Although the combination of affordable life insurance and private pilots has never been the norm across the scope of all life insurance companies, there hasn’t been a time in the last decade, almost two, where the match couldn’t be made with the right agent using the right company.
The goal has always been to avoid the dreaded flat extra charge, an extra charge that companies add to the base cost of insurance to help cover what they see as a perceived higher risk. A flat extra would be something like an extra charge of $2.50 per thousand per year, so if the cost of insurance was $1000 a year for $1 million of life insurance, the flat extra would be $2500 a year making the total cost of insurance $3500. So, unless you are only purchasing $100,000 or so of life insurance, a flat extra charge can be the difference between having full aviation coverage or taking an aviation exclusion just because of budget reasons.
The most common reasons for the average private pilot to pay a flat extra would be
1. Not enough experience as pilot in command. Most companies require at least 100 hours.
2. Not keeping their proficiency up by flying regularly. Most companies require a minimum of 26 hours annually.
3. Being a student pilot, which can be seen as a combination of 1 and 2.
4. Although more commercial than private pilots, flight instructors take a hit from most companies.
5. Flying too many hours can also be a problem. A private pilot flying over 250 hours annually is construed by many companies as being over exposed to what otherwise would be seen as a reasonable risk.
Then there are the not so common but easier to understand reasons for flat extras. Bush pilots in Alaska are a good example. When their normal airstrip is dirt on a good day and a glacier or sand bar in a river on the other days, the risk is definitely higher and most companies, if they will offer insurance at all, will add $5 per thousand or more. Pilots who fly aerobatically are another understandable higher risk as are (again going commercial) crop dusters or glider tow planes pilots.
Just like impaired risk life insurance, life insurance for private pilots is only given a fair shake by 1% or less of life insurance companies. The other 99% will only insure a private pilot with a flat extra charge or will decline to cover aviation at all, their only offer being to exclude any aviation related death from the policy. So the job for the pilot is to find the right agent that represents several, if not all of the pilot friendly life insurance companies. Because guidelines vary from company to company, representing just one narrows the possibility of an affordable approval too much.
I used to believe that agencies like the XYZ Pilot Agency were the best, if not the only place for aviation related life insurance and I ran a lot of business through them. They had a proprietary deal with a few companies that truly made it easy, but even then there were a lot of situations where they didn’t have the best package for a pilot. When those proprietary deals fell through, although very experienced with helping pilots, they found themselves on a level playing field with agents and agencies who were used to using all of the 1% of available companies. So, I guess the advice is that, while you shouldn’t necessarily shy away from aviation specialty life insurance agencies like the XYZ Pilot Agency, understand that their quotes should be checked against companies they don’t offer quotes for. They aren’t the power brokers they used to be.
Also keep in mind that, for instance the 5 bench marks above, are not always written in stone. We have companies that will write student pilots and flight instructors without a flat extra. We have companies that will make exceptions in some cases. They aren’t going to turn their back on prudent underwriting, but they aren’t all out of touch with reality. I had a client recently who had only been able to fly about 8 hours in the last twelve months because after his wife became pregnant she said no flying until he had life insurance that covered aviation. So his last 12 months were askew to example #2 and going forward was in danger if he didn’t get life insurance. I found a company that worked with him and gave him a preferred rate with no flat extra. He is fully insured and back to flying now.
Bottom line. As I mentioned above, just like impaired risk life insurance, private pilot life insurance shouldn’t be just casually bought from an agent who doesn’t have experience in finding the right fit. If you take your need to the wrong agent you could end up paying hundreds or thousands extra or not being covered for aviation at all. If you have any questions or believe you may not have the best deal available, call or email me directly. My name is Ed Hinerman. Let’s talk.