Last updated: March 8th, 2018
There are a few factors that can make obtaining a life insurance policy difficult such as a serious health issue, risky lifestyle choices (i.e. driving recklessly ), and a criminal background. Though it can feel like further punishment to be denied coverage for a crime that was already dealt with during the legal process, the denial of coverage has more to do with risk. Most major insurance carriers assign greater risk to individuals with criminal backgrounds, however having a criminal record doesn’t mean your policy won’t be issued.
Plenty of issues will arise when you’ve submitted your life insurance application. Your criminal record is only one of the factors. There are several other areas that are will alter the percentages of getting approved and what you owe for your policy.
Assessing the Risk
Many insurance carriers associate greater risk with people that have been convicted of a crime. Believing the individual prone to making poor choices concerning their own life, the insurer may not want to provide coverage in some cases. Yet it isn’t always so cut and dry. Many people with a criminal background may be approved for coverage, but it could take some searching around to find a life insurance carrier willing to approve their applications. They will naturally look at various factors when determining whether to offer the coverage or not. Let’s take a look at factors life insurance companies look at.
Insurance providers will likely look at how long ago the crime was committed. If the crime was an isolated incident that occurred years earlier, there’s a reasonable likelihood that coverage could be obtained. On the other hand, if the applicant is still on probation or parole, it’s more realistic to expect a denial of coverage.
Insurers will also take into consideration the applicant’s age when they committed a crime. Did the crime take place when the applicant was eighteen or thirty-eight? Age, like time, plays a critical role in their determination regarding coverage and those providers who do not outright deny applicants with criminal backgrounds do tend to look closely at each particular factor.
What Was the Nature of the Crime?
Naturally, insurers need to know what the applicant was convicted of. Certain crimes may warrant outright denial like a murder. On the other hand, certain crimes like a drug conviction in your past may get you approved as long as you have been clean for over 3 years and aren’t a repeat offender. When applying, of course, it’s essential to be forthright as the insurer can typically find the information in any case during their background check.
One, Two, or Multiple Crimes
It stands to reason that someone with a single crime on their record will have a better chance of gaining approval for life insurance than someone with several, though again, all factors will be considered. Applicants with just one conviction that occurred long ago may qualify for a life insurance policy from a reputable provider.
Beyond Regular Life Insurance Policies
If you have a criminal record and have been declined for a standard life insurance policy, you may qualify for a graded policy. Graded policies, sometimes referred to as high risk life insurance or guaranteed issue, are essentially geared for someone who cannot obtain traditional coverage. Some companies specialize in graded policies and people who have criminal records might consider applying with them if they have been turned down for a regular policy. An alternative can also be an accidental life insurance policy – anyone can qualify for this type of policy, and at least you have some coverage in place.
Guaranteed Acceptance Life Insurance
One last-resort option for insurance is a guaranteed acceptance life insurance policy. This type of plan accepts anyone, regardless of health, pre-existing conditions, or medical records. With these policies, you just provide some basic information. No exam required and no health questions asked. Regardless of your criminal past, you can buy a guaranteed acceptance life insurance plan.
There are a couple of drawbacks to these plans you should take note while considering this option. The most notable problem with these policies is you’re going to be severely restricted on the face value. Generally the upper limit available to purchase is $25,000, and this wont sufficiently protect most families.
Another difficult issue with these specific policies is how much your monthly premium will be than fully underwritten plans. The more information the company gets, the more risk they can mitigate. Without any health information on you, they are taking all the risk. They are going to require a higher payment to cover their risk.
On the flip side, there are a couple of advantages as well. One of those is how quickly you can get approved for these plans. A traditional policy will take around 2 months to get approved. With a guaranteed issue plan, you can be approved in a short amount of time.
How much Life Insurance do you Need?
Regardless of what type of plan you use, it’s important you have enough life insurance. Too little insurance protection could leave your family will additional expenses and debts. There are a couple of numbers you should calculate to make sure your family has enough insurance money if the unexpected did occur.
The first number you should add up is your debts and final expenses. Your life insurance policy should be large enough for your family to pay off your bills and expenses. Total the mortgage, student loans, business debts, and any other unpaid expenses.
It’s important to keep in mind your family income when putting together a goal for the face value of your life insurance policy. Bumping up the total value will keep your family afloat for a longer period of time than if you had not calculated it into the equation.
The last factor you should toss in is your final bills and funeral expenses. The average funeral can exceed $9,000. Don’t let your loved one struggle over how to properly memorialize you. Make sure your family has enough money to fulfill your final wishes.
The truth is it can be both daunting and discouraging to find a life insurance policy with a criminal background. Instead of going through the application and sometimes the repeated application process alone, contact an independent insurance agent who has access to multiple companies–companies that are known to consider applications from individuals previously convicted.
No company is the same, and they see applicants who have criminal records differently. That means some companies will quote you different rates. Some companies might offer you affordable life insurance while others are going to reject your application. It’s important you find the correct plan. There are over 800 companies out there, and all of them are different. Which means you could spend weeks calling different companies. Instead of wasting hours on the phone, have our independent brokers work hard for you.
Additionally, an independent agency can advise you about various routes to consider if an application for a traditional policy has been denied. We can match applicants with insurers who offer high risk policies.
Finally, some independent agents like us are willing to take the time to get to know individual cases so we can better shop for the ideal policy for clients and talk to insurance carriers on their behalf. Moreover, our agency is willing to write a letter to accompany an application pointing out the excellent reasons for offering life insurance coverage (i.e. long-term job, family, positive changes post-conviction) to our applicants.
Life insurance will ensure your loved ones have the resources they need. There are plenty of options for life insurance out there, and don’t let your criminal record prevent you from getting the life insurance you need. Interested about applying for life insurance with a criminal background or the options available to you? Our knowledgeable brokers are ready to show you what options are out there.
If you have a criminal background, you may certainly qualify for life insurance. Instead of stumbling through the process, discuss your situation with us; we know which insurers to shop your application to and are available to see you through it and to see you wind up with the best possible life policy you can get. Fill out our quote form on this page, or call us at 888-552-6159.