and understand the reasons
Solution 2: Take out insurance with another insurance company
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【Insurance declined】Can’t buy insurance even if you have money? 8 reasons explained (plus 2 solutions)
Being declined for insurance is not uncommon in Hong Kong. When an insurance company receives a policy application, it carries out underwriting to analyse and assess the applicant’s risk. If the applicant is considered to be at higher risk, the insurance company may charge an additional premium, impose exclusions, or even decline the application. Today, 10Life shares eight common reasons for an application being declined, as well as the options available to consumers when this happens.
Reason for declining cover 1: Medical history
When applying for insurance, applicants must disclose material facts in utmost good faith, enabling the insurer to assess the risk reasonably. For example, in medical and life insurance, material facts include health conditions and medical history. Medical insurance generally does not cover known pre-existing conditions, and if you already have a critical illness, the insurer has the right to decline coverage. Furthermore, some “minor ailments” such as fatty liver and acid reflux may also become reasons for a life insurance application to be declined.
Decline reason 2: Outside the eligible age range for cover
Some insurance products have age requirements for application, meaning that applicants who do not meet the eligible age criteria cannot apply. For example, although a certain term life insurance policy guarantees renewal up to age 99, it only accepts applications from individuals aged 18 to 60.
This is because term life insurance products are designed primarily to hedge against the life risks faced by the main breadwinner in a family. If the insured person were to pass away unfortunately, their dependants would receive a death benefit, reducing the financial impact of the insured person's death on the family. However, young children are dependants rather than sources of family income, and are therefore excluded from the eligible application age range.
Reason for decline 3: Occupational restrictions
Your occupation has a significant impact on whether life, medical, critical illness and Personal Accident Insurance Plan policies can be successfully underwritten. Taking Personal Accident Insurance Plan as an example, not only are premiums determined by the level of occupational risk, but for people engaged in certain high-risk occupations, such as construction workers, those working at heights and firefighters, some insurers may decline cover outright or exclude death or injuries sustained during work.
Declinature Reason 4: Policy not signed in Hong Kong
Whether for life or general insurance, the policyholder must apply and sign in Hong Kong for the policy to take effect. Please also note that, from 1 September 2016, all new applications for individual long-term policies by Mainland customers must include a Mainland Important Facts Statement—Mainland Residents Purchasing Personal/Life Insurance Policies in Hong Kong, to ensure that they understand the factors and risks they should consider when taking out insurance in Hong Kong.
Decline Reason 5: Financial Circumstances
Some long-term insurance policies, such as whole-of-life critical illness insurance, whole-of-life insurance and investment-linked insurance that require long-term premium payments, may expose customers to liquidity risk. Therefore, insurance companies must conduct a financial needs analysis for customers to assess their needs, financial circumstances, ability and willingness to pay premiums, and other relevant factors. According to the Insurance Authority’s guidelines, in general, insurance companies should not accept applications where there is a mismatch in affordability, such as a customer applying for life insurance beyond their financial means.
Reason for declining cover 6: Suspicious motive for taking out insurance.
If the life insurance amount applied for is too high, or the applicant declares that they are applying for insurance with multiple insurers at the same time, the insurer may require the applicant to provide a reasonable explanation; otherwise, it may refuse to accept the application. In addition, the higher the amount of cover applied for, such as US$10 million, the more stringent the insurer’s underwriting will be.
Reason for Declining Cover 7: No Insurable Interest
Taking life insurance as an example, a policyholder cannot simply choose a stranger to be the insured, because the policyholder has no reasonable grounds to insure against the death of someone with whom they have no interest or connection. In other words, there is no insurable interest (Insurable interest). Relationships recognised by law generally constitute an insurable interest. For example, a policyholder can purchase life insurance for themselves, their spouse or their children. Without an insurable interest, the policy may not take effect.
In addition, in accordance with industry practice, during the policy application stage, insurance companies generally only accept people who have a legal or blood relationship with the policyholder as beneficiaries. However, as modern family relationships become increasingly diverse, some insurance companies, such as HSBC Life, Manulife and Prudential, have expanded the scope of beneficiaries for life insurance to include same-sex partners.
Reason for refusal 8: Person with a mental illness
Insurance companies regard people with mental illnesses as high-risk individuals, particularly those with suicidal or self-harming tendencies. They often encounter difficulties when applying for insurance, especially medical insurance. According to information from the Consumer Council, there have been cases in the past where applicants were refused insurance after informing the insurer that they had consulted a psychiatrist because of mental stress. In fact, before the introduction of the Voluntary Health Insurance Scheme, mental illness was generally excluded from medical insurance coverage.
Solution 1: Negotiate with the insurance company and understand the reasons
If your application is declined, you should first contact the insurance company to enquire about the reason for the refusal and retain the relevant records. If you believe that the insurance company has not handled your case appropriately, you can make a complaint.
Solution 2: Take out insurance with another insurance company
The underwriting criteria and product terms vary between insurance companies. If applicants wish to make enquiries with several insurance companies at the same time, they can seek assistance from an insurance broker (Broker). Unlike an agent (Agent), an insurance broker represents the applicant and can contact multiple insurance companies on the applicant’s behalf. If required, please contact 10Life insurance advisers for professional advice free of charge.
Note: This article was last updated on 11 August 2022
This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies. Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information. If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com
