Thrilling adventures that'll freak out your life insurance company
You may love the adrenaline rush that goes along with taking part in high-risk sports, such as hang gliding and deep sea diving, but you’ll pay a price for your daring when you want to buy life insurance.
Your hobby can look like bad business to a life insurer that spends all day measuring risk among applicants. No company wants to issue a policy if its underwriters foresee a big payout in a short time frame. Because some recreational activities are classified as "hazardous avocations" by insurers, it's quite possible that your adrenaline-driven hobbies will lead to higher life insurance quotes. Cautious companies may decline coverage altogether if they perceive you as reckless.
Life insurance companies view dangerous activities as thrill seeking, says Loretta Worters, spokesperson for the Insurance Information Institute. Telling your insurance agent that you skydive or climb mountains may raise red flags. If you are a pilot, your insurer may want to know how many hours you fly each year and the type of aircraft you use. If you are engaged in several activities that could put your life at risk, "they may find you are too risky to take on."
Mixed feelings about extreme sports
You’re doing what?!
Jack Dewald, who specializes in providing insurance in high-risk situations, says there are some inherently dangerous pastimes that may lead your insurer to charge you extra or, in rare cases, decline your application. Here are several hobbies guaranteed to raise an underwriter's eyebrows:
Deep sea diving: Most insurers will take on scuba divers without question, unless they routinely dive below depths of 75 feet, Dewald says. Deep diving increases the chances that something will go wrong with your gear or that you will have trouble surfacing.
Hang gliding: Hang gliding fulfills the human fantasy of flight. However desirable this sport may be, it also poses considerable risk to life and limb. If you must soar with the birds, be prepared for your life insurance rates to soar along with you.
High-altitude climbing: If you routinely ascend to high elevations, it may unnerve your insurance provider. Make sure that this is a hobby that is worth the cost--and the risk.
Anything extreme: "Extreme sports" is the buzzword given to activities most of us are too timid--or perhaps too smart--to try. People have different ideas about what an extreme sport is. If your hobby is high-velocity or high-impact, you could face an added charge from your life insurance company.
Racing: It doesn't matter if it's a stock car, a dragster, a dirt bike or a Formula One racecar; racing cars is dangerous. Prepare to be charged for taking part.
Doctors often have mixed feelings about "extreme" sports that involve high speeds or the potential for catastrophic injuries. On one hand, they don't want their patients are taking part in activities that could shorten their lives or leave them physically impaired. On the other, they know that such sports often push athletes to train harder and achieve high levels of physical fitness.
John M. Martinez, a sports medicine doctor in San Diego, Calif., has served as a member of the sports medicine staff at the Hawaiian Ironman Triathlon World Championship since 1999. He says the drive to surf, skydive, bungee jump and engage in full-contact martial arts often outweighs the fear of injury. Once hurt, these extreme athletes are impatient to return to their sports and struggle to balance the need for thrills with their bodies' need to heal.
A sports medicine practice can resemble a battlefield. Among participants in mixed martial arts, which incorporates a wide variety of fighting techniques, "we see a lot of knee injuries, concussions," Martinez says. "We see some shoulder, upper extremity injuries." Even so, convincing someone who has been hurt to slow down or give up the sport isn't easy. "It's always a tough conversation."
Hurting all over and loving it
Martinez, who has found time to become a triathlete, a cyclist, and a runner, understands the drive to push yourself to the limit.
"You have a patient who is out there being active, doing something they enjoy," he says. "We had a 60-something gentleman last week with a thigh contusion because he was sparring with a 30-something" in mixed martial arts. "He got a huge bruise it will take a long time to recover from. On the other hand, he is in good shape. He looks like he is 45.
"There are some people who definitely have this thrill gene," he continues. "I have had some pretty bad cases that I have involved paralysis and serious injuries. I am sure those athletes regretted what happened to them. Hindsight always is 20/20. You can never hit the rewind button on life."
Biking and running dangerous but won't affect life insurance quotes
Not all caregivers worry about the dangers of extreme sports. They point out that most people sustain sports injuries while engaged in common activities that wouldn't cause an insurance underwriter to think twice about approving a life insurance policy. Andrew Pritikan, a physical therapist in Santa Monica, Calif., notes that running is far more hazardous than most extreme sports, in terms of the volume of injuries.
A 1998 study by the U.S. Consumer Product Safety Commission found that the most common sports injuries among baby boomers, those Americans born between the end of World War II and the early 1960s, resulted from bicycling. Next in line were basketball and softball, running and exercising, skiing and weightlifting.
Poor training causes injuries
Dan Lamar, an orthopedic surgeon and sports medicine specialist in Sarasota, Fla., says you are more likely to be injured because of poor training than because of the sport you choose. For example, a mountain climber can scale steep cliff walls and remain reasonably safe, if he or she has good conditioning and the proper equipment. In contrast, someone who is out of shape and can incur a severe knee or ankle injury simply by stepping onto a basketball court.
"You have to choose something within your ability and involve yourself at a level that is appropriate to your health," Lamar says. "We are born with great flexibility. Ultimately, we lose it. The elastic fibers of our soft tissues start to dry out. The tendency is toward rigidity. You want to maintain your flexibility as long as you can."
Many insurers will accommodate your need to take part in risky sports, if you are willing to pay a surcharge to cover the added risk, says Jack Dewald, president and owner of Agency Services, Inc., a life and health insurance brokerage in Memphis, Tenn. Typically, the annual premium surcharge can vary from $2 to $10 per $1,000 of policy value, depending on the perceived risk, he says.
Fess up about your risky activities
You may be tempted to save money by hiding or downplaying your dangerous hobby to your agent. After all, once you have a life insurance policy in place, your insurer can't increase your premiums until renewal time. Companies also are unable to cancel your policy after a "contestability period," usually lasting two years. However, if fraudulent statements are discovered on your application during those two years, your insurer will have the right to drop your coverage altogether.
When you lie on your life insurance application form, you are putting your beneficiaries at risk, says Marvin H. Feldman, president and CEO of the Life and Health Insurance Foundation for Education (LIFE), a nonprofit organization that helps consumers make sound insurance decisions.
Feldman explains that if you die and your insurer learns that you failed to report a hazardous avocation, such as auto racing, the company has the right to adjust the payout to cover the cost of the higher premiums you should have been paying all along. If it chooses, another option is to simply deny the claim.
"If you knowingly have lied, you have committed fraud," he says. "We always recommend to people to make sure you divulge as much info as possible so you don't have problem down the road."