Here is a link to a thread on Life Insurance we had on this a while ago ---
http://thedecostop.com/forums/showth...Life+Insurance
also here is a piece that Joel Silverstein wrote on the topic (Joel used to sell high end policies - the ones the 1% buy and knows the process) ............
Divers purchasing life insurance pose an interesting risk problems to insurance companies. Most carriers are a little ignorant to diving information and base most of their decisions on data from the 1980s. Keep in mind that you are going to ask someone else to take on a financial risk for your recreation. You are not in the buyers seat here you are in the "please" seat.
Here's how to go about it.
Life Insurance
1. Expect to pay a higher than normal premium. This is called a Flat Rating or an Avocation Risk Rating.
2. Make sure you clearly understand what your diving is. Not what you think it might be in the future. They only care about NOW and in the past 12 months.
For example the Avocation Form will ask about your diving experience. If you are a certified diver mostly doing classic no-stop diving then the answer is Recreational Diving no more than 130 fsw depth. Forget about the "practicing part". The insurance companies do NOT like cave diving or wreck diving. But if you did it in the past 12 months you must disclose it. If you have not forget it. Disclose all of your proper certifications.
3. When you apply for the coverage do it with a major carrier. Transamerica, Northwestern Mutual, Equitable, NY Life etc. there are also some smaller A rated companies that do nice work as well. Make sure you meet the financial requirements. Don't apply for too little or too much.
4. Term policies are a loser for the insurance company if they have to issue a premium rating -- heres why.
Term is rental coverage. Most companies "sell off" their block of term insurance to another company called a reinsurer. As such they have no incentive to take on a risk for little premium. Statistically all term policies are cancelled or replaced in the first 10 years of having them. When you apply for the coverage look at a whole life, universal or variable life policy. This gives you some leverage when the final premium rating comes back for delivery.
5. If you answer all the questions on the application properly and honestly the underwriting process will take about 4-6 weeks before you are offered a policy. When the policy comes in (if approved) it will have a base premium (cost per thousand) and then a flat rating (additional cost per thousand) the flat rating earns no interest in the policy its just for added risk. Usually once the policy comes down you can "negotiate" the flat rating. They will offer say a $6 per thousand rating and you can usually get it knocked down to $4 possibly $3 but not much less than that.
Remember you are applying for coverage. You don't get to own it till after they make the offer and you accept the offer. However when you apply give the agent a check for the first premium as a "pre-paid" application if they will take it. Some companies will automatically only take a non-prepaid application when they know it will be "rated."
You cannot get an exclusion. They will not allow you to have the coverage and "exclude diving" The widows / widowers will invariably sue the insurance company if there was an exclusion so they just don't do it.
6. If you presently have ANY term life insurance that is in-force that does not have a rating -- DO NOT replace it. Most have a conversion feature to convert to a permanent form of coverage. Do that right away. That is the most valuable coverage you have since they cant take it away once its in force.
7. Once you have the policy (if issued) set it up so that it's automatically paid for when the premium comes due. This is important so that the policy has no possibility of lapsing. Once you lapse a policy it may be difficult to get reinstated.
8. Lying. Sure you can apply for coverage and lie. If you do just make sure that you don't die for 2 years. Also make sure your agent is not your best buddy who knows you dive. Also make sure that your wife/ husband knows you lied so that she / he has no expectations of getting any money should you buy the farm. Essentially don't do it.9. If you are employed by a big company that has optional life insurance coverage that you can purchase via payroll deduction go get it. If there is any guaranteed issue coverage there get it. Regardless of how small. If it has a conversion feature to a personal policy convert it before you leave that job.
10. Life insurance is pennies for dollars. So even if you are paying $10, 15, or $20 per thousand in premiums who cares. Buy what you can afford. It's always better to have some than none. It's what you need to be responsible. Unless you have such significant wealth that you don't need the coverage then in that case delete this post.
Disability Coverage.
Disability Polices may be more difficult to get. However they will do the rating process the same as on life insurance. Policies come in a few types.
Group Disability (offered through your job possibly)
Individual Policies ( these actually pay)
Individual policies from major companies have clauses in there that are designed to replace income if you are unable to do the duties of your primary occupation or if you can't do the duties of any occupation. This is what makes them expensive but valuable.
Coverage is based on your provable income with a payroll history. The financial underwriting on these is more critical than on life insurance. the reason is that many policies will pay replacement income through age 65 which can be a huge amount of money when replacing a 100k income if you are 40.
There are only a few top players in the Disability market. Northwestern Mutual, MONY, Equitable, Unum etc.
If you can underwrite the life policy at the same time with the same carrier for the Disability then at least they are working with the same data.
If you have a group policy at work .. GREAT -- but it probably only pays for 5 years. See if there is a conversion feature to an individual policy. You also cannot double up on coverage. Meaning if you have a group policy that replaces 80% of your income you cannot put an individual policy on top. It would cause malingering and the companies don't cover that.
Accident policies for the most part are useless because the clauses are so restrictive. Expect that a good disability policy will cost a few thousand a year before premium ratings for avocations.
Some other tips.
If you get a policy that has a premium rating on it today because of your diving and then you take a year or two off from diving you can go back and ask for "reconsideration" to have the rating removed..... if you go back to diving a few years later they cannot come back and re-rate the policy.
Some other avenues. Savings Bank Life Insurance is usually a small policy, under $100k and may not ask diving questions. If they dont ask they dont care. The pricing is decent. Check with your local savings bank.
Don't ask for a QUOTE a quote means nothing without underwriting.
Don't put in applications all over the place. All the companies subscribe to the MIB Medical Information Bureau which lists applicants and if they have applied and been rated or declined. Also many of the companies will re-insure with the same companies. If you have an application into 3 companies that use the same reinsurer its quite possible they will all decline you because they are thinking you are going to be over insured if you accepted all the policies. Shop carefully with a professional agent and they can put you in the right market to get the coverage you need.
FWIW. I'm sitting with 1.5 million of life coverage 1/2 of it does not have diving ratings. They were purchased in the early 80s. They are self sufficient now and don't require premiums to be paid now. The rest has some ratings but they were negotiated hard. I have disability coverage for about $3k a month worth that was purchased long ago before diving. I cannot get disability coverage today because of diving.
<update> I have a new policy in underwriting now for another million. The first offer on premium was $14,500 annual. We declined that carrier and went to another one who says they will take it for $7500. We are still in underwriting for about 4 mos.
<update> new carrier came in at $9500 so i only took 1/2 of it --
My info above is very accurate. I spent 12 years in the business in NY during the 80s and early 90s and understand the underwriting process very well. Go find yourself a good professional successful agent who writes a LOT of insurance an they can help you.
I hope this helps you.
Cheers
Joel Silverstein
