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Life and Health


By September 1, 2009No Comments

Do you enjoy scuba diving? How much do you love those flying lessons? Feel like going bungee jumping this weekend? If these questions fill you with a longing to go indulge in your favorite extreme sport, beware. That sport might just affect your Life insurance premiums.

When underwriters review your health, hobbies, and history, they are determining how much risk you pose to the insurance company. The more mortality risk you and your lifestyle present, the higher your premiums will be. It’s important also to consider that the risk you pose to the insurance company isn’t strictly dependent on your current health or medical history. Any risky hobbies (also called avocations) you enjoy on a regular basis will also expose the insurance company to a higher risk of your death and subsequent death benefit payout.

Insurance companies know they’ll sometimes have to pay out death benefits on policyholders who have paid in very little in terms of premium from an unpredictable death caused by an unexpected illness or accident. A dangerous hobby poses a predictable threat of death supported by historical data. This allows the insurance company to quantify the risk and attach a dollar value to it.

Depending on the type of hobbies in which you participate, you might find the underwriter of your insurance policy including an additional premium in order to subjugate the risk your hobby poses. That additional premium allows the insurance company to lessen the financial burden that your added risk creates.

There are many different ways that an insurance company can increase your premiums.

  • Flat Extra Premium: A flat extra premium is a flat dollar amount that is added to your premiums every month. That amount is fixed and included in your premiums for the life of your policy.
  • Table Rating: A table rating is an additional percentage of the premium you’ll be expected to pay each month. Again, this amount is fixed for the life of your policy.
  • Temporary Flat Extra: Like the flat extra premium, the temporary flat extra adds an additional fee to your premium but, in this case, only for a certain period of time. A temporary flat extra might be used for someone who is taking flying lessons or another dangerous activity that has a known end date.

Another option is to accept an exclusion from coverage for deaths caused by or in relation to that hobby. This could allow you to enjoy regular premiums with no additional charges, but does create the unease of having a dangerous sport go uncovered. A Supplemental Accidental Death policy might be your solution.

Be sure to disclose your risky hobby with our insurance agents, so we can help you to determine the best course of action.