Information courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York.
Hobbies: those delightful activities we do in our free time, just for fun. They energize and motivate us. They offer valuable life perspective. And they give us a much-needed break from day-to-day demands and responsibilities.
But when it comes to our physical health, all hobbies are not created equal. Some can be dangerous.
"I'm not talking about settling in with a hot cup of tea and a new book," says Matt Lyon, USAA advice manager. "I'm thinking about thrill-inducing pursuits like hang gliding or rock climbing."
If you're someone who enjoys living on the edge, it's helpful to know that those high-risk activities have the potential to impact your life insurance policy's rates. Read on to learn more about what you can expect during the application process.
What are examples of dangerous hobbies?
Life insurance companies define a dangerous hobby as any activity that increases your likelihood of injury or death. These hobbies increase your risk factor, a statistic used to calculate life insurance rates.
Examples of dangerous hobbies include but are not limited to:
- Flying aircraft
- Hang gliding
- Mountain or rock climbing
- Bungee jumping
- Skydiving
- Scuba diving
- Base jumping
- High-risk international travel
- Motocross
- Drag racing
How dangerous hobbies affect life insurance premiums
If your hobbies place you at a higher risk of injury or death, there's a good chance they will also increase your premiums. Insurance companies aim to minimize their risks, so if you're more likely to die due to your hobbies, companies will charge you more to offset that risk.
Think of this in the same terms as age and health. When people are older or are in failing health, they pose a greater risk. Hobbies are no different.
Every life insurance company uses its own unique actuarial calculation to assess risk. So, there's no set formula you can use to determine the extent to which participating in a risky hobby might affect your premiums.
"It's possible that the impact will be minimal, so you shouldn't forgo applying for life insurance just because you enjoy one of these hobbies," says Lyon.
When should I tell my life insurance provider about my hobbies?
Your hobbies are usually discussed during the quoting process. "When you apply for life insurance, you should disclose any hazardous activities you participate in," says Lyon. "It's important to be up front and honest about your hobbies."
If these hobbies are discussed, you'll generally know what to expect as you enter the application phase.
On the other hand, without including hobbies in a quote, they are usually discovered during underwriting. In these cases, the approved premium will likely be higher than the quoted premium.
Failing to disclose dangerous hobbies could result in denied coverage. In extreme cases, your policy could end up being void.
Military-related high-risk activities
USAA understands that some high-risk hobbies are actual requirements of military occupations. Flying aircraft, jumping out of aircraft and high-risk international travel are all part of the job and factor differently for underwriting purposes.
Throughout the life insurance application process, don't lose sight of why you need life insurance to begin with. "Your goal is to ensure your loved ones are taken care of in the event of your passing," says Lyon. "If anything, these hobbies increase your need for life insurance."
If you have questions about how specific hobbies might impact your life insurance coverage, don't hesitate to speak with a licensed insurance professional. Plus, if you obtain life insurance at the youngest possible age, you may be able to secure lower rates.
Review your life insurance needs.
Consider how your hobbies might affect your life insurance policy rates.