If you have a criminal record, you may be wondering, how does a felony affect life insurance rates? Read more here on what you need to know.
Typically, when looking at life insurance plans, variables like your age and health will be deciding factors. However, one element that we haven’t dived into much in the past is how a criminal record affects your ability to get coverage.
Unfortunately, being a convicted felon can limit your options, much in the same way that a pre-existing health condition or old age would. However, don’t despair – it’s still possible to get life insurance as a convict. In this article, we’ll outline the various options you have, as well as discuss potential tips to help you save money in the long term.
How a Felony Affects Life Insurance Rates
As with all mitigating factors, life insurance companies will take a comprehensive approach to figure out if you qualify for a policy. As we’ll discuss later, the best thing you can do is compare rates and options with different companies so that you don’t wind up paying too much.
While each insurer is different, many of them follow the same guidelines. Here is how a felony can affect your life insurance rates.
If You’re Currently Charged With a Felony
One of the best reasons to get life insurance is to provide financial security for your loved ones. So, if you’ve been charged with a felony and are awaiting a trial, it may be tempting to get a policy, just in case.
Unfortunately, no life insurance company offers plans for those who are currently charged. Even if you think the case will be dismissed, you’ll have to wait until that happens before talking with an insurance agent.
As with everything else, the insurer wants to have as many details and facts as possible when underwriting a plan. While your case is in limbo, that uncertainty makes a lot of insurance companies nervous.
If You Were Recently Released From Prison
After being in prison, it’s only natural to think about the future and your plans for the coming years. Life insurance is always about preparing for the unexpected, which is why it can be appealing for the recently paroled.
However, even though you’ve served your time and you will be on the straight and narrow path from now on, you’ll still have to wait a little while before getting life insurance. As a general rule, you will need to wait a year before talking to an agent. Even then, you may want to postpone even longer if possible, as your rates will be much higher the sooner it’s been since you were released.
If Your Felony Charge Was Long Ago
Thankfully, the more time it’s been since you were incarcerated, the better your chances of getting favorable premium rates. While the type of felony you were convicted of and the duration of your sentence will be factored in, you can still get lower prices if it was more than 10 years ago.
The reason why the rates will fluctuate so much is that the insurance company wants proof that you won’t get arrested again. For example, if you have multiple battery charges on your record within the last five years, that indicates you’re likely to commit another crime. However, if it’s been 20 years and you only have the one felony (i.e., robbery), then that shows you’ve recovered and are less likely to break the law again.
One thing to keep in mind, however, is that you should be upfront and honest when filling out your life insurance application. Even though you were in prison decades ago, the insurance company will still want to know. The primary reason for disclosing your felony is that the insurer can’t claim fraud later on.
Typically, these companies have two years to conduct background checks and other investigations, so if a felony turns up then you could be denied coverage. Even worse, if they discover the offense after you die, your beneficiaries may not be able to receive the money.
What If I Have Life Insurance and Go to Prison?
Although life insurance can be challenging or impossible for new and recent felons, your coverage should be stable if you go to prison. As long as you’re able to maintain your premium payments and you don’t die doing a dangerous or illegal activity while in prison, your life insurance will remain intact.
Keep in mind, however, that your premiums will go up because of your conviction, and any lapse will give the insurance company reason to terminate your policy. Usually, insurers are wary of covering any convicts, so they will scrutinize your policy as much as possible.
Another thing to consider is if you’re incarcerated outside of the US. Many policies stipulate that you have to die within the United States for your beneficiaries to make a claim. Be sure to talk to your agent about any clauses like this, even if you’re not currently going to jail. You don’t want something to happen during an overseas trip that could put your loved ones in a bind.
Types of Felonies and How They Impact Life Insurance
As we mentioned, insurance companies like to take a holistic approach to determine coverage options and rates. So, the type of crime you’re convicted of will matter as much (or more) as when it occurred. Again, each insurer is different, but here is a brief breakdown of what you can expect with various crimes.
- Drug and Alcohol Charges – if you were arrested for intoxication, particularly driving drunk, this will impact your rates substantially. Insurance companies will see you as a higher risk, and charge more or deny you altogether. Even if the charge was for selling or trafficking, those felonies would still hurt you significantly – again, because you’re a higher risk.
- Property Damage – although this felony shouldn’t affect your health (unless you broke something or hurt yourself during the incident), insurers can still be wary. Ultimately, the circumstances of the damage will determine your rates.
- Assault and Battery – Insurance underwriters will want to know the conditions of the incident. Such as how much bodily harm you received and/or inflicted.
- Theft – stealing makes you more likely to get denied or pay higher premiums, as it’s an issue of trust.
- Other Crimes (i.e., Financial Fraud) – for the most part, the crimes listed above are going to impact your rates the most. But any conviction will affect your life insurance options. Companies will pay close attention to anything involving fraud. They will worry if you are trying to be fraudulent with them.
Overall, you want to provide as many details and evidence as possible when talking with your agent. Often, a conviction doesn’t tell the whole story. In some cases, providing the right amount of context can help lower your rates. This is provided that the details make you less of a risk.
Tips on How to Obtain Life Insurance With a Felony Conviction
Just because you have a criminal record doesn’t mean you can’t get coverage. Here are some ways to improve your odds and get the best policy available.
Wait as Long as Possible
We already mentioned that you’d have to wait a year after you get out of prison. However, if you can wait longer, particularly if you can show gainful employment and rehabilitation, that will help. Overall, waiting will allow the insurance company to see that you’re not as much of a risk. Nor that you will get charged again in the future.
Compare Plans and Companies
Because each insurer is different, you don’t want to settle for less coverage at a higher rate. Talk to as many carriers as possible to see what options are out there. It may take longer and seem like a lot of work. But, if you can save hundreds per year, it’s worth the effort.
Also, if you start working for a company that offers group insurance, that’s an easy way to get coverage. It means having to go through so much less trouble. However, group life insurance doesn’t provide as much protection or benefits, so keep that in mind.
Show Off Your Non-Criminal Record
People break the law for a variety of reasons. Your conviction does not define you. Talk with your insurance agent about life after prison to illustrate how much you’ve grown since then. Insurance companies will be more cautious if you continue to do the things that led you to imprisonment in the first place. Show off your improvement, and you can save a lot of money in the long term.
Get Guaranteed Life Insurance
One way to avoid disclosing your criminal background is to get guaranteed acceptance life insurance (aka burial insurance). Since insurance companies don’t look at your medical or felony record, you can get coverage no matter what.
However, the premiums are much higher, and you’re limited in the total benefits available. Usually, burial insurance caps off at $25,000. If that’s not enough for your loved ones, you’ll need to look elsewhere.
Contact NextGen Life Insurance Today
Comparing plans and rates is easy when you let us do all the hard work. Call us today to find out how we can help you get the coverage you need without all the hassle. Let NextGen Life Insurance give you the peace of mind you deserve.
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