Posts filed under 'private pilots'
You know the rates I’m talking about. You see them advertised everywhere and it makes it seem as though life insurance is almost free, simply there for the picking. In the industry those rates are called things like preferred plus, preferred elite, select preferred, or jokingly, Superman rates.
The question really revolves around whether you do, in fact, have to be superman or woman to get those rates? Is perfect health required? Do companies go out of their way once you have applied to find a way to disqualify you? If the truth was really known, would they actually bump Superman out because of his genetic weakness to kryptonite or because he is a private pilot (of sorts)?
OK! Let’s cut to the core of this question. All people do not qualify for those “best rate class” rates. Those who call up with diabetes, a history of depression, or heart disease and get all indignant because they don’t qualify are, well, living in la la land. Life insurance underwriting is to the best of its’ ability a measure of mortality risk. People with health issues and especially health issues with obvious mortality assumptions will be asked to pay a higher rate than those with no health issues.
There are a few health issues that balance in between. High blood pressure is one of those. Most companies will not allow their best rate class if you are treated for high blood pressure. High blood pressure of course has links to heart attacks and stroke. There are a few companies, two that I know of, that will allow their best rate with blood pressure treatment as long as the treatment is working and the blood pressure is well controlled.
Cholesterol is probably a better example as companies seem to be split about 50/50 on cholesterol treatment. About half seem to think it is OK to be treated with good control and the other half think you should pay more because of the cholesterol link to heart disease and heart attacks.
So, the question is “do you have to be in perfect health”? The answer is not cut and dried, but I would say no. We’ve placed a lot of best rate class life insurance on people with less than perfect health. Can you stretch that very far? NO!
Bottom line. Once again the edge for you goes to the independent agent. If you are locked into one company the chances of catching a break is slim to none. Be forthcoming and straightforward about any medications you take and past or present health issues you have and tell your agent that your goal is the best possible rates that you qualify for. Be realistic and you won’t be disappointed.
October 14th, 2008
Oshkosh is wall to wall private pilots this week. It’s a week long fest of vintage planes, shows, and even the much anticipated Martin Jetpack kicking things off with it’s first public flight.
Life insurance will be well represented I’m sure, but before you buy into the best rates coming from those agencies, bring their information home, shop and compare. Just because you are a private pilot doesn’t mean that an agency that specializes in pilots can necessarily find you the best deal. It’s important to remember that your life insurance risk isn’t just measured by one thing, but by a combination of health, family history, hobbies and even foreign travel.
The Pilot Insurance Center is generally well represented in Oshkosh, and to their credit they’ve done a fine job for a thousands of pilots over the years. But even PIC isn’t always the source for the best rates available. A second opinion could put money back in your fuel jar.
Bottom line. Enjoy the show and when you get home do some prudent shopping.
July 29th, 2008
A question that comes up fairly frequently is whether a person who takes up a new hobby, not knitting, but something more daring like flying, skydiving or the like, needs to take out a new life insurance policy in order to be covered.
This is a fair and prudent question because the last thing anyone wants to do is put their family’s future in peril because they took up a dangerous hobby and didn’t check. So, just to put this into context in as dramatic a situation as I could think of, let’s say I’ve just been approved to be an astronaut.
First let’s talk about the situation where someone who already has a dangerous job or hobby wants to take out a new life insurance policy. Generally they will be approved based on their health and then assessed what is called a flat extra. A flat extra is a certain amount per thousand extra above and beyond what a sane person would pay for their life insurance. I heard somewhere, although I’ve never seen this in writing, that astronauts pay $25.00 per thousand flat extra per year. So, if I wanted $1,000,000 worth of insurance it might cost me $3000 a year for the insurance and $25,000 per year for the flat extra to cover being blasted into space.
So, what if I have an application pending for life insurance and have applied for but haven’t been approved yet to be an astronaut? Well, in this case I would have to put on the application that I was earnestly seeking to become an astronaut, and the company would approve it with a flat extra which could be removed if I failed my astronaut test.
Now we’re down to where people get confused. Let’s say I just put my $1,000,000 policy in force and a month later a friend who just won the lottery buys two tickets on the space shuttle (yes I know you can’t do that) and wants me to go. Because I took out the policy with no intent, or even wild dream that I would get to go into space, the policy covers me while I’m ripping off through the wild blue yonder at 26,000 miles per hour. There is no flat extra. All insurance policies assume that there will be changes in the future that weren’t planned, so they accept that risk. If you think about it, it all balances out. People who don’t smoke will start smoking and many who smoke will quit. People who sky dive will quit and some who don’t will start.
The last scenario took place in the incontestability period, the two year period where companies can look back and make sure you weren’t concealing risk and they didn’t overlook any. So, even though it happened exactly as I laid out, the company is justified in investigating the time table that ended up providing me the chance to go into orbit. This two year period only comes into play if I don’t make it back from my trip. If everything checks out, the claim is paid.
One more scenario. I take out my $1,000,000 policy and honestly don’t have any intention of becoming an astronaut. I’m a bean farmer and even though I like roller coasters, I don’t see any logical avenue between bean farming, thrill rides and ever going into space, so I’ve never even considered it. Then, lo and behold, in Bean Farming Monthly is an ad asking for resumes from bean farmers that are willing to cultivate beans on the space station now that the toilet is fixed. I send in my resume and get picked and now I am an astronaut. Again, there was no intent of change of occupation when I took the policy out so the policy covers me fully without a flat extra.
Bottom line. Intent at the time of application is the key to whether you are covered without paying extra for the risk. I had a customer call today who was a student pilot in the 60’s and then gave it up. He took out a policy 8 years ago and correctly answered no to aviation. His financial situation has changed and he now wants to go back and complete his training and get licensed as a private pilot. He wanted to know if his current policy would cover him as a student pilot or if he needed a new policy. His current policy fully covers him because when he took it out he wasn’t actively intending to get back to flying. No need for a new policy.
July 16th, 2008
It is a common belief that a life insurance agent’s offer of an annual review of your policy is nothing more than a ploy to try to get you to buy more insurance. I know from experience with my own clients that many are so sales phobic that their honest belief is that any contact from us, including birthday greetings, is a sales pitch attempt in the making.
In spite of the fact that my clients were never “sold” to start with and in spite of the fact that I tell them I will stay in touch during the life of their policy, at least on an annual basis, I can tell from their reaction that they think I am up to something when I call and ask if any questions have come up or if there is any way I can be of assistance (change of beneficiary, payment plan, etc).
I’m not naive enough to believe that all agents are calling simply out of a desire to be of service, and I won’t tell you that, if asked, I won’t provide up to date quotes and provide a better policy given their current situation or additional insurance if they feel that is a prudent thing to look at. But the annual review or annual service call has importance even if nothing happens.
There are plenty of agents and agencies out there who will gladly sell you life insurance and never talk to you again, so if that is what you want, it’s available. But, just for a minute, let me suggest that there is truly a value added to your product when an agent is willing to stay in touch.
I generally send out a letter to my clients about six weeks before the anniversary of their policy. Attached is a sample. annual-review-sample-letter
This contains information that may prompt questions. Suppose, unlike the sample, the letter explained that you were in the 9th year of a 10 year term. It’s time to give some thought to what happens at the end of the 10th year and possibly will lead to questions about what options are available.
This letter is followed up about 10 days later with a call from me simply asking if they received the letter (if they didn’t, it could be that their address has changed and they forgot to inform me or more importantly the company), if any questions came up after reading the letter (like what is the conversion option?) or if there is any way I can be of assistance. Usually in the 5th year or so of the policy I ask if they are still comfortable with the amount of insurance and the term length.
It is not a rare occasion, even with annual review calls, that a client will kind of forget what they have and the reminder helps remind them of why they bought what they bought. I have a substantial block of private pilot clients and it’s amazing how many will forget that the reason they purchased the policy they did and the reason they purchased it through us, is that it covered their aviation practicies at a fair rate.
I also review each client’s situation annually before calling to see if there are ways to save them money. If, for instance, they were approved initially at a higher rate than expected due to elevated cholesterol on their exam, I bring that up. If they’ve worked on getting their cholesterol down to normal limits, it’s possible in many cases to get a new policy at a lower rate. If someone has indicated that they are trying to quit smoking, I make a note of that because if they do there is substantial money to be saved. For some, an improvement in health or a change in habit may mean that they can now afford a longer term without raising their premium.
Bottom line. Service has earned a bad reputation, probably from unscrupulous agents that want to sell you something new every year whether it is warranted or not. That is called “churning” and is illegal. Don’t be afraid to participate in an annual review. If it feels like a sales call you might want to chastise your agent for that. If it feels like service and value added, that’s exactly what it is.
July 3rd, 2008
Whenever I do an initial interview with a life insurance client we always touch on “avocation” questions, the dangerous hobby thing. In general the life insurance underwriter wants to know if you are actively increasing your mortality experience by having a good time.
I remember my wife grilling me about my own life insurance when I insisted on a sky diving experience for my 54th birthday. “Are you sure you’re covered?” In my case that was easy. My insurance was already in force and at the time I took the policies that I have out, I didn’t have any plans on skydiving. A distant dream maybe. Something from the “bucket list”, but no plans. In that situation, even if you take up skydiving as a regular hobby, you’re covered. The hinge question is really whether you took out the insurance knowing that you were going to take up skydiving.
Now, as for the other 80-100 folks out there that day all suited up and ready to bail out of a perfectly good airplane, they might not have been in the same situation. So what happens if you’re a skydiver and then, say, get married and have kids and feel like you really ought to be owning some life insurance? I know I harp on this a lot, but this is when you had best find an independent agent that is willing to shop it for you. Going through one of the big on line agencies or going through a local auto and home owner’s agent is going to give you a bad experience, guaranteed.
So, two ways to look at this. You can decide that there is nothing dangerous about sky diving and there are companies that will allow an aviation exclusion that includes skydiving. Think this one through carefully. They aren’t going to buy “the dive didn’t kill him, it was the sudden stop”. Also, because all of the companies I found tie the sky diving to an aviation exclusion, you also won’t be covered if you take up flying as a private pilot. You’re still covered if you’re a passenger, just not as pilot in command. Personally and professionally I don’t recommend putting all of your life insurance eggs in that basket. Consider carrying at least some portion of your life insurance with full coverage.
Full coverage as a skydiver means you will pay what is called a “flat extra” charge, an additional amount per thousand dollars of coverage per year. This will be an additional charge added to what your life insurance would cost if you didn’t do “Dangerous things”. The majority of companies charge a flat extra of $2.50 to $3.00 per thousand for recreational sky divers. So, on $100,000 you would pay $250 to $300 extra per year to be covered. One company really tries to paint you into a box with this breakout “If 50 or less jumps per year tentative $3.00 per $1,000 flat extra. If 51-100 jumps per year tentative $5.00 per $1,000 flat extra. If 101-200 jumps per year tentative $7.50 per $1,000. If over 200 jumps per year tentative $10.00 per $1,000 extra”. Essentially the more exposure the higher the cost.
So, it doesn’t hurt all that bad if you need $100,000, but what if you really need $500,000 and that flat extra is going to add $1250 per year. If budget isn’t an issue I say cover yourself completely. If budget is an issue, consider carrying two policies. One policy could have a sky diving exclusion and the other could have full coverage. If you die from anything other than sky diving, the death benefit is $500,000. If you die from the sudden stop, it’s $250,000. It may not be having your cake and eating it too, but your widow won’t be nearly as ticked as if you had completely excluded it.
Scuba diving, comparatively, is a piece of cake. If you are a truly certified recreational diver there are several companies that will hang in there with their best rate as long as you’re not diving below 100′, 130′ with one of them. You also need to resist the temptations of wreck and cave diving. Once you break the barrier into deep, wreck, cave or ice diving, hold on to your flat extra wallet.
Cliff diving? I have no idea. If you’re doing it professionally I suspect the insurance companies will freak out and charge some monstrous flat extra. If you are doing it recreationally at the lake, it will probably come down to how you answer the question on the application that says, “and any other dangerous hobbies?” If you don’t consider it dangerous the answer is no and it shouldn’t be discussed any further. I’ve never seen an application that specifically asks about cliff diving.
Bottom line. If you’re not sure if your hobbies are covered, ask a life insurance agent to review your coverage. It really hinges on when you took out the coverage and when you took up the hobby.
June 11th, 2008
Just as a practical matter the underwriting of private aviation may have to be reviewed. One of the guidelines that most companies have historically used is annual hours flown. Typically a company wants to see annual hours at or above 26.
With the price of all fuel escalating at a ballistic pace, many pilots who have historically flown in the 30-50 hour range annually have been cutting back some. Kind of a choice between putting gas in the car or fuel in the plane. While there may be those underwriters that think that anyone who can afford to fly can certainly afford the fuel, a fair question to them is whether or not they would cut back on driving their car when the price of gas goes over $5 a gallon?
It’s worth noting that treatment of private pilots by most life insurance companies leaves much to be desired, but that with the guidance of an independent agent preferred and preferred plus rates are available in many instances. While not all companies are adamant about the annual hour threshold, most are. Might be time for them to consider, for instance, just how significant the mortality experience change is if the annual hours requirement is cut by a third. I don’t know the answer, but I know that they do.
Bottom line. For many pilots fuel costs have not changed habits much, but for some it’s made flying an economic decision. What I would hate to see is that economic decision spread to whether or not they choose life insurance that covers aviation or not.
June 3rd, 2008
I was having a discussion with a private pilot concerning life insurance one day. This particular pilot had been a client for some time and a few year earlier had suffered something akin to a stroke. The FAA had pulled his license after the incident.
He was calling to let me know that the FAA had just cleared him to fly again so he wanted to get back on track with his goal prior to the health issue of obtaining more life insurance. His logic was that if the FAA considers him well enough to fly an airplane, certainly insurance would agree that his medical risk had substantially improved and would offer him good rates. Ultimately we found a company that would accept the risk and would cover his aviation, but not at the rates he had hoped for. We hope to improve on that in the future, but it was clear that there was not a direct correlation between the FAA opinion and that of life insurance underwriters.
This is an issue that we see in many forms, usually not as clear an argument as this. The truth is that there is no direct correlation between medical opinion and underwriting. While there is certainly weight given to the opinion of the treating doctor, ultimately underwriting is about assessing mortality risk, not short term health.
That is where the rub occurs. How often have I heard from clients that “my doctor said I’m doing just fine” or “the doctor said I have the heart of a person half my age”? Are the doctors lying to their patients? The answer is probably not. Doctor’s treat medical conditions and aren’t in the business of making long term projections. It would be a rare visit to the doctor indeed if you were told that “everything looks just fine and I expect you should live another 23.5 years if we stay on this course of treatment”.
I don’t fault doctors for this. It’s not their job to project you life span. On the other hand, a life insurance underwriter isn’t concerned with your short term health. They are more concerned with, based on mortality experience, assessing the risk based on factors such as how old you were when you had a heart attack and what the course of treatment was and how your current cardiac health might impact your life span.
One other note on life insurance underwriting. I know a lot of people think they make decisions without the medical knowledge they think it takes. The truth is that all insurance companies have a medical director, a physician who reviews all of the more complicated cases. So, as part of the process, the underwriter does obtain a medical opinion just to make sure they’re being fair.
Bottom line. You just can’t connect the dots between your doctor’s opinion and the opinion of a life insurance underwriter. They aren’t looking at it from the same perspective. They don’t focus on the same things. They weren’t born on the same planet. While I have had my fair share of disagreements with underwriters, I have probably had a similar number with doctors.
June 1st, 2008
Whether you fly for the big boys like Net Jets and Executive Jet Management, or some smaller group, there has been a move in the life insurance industry to charge you more than other ATP rated pilots.
I won’t be long winded about this. If you have had that experience, take heart. Not all companies share that desire to pillage your take home pay.
Bottom line. If you are a private pilot or a professional pilot, talk to an independent agent today who knows what companies will give you the best rates, and more importantly, which won’t.
May 24th, 2008
If you want to get a life insurance underwriter’s attention, talk about your history of alcohol or drug abuse. Tell them about your DUI or history of DUI’s. A good independent agent is going to ask about any history of alcohol abuse, treatment for alcohol or drug abuse and any dui’s you may have had. Is he going too far? Let’s be honest! These issues, depending on when they happened and how severe the problem was or is, can have a definite effect on mortality.
For those who choose to take the route of not answering the questions honestly, a word of caution. If you are still drinking, in all likelihood your liver function tests will tell the tale. If they come back elevated, the underwriter will ask for an alcohol test to be run. Called a CDT, it is very sensitive and very accurate in bringing heavy drinking, alcohol abuse, to light. A positive CDT is an automatic decline.
If you have changed your ways and no longer drink, or at least don’t drink heavily, alcohol abuse is still likely to be documented in your medical records and certainly DUI’s will show up in a motor vehicle report. Yes, they really check all of that!!
And of course DUI speaks for itself. Life insurance companies aren’t prone to leniency when it comes to insuring people who may kill themselves or end up in jail. There are a few companies that will forgive one indiscretion if it isn’t part of a lifestyle pattern. With them you may only need to wait a year before decent rates are available. Unless you fly airplanes. They really don’t like the idea of someone who drinks and drives and is a private pilot.
Now for the light at the end of the tunnel. Time does heal. Just like traffic violations and your auto insurance, the further you are from the last incident, the more you are forgiven and the better the chances of locking in good rates. So, given time, most companies will allow that DUI to melt away. Do it more than once and it won’t melt near as fast. Depending on circumstances, multiple DUI’s can put a cork in the life insurance bottle permanently.
Bottom line. Life insurance underwriters are concerned with health risks, but they also take lifestyle risks very seriously. Don’t drink and drive is a good slogan for staying alive and for getting the best rates life insurance has to offer.
April 2nd, 2008
I’ve often discussed the fact that out of the nearly 2000 companies that purport to be in the life insurance business, there are only a handful, maybe 2% that are serious about working to get you the best deal. When you throw in health issues of any consequence that probably drops to 1%.
The stock answer from the other 98% if you have had a heart attack, you have diabetes, you’ve had cancer of any type at anytime in your life, you suffer from depression or maybe bipolar disorder, or if you are a private pilot, is NO! Read their lips. You are declined. They don’t want your business. You are too risky for them. They don’t want to hear about any mitigating circumstances. Go away!
I guess what needs to be said, for the sake of all of the people that have been abused by the majority of companies, is that the other 2% are easy to find through an independent agent. It is amazing the number of cases I have seen go from a decline with one or more of the 98%, to better than standard rates and even as good as preferred plus rates.
So, what is the difference? How can two companies have such a different opinion of the same risk? It is unfortunately just a fact that the majority of companies don’t want to take the time to accurately assess the risk and they would really prefer not to have anything but perfectly healthy clients on the books.
Bottom line. If you’ve been told no, get a second opinion. Google the reason they gave you for the decline and life insurance. For instance, “bipolar disorder life insurance”, and find an independent agent who knows how to get the job done.
March 13th, 2008
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