It is common knowledge that being young and in good health provides the best life insurance rates. However, what happens when that youth and health are due to participation and enjoyment of extreme sports? Underwriters base premiums on risk; how do they view applicants that look risk in the face and defy it – intentionally? We turned to long-term insurance professional Mathieu LeBlanc for insight on this question.
Mathieu, are there any sports or activities that are an automatic decline for traditional life insurance?
Contrary to popular belief, the majority of amateur sports can be covered, and even some professional sports. However, some are obvious declines including:
- Professional combat sports (MMA, cage fighting, boxing)
- Free solo climbing
- Base jumping
- Wingsuit jumping
- Involvement in extreme sports record attempts
Additionally, we cannot overlook professional bodybuilding, mostly due to the PED use involved in reaching that level.
Also at risk of decline are applicants that are involved in too many hazardous sports. Normally, if someone is doing a maximum of two or three different rateable activities, the offer would be based on the activity that represents the highest risk. For example, if you have someone who is ratable two per thousand for activity one, five per thousand for activity two, and three per thousand for activity three, etc., the highest rating would be offered. Another option is to exclude all sports (usually no more than three) or offer a combination of ratings and exclusions. However, this is all very case and carrier-philosophy dependent.
Are all professional sports off the table?
When a sport or activity is directly related to the client’s occupation, insurers won’t exclude coverage. They will either rate or decline. That being said, oftentimes they will take a favourable case (both medically and non-medically) to insure someone who performs a ratable activity as part of their work duties.
Individual consideration for these types of sports includes:
- Professional football player (individual consideration is based on position and overall history; a punter may be a better risk vs a lineman).
- Mountain climbing in the Himalayas and/or +7000 metres (it’s important to distinguish between trekking in the Himalayas, which is easier to exclude, and high altitude mountain climbing, such as summiting 8000 metre peaks. One may get lucky and have a company offer an exclusion.
- Free diving (diving without oxygen to maximum depths) will be declined by most carriers. Again, an applicant may find one who is willing to offer an exclusion.
Professional athletes playing in one of the four major sports in North America represent a special type of risk. Although they may be insurable, most companies and their reinsurers will limit their capacity on a single individual.
At the reinsurance level, some companies may limit the total amount of insurance they have in force on a single team and once that cap is reached, they will not offer more capacity (this involves tracking trades, player retirements, etc.).
Has there been any movement on guidelines in the last three to five years, such as things that were a decline but now covered and vice-versa?
Backcountry skiing rules have become much more lenient. Whereas standard decisions were once reserved for guided tours only under a limited number of days per year, you can now find carriers that will offer standard coverage without exclusions or ratings regardless of frequency; this is even without submitting the case to their reinsurance partners.
Maybe less so in the last few years, but I would say in the last 10 years, recreational scuba diving guidelines have improved. Generally, depending on the insurers, open water diving to depths of 100 ft (and for some companies, 120 ft) can be insured as standard without an exclusion or rating.
I can’t think of anything that has become much more severe in terms of ratings in the last three to five years other than companies (mostly reinsurers) paying closer attention to marijuana use in combination with hazardous sports activities.
Are health conditions a variable when combined with riskier activities?
Absolutely! For example, although recreational scuba diving at depths of 100 feet or less is generally approved with standard rates and without exclusions, if a client has a history of cardiovascular disease, epilepsy, or chronic respiratory disorders, an underwriter may decide to exclude coverage.
Another example would be someone involved in rock climbing even though they have a recent history of seizures or syncope.
Non-medical history can also have an impact; for example, a ratable driving history, drug, or alcohol use history in combination with hazardous sports. Professional athletes with lifestyle histories like this are typically declined.
Additional Thoughts from Philip Setter
We also checked in with Philip Setter from Affinity Life. He had some great advice on how to increase the chances of a successful life insurance application and claim for those that enjoy extreme sports.
“The main reason that insurance company will decline a claim from an insured dying from extreme sports usually has something to do with them lying or excluding details on their application,” Setter points out. “Most fully underwritten life insurance policies ask questions regarding extreme sports and lying or intentionally leaving out information on your application can give the insurance company a reason to deny your life insurance claim.”
We thank Mathieu and Setter for their insights on this topic. For those involved in amateur or professional sports while looking for life insurance, consider no medical life insurance.
No Medical Life Insurance: Incredible Value for the Hard-to-Insure
No medical life insurance is a type of policy that does not require a medical exam or health questionnaire. It is typically offered in two forms: simplified issue and guaranteed issue.
Simplified issue policies are the most common type of no medical life insurance. They require applicants to answer a few basic health questions but do not require any additional medical tests or exams. These policies generally offer lower coverage amounts than traditional life insurance policies, but they are much easier to apply for and can provide quick coverage if needed.
Guaranteed issue policies are another form of no medical life insurance. These policies do not require any health questions or exams. However, premiums for these types of policies are more expensive than any other type of policy, and the coverage caps are lower than for traditional or simplified. If the life insured were to pass away during the first two policy years, the benefit will not pay out. However, the premiums paid will be returned to the beneficiary.
No medical life insurance can be an excellent option for those who need coverage without having to go through the invasive process of applying for traditional life insurance. It can also be beneficial for those who may have difficulty obtaining traditional life insurance due to their love of extreme sports.
Mathieu LeBlanc is a passionate and dedicated professional in the fields of underwriting and insurance, with a distinguished track record in the industry. He has completed numerous designations such as FALU, FLMI, FLHC, CLU, CHS, PCS, and ARA during his early years as an underwriter, and eventually became an underwriting director at a prominent reinsurer in Canada. In 2018, he established Mathieu LeBlanc Consulting Inc., an independent consulting firm that provides tailored solutions to carriers navigating the complex world of underwriting.
He works on some of the most complex cases on the market, transforms risk management practices, and provides valuable mentoring to many underwriters and insurance sales professionals. Mathieu’s attention to detail, creative thinking, and client-centric approach make him a trusted advisor on all lines of individual insurance business, including life, critical illness, disability, and health. Despite the ongoing technological revolution in the insurance industry, he remains committed to preserving the irreplaceable human touch in an increasingly automated world.
– Mathieu LeBlanc
Based in Calgary, Alberta, Philip Setter is an insurance and investment professional who also founded and manages Business Critical, a multi-disciplinary advisory firm that specializes in corporate tax strategies. If you work with Philip, he can provide you with a clear overview and direction for your business as your business advisor and tax strategist. He prioritizes education, transparency, and delivering customized quality services to suit your corporate requirements. Furthermore, he aims to establish a trustworthy and lasting relationship with each of his clients.
– Philip Setter