25 March 2013 0 Comments

What Will Your Hobby Cost You?

Bungee-JumpingWill your avocation or hobby drive up the cost of your life insurance?  Not if it’s stamp collecting…unless you are personally searching for a rare Afghanistan stamp in the outback mountainous caves of that country.  On the other hand, if its speed racing motorcycles there is likely going to be a surcharge.

Surcharges are added to the annual premium per $1,000 of coverage and will depend on several factors including the extra risk associated with the activity, the experience of the applicant and frequency of involvement.  Generally, participation in any one of the following avocations should not produce an extra premium charge:

Automobile Racing

   Drag racing on authorized strips in sanctioned races, <120mph

   Go-cart racing, infrequent and speeds less than 50mph

   Sports Car Racing, Solo I, Solo II, Rally

   Stock Car Racing, limited local participation, <75mph average speed

Bungee Jumping

   Jumping 1 to 2 times yearly

Surfing

   Amateur, local

Trekking (Trail Hiking)

   Participation only in the U.S. or other acceptable countries

Rock/Mountain Climbing

   <13,000 feet in the U.S. or other acceptable countries*

   *Could be up to 20,000 feet based on experience and frequency.

Skin Diving

   Face mask, fins, snorkel

   Scuba to 100 feet with Basic Open Water Certification

   Scuba to 130 feet with Advanced Certification and frequent dives.

Following is the annual extra premium per $1,000 of coverage that is likely to be charged for some of the same general avocations, but with slightly different parameters:

Automobile Racing

   Drag Racing

   Fuel Funny Car, Top Unlimited Fuel, or >120mp                    $5.00/$1,000

   Go-cart Racing, frequent, or over 50mph                                $2.50/$1,000

   Stock Car Racing, limited local participation, >75mph             $2.50/$1,000

Bungee Jumping

   Jumping more than 1 to 2 times yearly                                   $2.50/$1,000

Surfing

   Big Wave                                                                                 Decline

Rock/Mountain Climbing

   >20,000 feet with 6+ years experience and in the U.S.            $5.00/$1,000

Skin Diving

   Scuba 101-130 feet with Basic Open Water

   Certification                                                                                 $2.50/$1,000

As you can see, in order to obtain the best price, it is important for the applicant to paint the most positive picture possible to the insurance company.  These extra charges are not absolutes.   A multi-year accident-free record should always be highlighted as well as extra precautions taken by the applicant.  If more than one ratable avocation is pursued by the same person, the ratings could be greater.  It’s also important to determine if the insurance company will add these extra charges to the underwriting class for which an applicant would otherwise be eligible, or will they start with “standard” even if a “preferred” risk based on health factors would have been issued.  Make sure your agent knows the difference and look at the total premium, not just the surcharge.

As stated in my last entry, answer only the questions asked on the application and if you are merely thinking about involving yourself in a potentially hazardous activity, apply for life insurance before making any definitive, identifiable move toward such involvement.

Coming up…occupation and aviation as it pertains to life insurance premium.

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