Posts filed under 'skydiving'
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
If you are planning a trip to the Olympics this summer, it’s time for a life insurance checkup to make sure you are covered for foreign travel, and if you are considering increasing coverage before you go, you need to apply now.
Most life insurance you have in force will cover foreign travel as long as it was either not planned or admitted to at the time of the application. There is an assumption in all life insurance that opportunities will pop up and you should be able to take advantage of them without losing coverage. I used that very assumption last year when I went skydiving for my first and probably last time. The bucket list, you know!
If you are thinking about increasing coverage and are planning to go to the Olympics, you should act now. Make sure you have the policy in force before you go as companies aren’t real crazy about putting a policy in force when you are overseas. From a legal standpoint you are also supposed to accept, sign and pay for the policy while in the the states.
Bottom line. The good news is that there are quite a few companies that really won’t have a problem with you going to Beijing for a week or two (depending on travel warnings due to terror threats, etc). So, whether you are going to the Olympics or on an African safari, don’t wait until you’re packing your bags to decide to increase your life insurance.
March 19th, 2008
I finally got my wife to look the other way while I jumped out of an airplane this year. She’s always so nice about asking me what I want for my birthday, and for the past 5 years I’ve been telling her I wanted to try skydiving and that would be a great present. She steadfastly refused, not wanting to be a party to my smashing demise on an airport runway. So, having paid for it myself, it’s a perfect example to discuss how life insurance companies feel about you taking up risky hobbies after you already have insurance in force.
The whole thing comes down to a simple question. Were you actively planning on doing the activity when you took out the insurance? Hoping to do something at some point in the future is not actively planning. Having a date set to jump out of the airplane is actively planning. If you weren’t actively planning, you’re covered.
This question has been brought up by a number of my private pilot clients. In many cases they were ready to dump life insurance policies that they had taken out prior to becoming a pilot. So my question to them was, “at the time you took the policy out, were you actively planning to start training as a pilot?” If the answer was no, their old policy covered them. They also ask about future changes in their aviation activities. If, down the road, they get an opportunity to take up aerobatics, as long as it wasn’t planned at the time the insurance went in force, they’re good to go and fully covered.
From an insurance company point of view, when they underwrite your policy there is an assumption that people with bad habits will stop them and people without bad habits will pick them up. I have had clients that started smoking after they had insurance in force as a non smoker. They were fully covered even if they died from a smoking related cancer death. It is not uncommon for a recreational scuba diver to take up wreck or cave diving after a while. As long as they didn’t plan on doing wreck or cave diving when they took out a policy, it’s covered.
Bottom line. Insurance companies don’t assume you will remain exactly as you were when they approved your policy. Before you run out and look for new insurance because of a lifestyle change, have your policy reviewed by an independent agent.
August 13th, 2007
The discussion went smoothly. A wife looking for insurance to replace a term policy on her husband that was coming to the end of the guarantee. Good health. A little family history hiccup, but not a big deal. Then I asked about foreign travel and she said, well, yes he does travel. After a little beating around the bush it seems that her husband had become a little bored with retirement and had decided to do contract work….. kind of where ever he might be needed. He was currently in Iraq for 12 months. Wrong time to review his insurance portfolio!!
To all of you husbands/wives who have a husband or wife who is considering changing careers or taking up hobbies, review life insurance while it is still in the considering stage. Once plans are in place and commitments have been made, whatever is coming down the road will impact your life insurance.
A few examples might help clarify this. Let’s say I’ve always thought it would be kind of fun to take up skydiving, but I’ve always kept that in my someday file. If I buy life insurance and they ask me about skydiving, it’s not an issue. I have no set plans on when I might do it so it doesn’t impact my life insurance. If, on the other hand, I am scheduled to start skydiving lessons June 23, 2007, the answer is yes to the dangerous hobby question and it will impact my life insurance rates. Now, a good independent agent can minimize the impact, but it isn’t going to go away.
Like our example above, if I have always thought it would be fun, or exciting, or profitable to go for an extended stay to travel Africa, it doesn’t impact my life insurance if I have not actually started planning and scheduling or making commitments. If, on the other hand, I have started negotiating with a company to help sell water purification systems in Zimbabwe, I have to be honest about my future plans, and yes, it will likely impact my life insurance rates.
I discussed in another blog the fact that some states no longer allow life insurance companies to ask about foreign travel. Personally, I don’t see that stance lasting long. I really don’t see it growing past the 5 or so states that currently have that rule.
That’s not the point though. Review your life insurance with your agent annually. Share your “want to’s” with your agent so they can advise you at the right time. Whether it is foreign travel, skydiving, motorcycle racing or mountain climbing, after you have headed down that road is the wrong time to ask about the impact on your life insurance.
June 13th, 2007
On the way up this weekend I got the chance to talk to two pilots and three professional skydivers. One of them asked me what I do and when I mentioned that I am a life insurance agent, the questions started flying. Can I get it even though I skydive? Why do pilots have to pay so much more? How can I tell if I’m already covered with my current policy?
The bottom line was I told them that while both the pilots and skydivers were taking part in activities that a lot of insurance companies deem dangerous, not all insurance companies take the same view and many independent insurance agents have the experience to advise them in how to maximize their coverage in spite of the downsides in the underwriting.
After promising them all business cards we headed for the door. This was my first experience, a tandem jump with Nick from Mile-Hi-Skydiving in Boulder, CO. Just as I had suspected for all the years I had considered doing this, the first step was absolutely unbelievable. While I’m not sure I will make a habit of it, I would highly recommend everyone experience it at least once. Tell Nick I sent you. Contact info is at www.mile-hi-skydiving.com.
But back to life insurance. While there is no escaping the dreaded extra cost that comes with some hobbies, a good independent life insurance agent can guide you to the lowest possible life insurance quotes.
Then consider this. I don’t know of a private pilot that really believes their demise will occur while flying. After this weekend I can tell you that skydivers feel the same. So say you have a family and you really believe in the need to provide life insurance protection, but you don’t want to bust your budget. Carry two policies!
Carry one term insurance policy where you bite the bullet and pay the extra cost to cover your hobby or profession. Make it a large enough policy to have a meaningful impact on your family’s future, but not so large that it damages your ability to feed your family.
Carry another policy where you exclude aviation activities, thus keeping the cost of that policy very low.
Together they do everything you want. In the event of a death due to your hobby, your family is still left with a substantial amount of life insurance. Any other cause of death would result in the full amount of both policies being paid. Just like staggering your insurance (not putting all of your life insurance in one term length), layering your coverage around an occupation or avocation is an option worthy of study.
March 18th, 2007
