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 that doesn’t mean you can’t get approved for life insurance with a criminal record.
There are dozens of factors the insurance company is going to look at when reviewing your application. Your criminal record is only one of the factors. There are several other areas that are going to impact your chances of getting approved and how much you pay 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 regular life insurance policy, you may qualify for a graded policy. Graded policies, sometimes referred to as high risk life insurance or guaranteed issue life insurance, 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. These plans accept anyone, regardless of health, pre-existing conditions, or medical records. With these policies, all you have to do is provide some basic information. There is no medical exam required and no health questions. Regardless of your criminal past, you can be approved for a guaranteed acceptance life insurance plan.
There are a couple of drawbacks to these plans you should take note of before you purchase one of these. The most notable problem with these policies is you’re going to be severely restricted on how much you can buy. Most companies will only allow you to buy around $25,000 worth of insurance, which isn’t nearly enough coverage for most families.
Another problem with these plans is they are going to be much more expensive than a plan that requires an exam and health questions. 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 offset by charging you much higher rates.
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 get life insurance in a matter of minutes.
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 something were to happen to you.
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. Add up your mortgage, student loans, business debts, and any other unpaid expenses.
The next number you should throw in the equation is your annual income. The secondary purpose of your life insurance is to give your family the money they need to replace your stream of income if you were to pass away. If you’re the main source of income in your household, your family would struggle financially if they no longer had that paycheck.
The last factor you should toss in is your final bills and funeral expenses. The average funeral can cost around $10,000. It can be difficult for a grieving family to cover. That’s where your life insurance comes in. 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 if you have 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.
Every insurance company is different, and all of them are going to view applicants with criminal records differently. That means some companies are going to offer 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 best policy for you. 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, let one of our independent brokers do the hard work 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.
You never know what life is going to throw at you tomorrow. 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. If you have any questions about getting life insurance with a criminal background or the options available to you, please contact one of our experienced agents today. We would love to answer those questions for you.
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.