For customers, life insurance is about reducing the risk: You get coverage so that your family is financially protected if you die, which removes a certain risk from your life and gives everyone some peace of mind.
For a life insurance provider, however, life insurance is all about taking risks, and in this case the risk is yours. The insurance company accepts that you can die during the coverage period, which would cost them money. Actuaries do their best to make a risk assessment and calculate the probability that you will die prematurely, and then charge you in terms of insurance risk. (More likely to live = lower premiums.) When assessing your chances of survival, insurance companies consider a number of easy-to-understand factors such as age and health, along with the darker concept if you engage in "dangerous activities" that you may have noticed when applying for a term. life insurance.
So what are these activities and how often do you have to participate in them to be considered "risky"? And how does it affect your coverage? Also, if you want to go skydiving and you want a reasonably priced life insurance policy, what should you do?
We ask these questions to the Head of Guaranteed Solutions at Haven Life. Here's what we found out.
In this article:
What do insurers mean by "risky"?
Throughout the insurance industry, there is a broad consensus that certain activities are dangerous. They include (but are not limited to) diving, rock climbing, skydiving and vehicle racing, but each company assesses the risk a little differently. Insurers use a mix of statistics that apply to the entire population (what percentage of mountain climbers die, for example) and also their specific companies' experience of previous claims. If your insurance company has made many payments related to car accidents, they will probably charge racers more for coverage.
Lists of dangerous activities are updated as trends change: 20 years ago, no insurance company would have asked for parkour (which can mean jumping between buildings), but now some do. At Haven Life, the application questions contain a section on "calling" (hobby) which is evaluated every few years. A team of risk specialists keeps an eye on new trends in dangerous sports and in the industry as a whole. Recently, Haven Life added skeleton and toboggan in our bob sled category (yes, there was already a bob category ̵
What do you need to know about risky habits and hobbies?
For insurers, an important question for every risky hobby is how often a potential customer practices it and at what level. When you apply for coverage, you will be asked if you have participated in certain activities in the last three years, or if you plan to do them in the next two. Insurers take into account the specific details. If you like motorcycle racing, they will consider the type of bike you have, the type of racing you do and how often. If you are a professional diver who spends half of their waking hours in deep water, you pay more for life insurance because there are potential risks associated with this hobby. However, if you sometimes dive with a friend in relatively shallow water when you are on holiday, it probably does not affect your insurance premium. There is a reason why honesty is important when applying for life insurance: It can save money.
The second reason is that, frankly, if you are less than honest, there is a chance that you will be caught. (After you die, which is awkward.) Take the example of mountaineering. If you die while climbing, your life insurance company will check if you climbed regularly, when you started doing it and if you told the insurance company about it. If you were a serious climber when you got your insurance, and you told your insurance company, there are no problems (except the fact that you, yes, dead). However, if your insurer finds out that you did not tell them about your habit of peeling mountains without ropes, or that you did not mention that you had planned a trip up El Capitan when you signed up for your insurance, there may be problems with your payment.
The above applies in particular during the "competition period" – the time period immediately after you have received your policy (usually the first two years). If you die during this time, a life insurance company will, of course, check to see if you made any false claims when you signed up for your insurance.
It is worth noting that none of this limits your life or obliges you to know everything about what you will do in the future, even if it sounds like it may. For example, if someone reports limited participation in a dangerous hobby in their application and then dies participating at more risky levels (for example, someone who reported that they only dived to 100 feet and then died in a dive accident below 100 feet), a special investigation team be to evaluate the claim. If they found that the client had been truthful about their previous participation, there would be no reason for misrepresentation and the claim would be paid. Only if they found that the customer had misrepresented their participation before the policy came into force would the claim probably not be paid.
How could my hobbies affect my premiums?
The extent to which participation in a dangerous activity can increase your prizes varies from person to person, but the way you will be charged is pretty standard. If you are, say, an avid helisker, an insurance company can only give you a higher total premium than your less adventurous friends, or they can add what is called a flat extra – an extra fee related to the risky hobby. If a customer has a flat extra, many insurance companies will consider removing it in the future if the customer has stopped the dangerous activity for at least two years and has no plans to return to it in the future.
When do I need to notify my insurer of risky activities?
Life insurance is about protecting your family's future, and when insurers consider you engaging in dangerous activities, they also look ahead: They are primarily concerned about what you will do in the future. If you used to spend every weekend bass jumping but gave it up many years ago when you had children, it will not affect your premium, as long as your time to throw yourself off the cliffs really is earlier.
But what if you had no plans to do anything dangerous when you signed up for your policy, but then you decided to become a professional parachutist? (Hi – it could happen). In that case, perhaps surprisingly, your coverage is unlikely to be affected, not even during the competition period, when all claims are automatically investigated. If you die with a dangerous business and a life insurance company investigates the claim, the investigation aims to determine if you should have known and revealed that you planned to pursue a risky hobby when your insurance was taken out . In other words, if you did not intend to go near an airplane when you signed up for life insurance, but a year later you clicked Top Gun and decided to get your pilot's license, your coverage would not & # 39; t be affected.
So basically this is: When it comes to your life insurance provider, you should do what you want, now and in the future; just be straight with them when you apply for your insurance so that any insurance risks are reported. This way, you can pursue all your hobbies while knowing that the financial risk to your family has been taken on as much as possible.
Our Editorial Policy
Haven Life is a customer-centric life insurance agency that is supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and your general well-being can be refreshingly easy. ). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.
Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.
Haven Life does not have the right to provide tax, legal or investment advice. This material is not intended to be provided and should not be relied upon for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
Haven Term is a term Life Insurance Insurance (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual. Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a simplified Life Insurance Policy Issue (ICC19PCM-SI 0819 in certain states, including NC) issued by C.M. Life Insurance Companies, Enfield, CT 06082. Numbers and functions for insurance and equestrian forms may vary by state and may not be available in all states. Our California license number is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best company as A ++ (Superior; top category 15). The rating is from Aril 1, 2020 and may change. MassMutual has received different ratings from other rating companies.
Haven Life Plus (Plus) is the marketing name of the Plus Rider, which is part of the Haven Term policy and offers access to additional services and benefits free of charge or at a discount. The driver is not available in all states and is subject to change at any time. Neither Haven Life nor MassMutual is responsible for the provision of the benefits and services made available under Plus Rider, which are provided by third party providers (partners). For more information about Haven Life Plus, visit: https://havenlife.com/plus.html