Denied Whole Life Insurance… What are my options?

Written by: Steven Gibbs | Last Updated on: April 4, 2023
Fact Checked by Jason Herring and Barry Brooksby (licensed insurance experts)

Insurance and Estates, a strategic life insurance provider composed of life insurance professionals, is committed to integrity in our editorial standards and transparency in how we receive compensation from our insurance partners.

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Here at I&E, we’ll often get calls from folks who have just recently had a life insurance application denied.  Now there are a lot or reasons why an individual may be denied a life insurance policy.  Some folks may be denied due to some type of heath issue such as:

  • Cancer,
  • Heart disease, or
  • Diabetes.

While others…

May be denied a policy because of some other “issue”.  An issue which may have nothing to do with one’s health at all.

Some Non-Health Related Reasons for Being Denied Life Insurance

  • Travel history,
  • Driving record,
  • Previous felonies or misdemeanors, or
  • Even a recent chapter 7 bankruptcy!

All of these so called “lifestyle” choices could cause someone to be denied life insurance coverage.  Particularly if they choose to apply for life insurance with the “wrong” insurance company.

Which is why…

The first thing that we want to do when we have an individual call us that has recently been denied insurance coverage is ask them…

“Which insurance company denied your life insurance application?”

We do this first because…

In some situations, an individual who may be considered “uninsurable” by one insurance company may be completely eligible for insurance coverage from another.  A perfect example of this would be:

  • Someone who recently filed for bankruptcy within the past 2 years.
  • Someone who frequently crosses the Southern border into Mexico by land.
  • Someone who uses marijuana for recreational purposes.
  • Someone who uses insulin to treat their diabetes or has been diagnosed with type 1 diabetes.


These are just few very common reasons why someone may be denied life insurance by one insurance company only to be insured later on by another insurance company assuming they didn’t “give up!”  Because the truth is, we could go on and on with 100s of reasons why someone might be declined life insurance coverage by one insurance company yet be approved by another.

That’s why we…

Here at I&E don’t immediately “freak out” when we hear that a new client has been previously denied coverage elsewhere. After all, there’s still a really good chance that they chose to apply with the “wrong” company their first time around.

But what happens to those…

Folks who may have a serious medical condition or have some type of lifestyle choice (i.e.:  dangerous profession, multiple recent felonies, current illicit drug use) which does make them truly “uninsurable”?

In cases like these…

What you’re generally going to find is that if they are over the age of 50 (or 45 in certain circumstances), they may be able to qualify for a “guaranteed issue life insurance policy” which can provide life insurance coverage up to $25,000 or they may be offered what is called an accidental death insurance (ADD) policy which will only provide cover “accidental causes” of death.

And while…

These may be “acceptable” alternatives for those without any other options, what we wanted to talk about today is an “alternative” that most folks don’t actually consider immediately upon being denied a life insurance policy.

Now we have to be honest here…

What we’re about to suggest might not seem to make a whole lot of sense to someone at first.  Particularly, if they were only interested in purchasing a whole life insurance policy for its death benefit.

You see…

If you simply can’t qualify for a traditional whole life insurance policy, it might make sense to consider buying life insurance on someone else in your family instead!

“Say what?”

Yep, you read that right!

Remember we told you that if you’re not totally familiar with all of the benefits of whole life insurance that our “suggestion” might seem a bit odd.  But for those who fully understand what can be accomplished by owning a whole life policy our suggestion of buying one on another member of the family makes sense.

You see…

If you find yourself in a situation where you’re not going to be able to qualify for a traditional life insurance policy, and owning an accidental death policy or a guaranteed issue life insurance policy simply isn’t going meet your needs, well then, your options are definitely going to be limited.

But that doesn’t mean that…

You can’t begin working on a strategy that might be able to allow you to one day be able to become “self-insured”.  And by “self-insured”, we mean having enough money saved so that you no longer need to rely on the death benefit associated with a life insurance policy.


One possible way to become “self-insured” is to play and win the lottery, which is probably not the best strategy which is why we here at I&E prefer to help folks understand how cash value life insurance can be used to create and grow wealth over time. And which would hopefully allow one to become independent of the need for a “death benefit” that they were trying to qualify for by purchasing a life insurance policy in the first place.

The problem is…

That this approach of purchasing whole life for “other” reasons other than just obtaining a life insurance policy with a death benefit isn’t something that is discussed all that much by financial advisors and life insurance agents alike which is why we wanted to take a moment and introduce you to the idea below.

This is because…

Here at I&E, we understand that this “concept” may seem a bit strange especially if you’re not familiar with some of the benefits of owning a cash value whole life insurance policy or the…

Infinite Banking Concept

And rather than go into a ton of details on how it works, we thought it might make a bit more sense to actually list 5 potential benefits of purchasing a whole life insurance policy on another family member if it proves impossible for you yourself to be able to qualify for a policy.

Top 5 Benefits of Owning a Whole Life Insurance Policy [and How Infinite Banking Works]

Now when it comes to owning a whole life policy there are certain “benefits” that will be available to the insured while they are alive that simply won’t be available with other “types” of life insurance products such as term life insurance policies or guaranteed issue life insurance policies.

And since…

These benefits will be available to the insured while they are alive, this means that they will also be available to a family member also.   This is why it may make sense for someone that has been denied life insurance coverage to start thinking about purchasing a whole life insurance policy on another member of their family so that they can gain “access” to the benefits that we’re about to list here for you now.

  1. Whole life insurance as a “savings account”.

One reason why buying cash value how life insurance makes a lot of sense to an individual is because these types of life insurance policies can be used as a safe alternative to “park” your money, other than a traditional savings account which most are currently earning very little interest.

And yes…

There was once a time when money in the bank would actually earn folks a respectable return, but those days seem long gone and don’t seem all that likely to return anytime soon.

Which is why…

For a lot of folks who aren’t necessarily all that interested in investing their money in the stock market and are fearful that the next “housing bubble” is just around the corner, using a whole life insurance policy as a way to “store” one’s cash isn’t such a bad idea.


Considering the fact that if one chooses to use a whole life insurance policy in this manner, they’ll essentially maintain the liquidity of their existing savings account, in addition to significantly increasing the interest earned versus other savings accounts, such as at a local bank.

Now we’ll be the first…

To acknowledge that this particular reason goes against the “conventional wisdom” of many financial advisors out there who will tell you that whole life insurance policies are terrible investments, but we’re not suggesting that you use a whole life policy as an “investment” we’re simply suggesting that you use it as a “savings account”.


Because this advantage has nothing to do with “who” owns the whole life insurance policy within your family, just because you’ve been denied coverage, doesn’t mean that you can have another family member apply for the same kind of cash value whole life insurance policy and still gain access to this financial strategy.

  1. Become your own banker.

Another quality reason why someone might want to consider purchasing cash value whole life insurance for someone else in their family is because these types of life insurance policies can be quite useful for those who have a significant amount of savings combined with debt.

You see…

These folks, whether they realize it or not are in a unique situation where should they decide to “change” their way of thinking, might be able to utilize a financial strategy which is commonly referred to as “infinite banking”.


While we would love to take credit for this idea, the truth is that the Infinite Banking idea was first introduced by Nelson Nash when he discovered that he could use his own whole life insurance policy to accomplish many of his own financial goals.  One of which was to ultimately “become his own banker”.

You see…

By owning a whole life insurance policy that has accrued “cash value”, the owner of such a policy can begin to utilize those funds by taking out loans against the cash value of their own policies.  These loans can be used to make large purchases, such as purchasing a home or vehicle, or perhaps just paying off costly credit card debt.

Only now…

Instead of using creditors to finance these expenditures, owners of a cash value whole life insurance policy can use their “bank” to finance purchases. Then pay your “bank” back, with interest. Essentially, you now are the banker and you use your life insurance as your bank.

Still not sure how this could be beneficial?

No problem, but before you discount just how powerful it can be to eliminate creditors from your life, we would suggest that you take a moment and try to calculate just how much you pay in interest to these creditors each year and then multiple that number times 10 or 20 years.


If that number isn’t eye opening enough, imagine what you could do with that kind of money if each year you held it in some type of savings account earning 3 to 5% tax free!

That’s what we’re talking about here when we talk about becoming your own banker.

  1. Did we say “Savings Account”?   Because if we did, we left out a lot.

Sure, it’s true that cash value whole life insurance can be used as a safe harbor for your money typically earning significantly more that most traditional savings accounts, but that’s not all they can be used for.

You see…

Within whole life insurance, the cash value accumulation doesn’t get reported to the IRS, which means that, this cash value doesn’t need to be included on your asset reports.

And if…

You’re currently a student or you’re helping a finance a child’s education, this also means that this money won’t appear on one’s Free Application for Federal Student Aid or FAFSA application.

This money (Within your cash value whole life insurance policy)…

Is also TOTALLY protected from creditors in MANY states and PARTIALLY protected in SOME.  Which for some folks is all the reason in the world to run out and purchase one of these “types” of life insurance policies!

  1. I’m approved!

Another nice thing to remember is that once your cash value life insurance policy has accumulated cash, you don’t need to worry about loan approvals.

In fact…

Borrowing against your life insurance doesn’t even appear on your credit report!  This is because in essence all you’ve done is “borrowed” money from yourself!

Now if you combine this reason with the fact that the accumulated cash within a cash value whole life insurance policy is protected from creditors in many states, it’s not hard to see why so many folks who owned these types of policies were quite happy with their decisions to purchase them during the last housing crisis!

  1. Make your money go to work!

The beauty of whole life insurance is that it allows the same dollar or dollars to do multiple jobs. One dollar paid into your whole life policy can actually perform many jobs at once:

  • pay the premium,
  • build up cash value,
  • create and increase the death benefit,
  • offer leverage to your cash value through loans, and
  • enable Paid-Up Additions.


mutual life insurance companies are some of the most financially sound places to park your money if we experience another crisis like the internet bubble of 2000 or the housing bubble of 2008.

And with a potential Everything Bubble looming, having a safe haven to store your wealth allows for peace of mind and avoids many sleepless nights.

Now you still…

Might not be convinced, which is fine because at the end of the day, we here at I&E didn’t decide to write this article in an attempt to try and “Sell” you on the idea of purchasing a whole life insurance policy.

We choose write this article so that we could point out to those who have been recently denied a life insurance policy that even though you “might” not be able to qualify for a traditional term or whole life insurance policy, that does not mean that you don’t have any options whatsoever!

What it does mean is…

That unlike super young and healthy individuals who probably won’t have any problem qualifying for a quality life insurance policy, you’re probably going to need the help of an insurance expert that did not start selling insurance six months ago.

The good news is…

That we here an I&E have a ton of experience helping folks qualify for the life insurance and we’re not “afraid” to take on those more challenging cases which may or may not have already been denied coverage elsewhere.

So, what are you waiting for?  Give us a call today and see what we can do for you!

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  • Joseph Frazier
    Joseph Frazier

    Got denied life insurance was wondering any more options

    • Insurance&Estates

      Hi Joseph, thank you for the message. We will reach out to you shortly.

      Best regards,


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