Underwriting Life Insurance for the Extreme Risk Taker

It may be surprising to know that having a clean bill of health will not necessarily guarantee the best life insurance rates.   If you regularly participate in what insurers classify as “risky” hobbies then be prepared to fork out higher premiums to purchase life insurance.  Any activity considered an extreme sport, such as mountain climbing, hang gliding or scuba diving, could cause your insurance rates to rise.

If it is your unmitigated desire to participate in extreme or risky activities there are some items you should know before purchasing life insurance.  The way insurance companies categorize potential clients is as follows.  First, there are smokers and non-smokers that are generally further broken down into 3 groups consisting of Preferred Plus (offering the lowest premium), Preferred (an average premium) and Standard (the most expensive).  If you engage in activities that an insurance company considers risky then you are probably knocked out of consideration for Preferred Plus or Preferred status.  When medical history or other factors are added into the equation you could be lowered to a level below that of a Standard rating.   From an underwriting standpoint, the insurer views you as having a higher likelihood of premature death.

There are some options you may want to consider that may help lower the price of your insurance.

• Buy your life insurance before you start participating in an extreme sport or risky endeavor.  Once you purchase your policy the rates are locked in for the term of your policy and cannot increase based on changes in your lifestyle.
• You can purchase a policy that excludes coverage for your risky activities.  You won’t have to pay an extra “risk” premium, but you must also realize that if you meet your demise in this activity you will not be covered.
• Shop around for rates from different insurers.  Where one company might refuse to cover you or will only do so at an exorbitant rate another insurer may be more comfortable with your chosen activity and will not be as rigid.  Talk to an agent that specializes in high-risk coverage.
• Another option is to buy a mortgage-life insurance policy.   If you die your mortgage is paid off.  This is a group policy where the bank is the beneficiary and the amount of the benefit would be based on the face amount of your mortgage at the time of application.
• If you must participate in a risky activity then do all you can to educate yourself about safety and licensing regulations.  Becoming an expert will paint a better picture for your prospective insurer.
• Notify your insurance agent if you decide to stop participating in the risky activity.  You may be able to submit evidence to the insurer to have any extra rating removed from your policy.

It is not an option to lie on your application.  Doing so could lead to a future claim being denied.   Know what you are getting into if you are thinking about participating in an extreme activity, it may involve more than just the thrill of the moment, it could cost you more than you’re willing to risk.