The Comprehensive Guide On Life Insurance For Pilots
In the past, flying was considered a high-risk activity by the life insurance industry. It was much harder to purchase life insurance as a pilot or other aviation-related profession because of this.
However, the aviation industry improved a lot in the past few decades. Stricter protocols and technological advancements have made flying much safer. Because of this, the process of buying life insurance for pilots has also changed – now, your insurability mostly depends on whether you fly professionally or recreationally.
If you’re a pilot (or planning to become one), then read on to learn about how flying can affect your life insurance rates and insurability.
Does Your Occupation Affect Your Life Insurance Coverage?
There are many factors that affect your life insurance. Your age, health, medical history, and lifestyle are all evaluated by underwriters when you apply for a policy. These factors help the insurance company predict how likely it is that you might die during your policy.
The lower your life expectancy, the risker it is for insurance companies to issue a policy. This results in higher premiums or lower coverage amounts.
People who have extreme hobbies or jobs (like being a pilot) are at higher risk than the average individual. They often have to pay higher premiums to make up for the additional risk associated with insuring them.
How Does Being A Pilot Affect Your Life Insurance Policy?
Pilots applying for life insurance will have to answer a series of questions that describe their flying activities. Alongside your health, these activities are what insurance companies look at to determine your overall “riskiness” as a pilot. Some common questions are:
How often do you fly?
What type of plane do you use?
How much experience do you have?
Do you fly professionally or recreationally?
Though it’s usually easier for pilots to get a policy nowadays, each life insurance company will still have its own set of unique criteria. You should keep in mind that you may be charged higher rates or have exclusion riders in your policy. Generally speaking, pilots who fly smaller planes non-professionally should expect the highest premium rates because of the higher accident rate associated with it.
Depending on how your aviation activities are classified, you may have to pay flat extra fees on top of your regular monthly premium. These fees are often added to life insurance policies of those who have certain health conditions, risky occupations, or dangerous hobbies. Because of concerns around competency and safety, flat extra fees are more common for student pilots and private pilots.
Although this may seem like just another added expense, the alternative is being declined for an insurance policy by your insurance carrier. Increasing the premium rate is one compromise that life insurance companies make to provide pilots with insurance despite their high-risk classification.
Another compromise implemented by life insurance companies is the “aviation exclusion rider”. This policy rider is sometimes required by certain insurance companies for pilots who are applying for a policy. This policy rider lets you enjoy lower premiums, but your beneficiaries will not receive the death benefit (or face value) if you die in a flying accident.
Types Of Pilots
Your life insurance classification is dictated by the type of pilot you are. These classifications are determined during the underwriting process.
Insurance company underwriters look at your age, family history, how frequently you fly, and whether you’re a professional pilot or not. With this information, you are assigned a classification that corresponds to the level of risk that would come with providing you with a policy.
Below is a quick breakdown of life insurance classifications:
Preferred Plus: Preferred plus clients are those who are expected to live long and healthy lives. They receive the lowest policy premiums.
Preferred: Preferred clients are similar to preferred plus clients, except that they might have a few risk factors. For example, people with typically non-urgent chronic illnesses like high cholesterol may still receive a preferred classification. Policy premiums for these clients are affordable but more expensive than preferred plus.
Standard Plus: Clients in this category have average life expectancies and average premium rates.
Standard: Standard clients are those that have an average or below average life expectancy. People in this category should expect higher policy premiums.
Substandard: Anyone with a drastically below-average life expectancy should expect significantly higher policy premiums.
Professionally flying planes is seen as a low-risk activity because of all strict Federal Aviation Administration regulations set in place. For example, you need to have 1,500 hours of experience to earn your professional pilot’s license. This ensures that you have the skill and experience necessary to fly safely.
If you’re a young pilot who works for a commercial airline, you’ll likely enjoy preferred plus life insurance rates – just like other healthy professionals.
That being said, underwriting is still done on a case-to-case basis, and some life insurance companies will be more forgiving than others. Life insurers may charge you differently depending on:
Whether you fly domestically or internationally
How many years of experience you have under your belt
Your overall health
If you’re having a hard time finding an insurance company with fair rates, then consider exploring insurance options provided by aviation unions or other similar labor organizations. It’s highly likely that they’ll offer insurance policies specifically designed for pilots. Some commercial airline companies may also provide group life insurance as an employee benefit.
Private pilots are those who are licensed to fly, but only do so recreationally and not as a job. Pilots who fall under this category might not have it as easy as commercial pilots when it comes to life insurance. This is because private flying is less regulated than professional flying.
If you’re a private pilot, your policy premium may be slightly higher. Alternatively, your insurance company might charge you a flat extra fee.
It’s important to note here that underwriting guidelines are more concerned with where and what you fly. For example, someone who primarily flies bigger planes over flat fields might have a better premium rate than someone who flies small planes around mountainous areas, which is a significantly more dangerous route.
Since many life insurance carriers look at your flying experience as a risk factor, it follows that student pilots will have the hardest time finding affordable life insurance. Student pilots are usually classified as standard or standard plus. You should also expect added flat extra fees.
As a student pilot, keeping yourself in good health is the best thing you can do to reduce your risk level and counter these higher rates.
Does Flying Outside Of Your Job Affect Your Life Insurance Quotes?
It’s common for pilots who fly professionally to also fly in their private time. This can affect your coverage, although it depends on what kind of flying you do and how often you do it.
For example, regularly flying as a stunt or show pilot will affect your pilot insurance rates much more than occasionally flying a helicopter for a private client.
Activities like these may be harder for underwriters to evaluate, and you should be ready to answer a lot of questions. Since flying is a niche hobby, finding an insurance agent who specializes in life insurance for pilots will ensure that you are provided with fair quotations.
Life Insurance Policy Options For Pilots
There is no one-size-fits-all insurance policy that will work for everybody. Let’s go through some common life insurance policies to give you an idea about what to expect when buying life insurance.
Permanent Life Insurance Policies
Permanent policies (also called whole life policies) insure you for the duration of your life. As long as you consistently make your premium payments, your beneficiaries are assured a death benefit payout when you pass away.
The main selling point of whole life insurance is its permanent nature. You will not lose your insurance as long as you continue to make your payments.
Plus, premiums are level throughout the policy life. This means that, if you get the policy before you become a pilot, you will still have that same policy even when you start flying. You will enjoy the same premium rate and coverage throughout your coverage period.
Another unique selling point of permanent life insurance policies is its cash value component. Cash value is a separate savings account that is funded by a portion of your regular premium payments. It gains interest and grows like a regular savings account, and you can eventually withdraw from it too.
One thing to keep in mind is that there are some permanent life insurance policies that do not cover deaths caused by private flying accidents. Make sure to ask your insurance agent or insurance carrier about the exceptions of your insurance type.
Term Life Insurance Policies
Term life insurance only covers you for a set period of time, usually between 15 and 30 years. The main difference between term life insurance and permanent life insurance (other than the duration of the coverage) is that term insurance doesn’t have a cash value.
The main draw of a term life insurance policy is that you can control the length of time you want to be insured. This is great for pilots who are on a budget and only need life insurance coverage for a specific period, like until your children become financially independent or you finish paying off your mortgage. If you’re looking for short life insurance protection that won’t break the bank, then term life insurance is the way to go.
Group Life Insurance Policies
Group life insurance for pilots covers multiple people under one policy. With this type of policy, the policyholder is an entity (usually the employer or a labor organization). You may be able to get insurance coverage through your employer or pilot union if you are a professional pilot.
Group life insurance for pilots is cheaper, more easily accessible to pilots, and usually tailor-fit to their needs. The downsides of group insurance are that you will have the same exact coverage as everyone else (even if different people have different needs) and you will lose your coverage if you ever leave your job. To fill these gaps, most insurance buyers supplement their group policy with individual insurance.
Supplemental Life Insurance Policies
Supplemental life insurance for pilots is purchased in addition to existing life insurance policies. Since many traditional life insurers don’t provide coverage for aviation professionals, supplemental life insurance can fill in the gap.
Life insurance products are great for providing your beneficiaries with a financial safety net when the unthinkable happens. However, the process isn’t as straightforward for those who are in the aviation industry.
Due to the risk associated with flying, pilots might experience higher rates and more comprehensive underwriting processes. You should expect to answer a lot of questions about your flying activities, pay extra fees, and add exclusion riders to your policy. Finding a life insurance company that compromises with your needs will be your best bet at finding affordable life insurance as a pilot.
If you engage in risky activities, finding the perfect life insurance can be difficult. Don’t worry! Wesley Insurance, LLC can advise you on how to find the best insurance policy for your life insurance needs. Call us today to find out what we can do for you!