It’s never been a pretty picture applying for life insurance and wanting your favorite dangerous hobby to be completely covered. The problem for most of us going in is that we jump on the fun bandwagon without consulting our local life insurance underwriter.
Skydiving is one of those life time sports that most people take up at a fairly young age, often before the idea of family and life insurance is even in the thought process. Then comes the marriage and they can kind of dance around the whole subject by rationalizing that the hobby was there before the wedding. But, that logic loses steam when a child shows up and suddenly both of you realize that life insurance is an important consideration and skydiving life insurance should be a no brainer.
So what’s a guy (or lady) to do? You’re a recreational skydiver maybe doing 30 or 40 jumps a year and you’re experienced so your perception of the risk is minimal. A common reply when I use the word risk is, “I’m more likely to die in a car accident on the way to jump….”. You go see your local auto insurance agent and lay it all out and even though you’re only in your 40′s he says that $500,000 of life insurance that will cover skydiving is going to cost you over $2500 a year, but that is a guaranteed level rate for 20 years.
So you go an online mega agency like Selectquote and they tell you that they can get it under $2000. The best rate out their for life insurance with skydiving coverage is an unfortunate combination of two things. The first is a flat extra charge per thousand per year. The lowest one for skydiving is $2.50 per thousand which equals $1250 per year JUST FOR THE SKYDIVING. The other piece of bad news is that even though you’re in perfect health, the companies with the best flat extra charge it on top of their standard or standard plus rate, not preferred plus. So, $500,000 of 20 year term is going to run $745 a year plus the $1250 flat extra for a low end quote of $1995 a year.
I ran this same scenario for a client today and suggested that rather than blow the budget, let’s separate the two. American General will allow a life insurance policy that excludes skydiving (in most states), but covers everything else. I have access to an accidental death policy that will cover skydiving (and any other accident). So, the $500,000 20 year term insurance policy at preferred plus rates was $440 a year. The AD&D policy is $420 a year. So for $860 a year everything is covered. If the client dies from a heart attack the life insurance will pay $500,000. If the client’s chute doesn’t open the AD&D will pay $500,000. And get this. If the client actually does die in a car accident on the way to jump, both policies pay in full.
Bottom line. Don’t let anyone tell you to pay a large flat extra charge for recreational skydiving. You don’t need to. And the AD&D rates are only slightly higher if you do something like race airplanes. And if you have life insurance in force that you bought before you took up skydiving, you should be covered. Call the company and ask. If this hits a hot button for you give me a call 866-539-7914.