Have you ever heard medical doctors say that certain drugs are “gateway” drugs to other more serious and harder drugs?
Well, most insurance companies consider skydiving to be a “dangerous hobby” and a “gateway” to other high-risk hobbies such as rock climbing. Therefore, it can be considered “high-risk life insurance”.
Nevertheless, skydivers need life insurance, and insurance carriers are in the business of providing insurance. Therefore, they need to offer life insurance for skydivers.
In this article we will answer the following questions:
- Why are life insurance companies afraid to insure skydivers?
- What is the “flat extra”?
- How much will my premiums cost?
- How should I structure the coverage?
- What will they ask on the application?
Why are Life Insurance Companies Afraid to Insure Skydivers?
When you are an extreme hobbyist, and the thought of jumping out of an airplane at 12,000 feet going 115 mph makes you jump for joy, it may be a little difficult to see an insurance company’s point of view on skydiving.
On top of that, you add in that most skydivers know how safe their hobby is and practice safety with every jump.
Odds of Dying in a Skydiving Accident
Out of 3.1 million jumps in 2012, the United States Parachute Association recorded 19 fatal skydiving accidents. That works out to a 0.00061% chance of a person dying while skydiving.
The National Center for Health Statistics has it about 1/3 higher at 0.00099%.
Even if we go with the higher number (worse chance), it’s still very low compared to a deadly activity even a crazy thrill-seeker like yourself would NEVER do……driving a car. Did you know you are 16 times more likely to die while driving!?
So then why do the insurance companies want to charge you more in premiums?
- They break everything down by the numbers and “normal” daily living activities such as driving are already factored into standard rates. The increased risk of skydiving and other dangerous hobbies is something extra they have to take into account.
- This won’t seem fair but the mere fact that you skydive also leads them to believe you may be more of a “risk taker” in general. Maybe you are, embrace it!
What is the “flat extra”?
You are going to hear about it, so let’s explain.
Most people applying for insurance will fall into one of the main categories for ratings. These usually include Preferred Plus/Preferred/Regular Plus/Regular. Beyond that are an additional 10 table ratings.
Sometimes a certain occupation or dangerous hobby (like skydiving) doesn’t quite fit into the standard ratings and they’ll choose to add an extra premium amount on top of whatever ratings class your health and age put you in. This is known as a “flat extra”
Think of the flat extra as an annual fee that is applied to each $1,000 of coverage. Let’s say you were applying for a $200,000 policy and the flat extra was $5 for your skydiving. You would pay $5 x 200 =$1,000 as the annual fee.
This extra fee makes insurance companies feel safe about assuming what they perceive to be an additional risk due to your hobby.
Feeling confused? Don’t worry. We can walk you through this personally. We know which companies are most flexible and affordable for our skydiving clients. Contact us to get started.
How Much Will my Premiums Cost as a Skydiver?
When it comes to trying to estimate the costs associated with obtaining a life insurance policy for any given dangerous hobby, you must be aware that you are going to pay rates higher than a person who does not engage in extreme and even life-threatening hobbies. This should be a no-brainer.
Going into the quoting process with this mindset, no life insurance quote will shock you. You will be able to focus more on the actual coverage that you and your family are going to get over how much the policy will cost.
If you’ve only jumped a handful of times in your life and are planning a few more in future, this may not affect your rates at all as it’s more of an occasional thing rather than an actual lifestyle or hobby.
In the event you die from a skydiving accident and didn’t disclose it, your family could be left in a bad spot when they delay/alter/deny paying the claim. This is especially of concern during the first 2 years after a policy is issued, known as the contestability period.
Bottom line: be honest
When you start to get above certain thresholds like 50 or 100 jumps per year, the flat extra amount will increase.
If you are a regular jumper, plan to pay a flat extra of $2.50 to $7.50 per $1,000 of life insurance coverage depending on how often you jump.
These flat extras are always in addition to your regular insurance rate depending on health and age. If you engage in rock climbing, bungee jumping, or other hobbies considered to be dangerous, there may be an additional flat extra imposed beyond the skydiving rates.
Underwriting guidelines from one company to another are constantly changing. The most favorable companies for skydivers today might be different next year. Contact us to discuss the most current and best options for you today.
How Should I Structure the Coverage?
The way we see it, you have 3 general ways to structure your policy as a skydiver.
#1 (most risky but cheapest) You can ask for an exclusion for your skydiving habit.
This means you can forget about all the talk about flat extra as you won’t pay anything more than whatever your normal premium would have been. Should you die from skydiving, your family gets nothing, since you weren’t covered.You are definitely taking a risk here but some coverage is always better than no coverage so I feel obligated to give you all the options.
#2 (good middle ground in cost and coverage) Purchase 2 policies. One policy that covers skydiving and one with an exclusion.
If the flat extra added on for skydiving coverage is too expensive for you then layering 2 policies might be a good compromise. Here is a comparison for a 30-year-old non-smoking male at standard rates on a 20-year term life insurance policy for 500k.
He’ll pay $424 annual premium for the base policy. Let’s say the flat extra for his skydiving is $2.50 per 1k in coverage. This adds $1,250 in premium for a total of $1,674 in premium.
1. He’ll pay $259 in premium for a 250K policy that EXCLUDES skydiving.
2. He’ll pay an additional $625 for the flat extra on a 2nd 250K policy that INCLUDES skydiving for a total of $884.
By splitting the policy in 2, the annual premium drops from $1,674 to $884, over 50% savings!
Let’s be clear here. If he were to die in a skydiving accident, only 1 of the policies (250K) would pay out. If he dies from any other cause both policies pay in full (500k).
#3 (safest and most expensive) Have skydiving included on all your life insurance coverage.
Work with an independent agent that will aggressively shop you behind the scenes to get the best rate with the most skydiving friendly companies. Yes, the flat extras will result in substantially higher overall premiums. But you’ll sleep better at night knowing that no matter what happens, your family will have the full amount of protection that they need.
What Will They Ask on the Application?
These questions will help the insurer determine your premium. Don’t be scared, it’s a good thing!
- How often do you jump?
- What altitude do you typically jump from?
- Do you jump alone or tandem?
- Do you belong to any groups that promote safe skydiving such as the USPA?
- Are you a member of a skydiving club?
In addition to these questions, you will, of course, have the normal insurance application questions pertaining to health history and lifestyle. Your skydiving addiction is just one part of the overall picture.
The secret to getting the lowest rate is placing you in a policy with the company who views you in the most favorable light.
We are one of the rare independent brokers that only sell life insurance so we’ve gotten pretty darn good at it.
If you are ready to get started, please fill out a quote request or always feel free to contact us with any questions. We offer both “traditional” insurance policies as well as life insurance without a medical exam.
We are here to help and will NEVER pressure you in any way.
So gateway dangerous hobby or not, skydiving is one of the most popular hobbies in the extreme sports world.
Thousands of people try it every year, some people even getting married while skydiving in midair. If done correctly, skydiving can be very safe activity to enjoy with friends and family.
Just expect to pay a little more.
Skydiving Trivia: The highest skydive jump ever was performed on October 24, 2014, by Google Senior VP Alan Eustace. At a jump from 138,890 feet, Eustace crushed the previous record of 127,852.4 feet.
He broke the sound barrier and reached a speed of 822 mph, also a record.