Why Don’t Life Insurance Companies Understand Pilots?

For as long as anyone can remember, pilots have often faced stiff premium surcharges and aviation exclusion clauses when shopping for life insurance protection for their families. But, according to William Fanning of The Pilots Insurance Center, things have changed. Term life premiums have come down sharply in the last few years, and an increasing number of underwriters have come to realize that most pilots are actually excellent insurance risks. Fanning suggests six specific ways pilots can save 40% or more on their life insurance.


Why do pilots pay more for life insurance?

InsuranceWhy? Ever sit down and study an Insurance Mortality Table? Probably not. Well,unfortunately for pilots, the folks who set and approve insurance rates (they’re calledactuaries and underwriters) rarely pilot aircraft.

If they did, they’d understand that pilots in general are pretty good risks. They’dunderstand that pilots as a group are typically better educated, earn higher incomes andgenerally are in better health than the average American. How many individuals undergohealth exams twice a year!

When you complete an application for insurance coverage you’re asked whether you pilotaircraft. When you check "Yes," most companies will do one of two things:

  1. They’ll exclude general aviation from your life insurance contract (an Aviation Exclusion Clause). If you do succumb to an aviation-related death (sometimes even if you are a passenger), the insurance company is entitled not to pay off on your policy. Or…

  2. More likely, the insurance company will "rate" you. This will add to the cost of your coverage (similar to the way smokers generally pay more). The increased cost typically adds between 50% — to as much as 100% (double) — to the cost of your life insurance coverage.

Because, few insurance companies have ever taken the time to really understand the vastdifferences in experience, ratings, training and equipment flown — it’s easier to group"all pilots" and assign some risk to aviation activities. This makes it easierfor their agents and brokers, who generally also lack the experience or training todifferentiate between the many types of professional and recreational pilots.

Good news for all pilots: Things have changed!

There’s good news for all pilots. It’s no longer necessary for pilots to acceptcoverage that costs more — or protection with exclusions that discriminate againstaviation-related accidents.

Several leading national insurers, in cooperation with some aviation-savvy brokers,have taken the initiative to offer pilots preferred life insurance rates without a ratingor exclusion. After closely examining historical data, these insurers now clearlyunderstand that the majority of pilots are an excellent risk for life insurance. Generalaviation fatalities have dropped in the last decade to the lowest in history. So now thereare a few insurers that will offer pilots a preferred (lower) rate on life insurance thathas been unavailable until now.

What does it mean to you? If you already own an individual life insurance policy,you’ll probably be able to save money on your annual cost (or, you might be able toincrease your benefits).

If you don’t already have life insurance coverage – either because you’ve been deniedcoverage or found it too expensive – you can most likely secure the coverage you need at aprice you will find affordable.

If you own a business and have found it difficult to obtain policies for someexecutives — because they pilot aircraft — you’ll no longer face this situation.

Most pilots can now save money on life insurance

Can you save if you already have life insurance coverage? The good news is: Yes …most likely you can.

Can you save even if you’ve owned the policy for a number of years? Again, Yes. Costsfor term life insurance have decreased significantly in recent years. If you haven’treviewed your policy in three or four years, you owe it to yourself to get a current ratequote.

Can everyone save? Not always. If you are covered through your employer you may notsave. But, be certain that your policy does cover general aviation-related accidents (mostdo not). If yours does, you may be better off keeping your current coverage.

How much can you save? It depends. If your life insurance policy is more than threeyears old — or if you were "rated" as a pilot — you will likely save between40% and 70% in your annual premium. For an individual 45 years old with a 500,000 termlife insurance policy – the savings could be $500 or more…each year.

Six Ways Pilots Can Save

Here are proven ways pilots can save money when purchasing life insurance.

  1. Don’t buy insurance if you really don’t need it (for example, if you are single, you may only need enough to pay for Final Expenses plus something to leave to loved ones).

  2. Shop for a competitively priced policy. Be certain to see if you can save from an insurer that understands how to deal with pilots. A rated policy can cost a pilot between 50% and 100% more than one that doesn’t discriminate against pilots.

  3. Work with a professional insurance agent who is also a pilot. They’ll best understand the issues you face — and can generally work on your behalf to obtain lower premium costs or better coverage. They will also know which companies pilots should avoid.

  4. If you own a term life insurance policy, compare current rates. In recent years, insurance companies have dropped their rates significantly. If you have a policy that’s three or four years old, you will likely be able to save — even though you are now older.

  5. Look for guaranteed renewable policies if you are buying term insurance.

  6. Participate in a plan sponsored by your employer, even if you have to pay for coverage. However, as a pilot, first be certain to check to see what exclusions exist.

What’s the next step?

Take the few minutes to review and understand your life insurance policy. Look for anyAviation Exclusions. Get a complete understanding of your policy provisions including theface amount, the term, and the premium you are now paying. Then it is important that youfind a broker that understands the underwriting provisions for aviation and quotes thosecompanies that are aviation friendly. Preferably, your broker should also be a pilot. Dosome comparison-shopping: there are huge variations in premiums among underwriters,particularly in the fiercely-competitive term insurance field. A reputable broker willprovide you a comparison quote over the phone and in writing.