Applying for Life Insurance with a Criminal Record

Most life insurance companies will check criminal records before insuring you. But, depending on the crime, your premiums may not change at all.

How does a criminal record affect your life insurance application?

Life insurance companies will ask you the following two questions about your criminal history when you apply:

• Are you presently being charged with a criminal offence?

• Have you ever been convicted of a felony?

Your answers will impact your insurability and your premium rate.

You should always answer the questions on your insurance policy application truthfully. Criminal records do not go away. Insurance providers are likely to do their own research, which will reveal if you have a criminal record.

Should you be dishonest on your application, the insurer is likely to deny you coverage. Furthermore, being denied coverage for lying could mean that other providers will not accept your application, either.

Let’s look at how different scenarios can impact acquiring life insurance.

You are presently being charged with a felony offence

Life insurance companies will not offer you a life insurance policy while you are on trial. We recommend postponing your life insurance application until any charges against you are dismissed.

You have been convicted of a crime in the past

Every insurer handles felonies differently. For some providers, a felony is uninsurable. Others, however, are not so rigid. Life insurance companies that do extend coverage to applicants with a criminal record, do so on a case-by-case basis.

The insurer will consider several factors, including the type of crime committed, its severity, how much time has elapsed since the applicant’s last conviction, whether you served time in prison, and, if so, for how long. If you have been convicted of a felony and are looking for life insurance, it might be in your best interest to work with an insurance brokerage like Dundas Life who deals with high-risk applicants.

You are presently in jail or on probation

Life insurance company would not offer a life insurance policy to someone whois in jail or on probation. Some insurance companies will extend coverage only if at least one year has passed since the completion of the probation period. Some other insurers, however, have a longer waiting period. We recommend you do not apply for life insurance if you are presently in prison or on probation.

You have been convicted of a misdemeanour

A misdemeanour is a crime that is less serious than a felony. Examples include shoplifting, trespassing, petty theft, disorderly conduct, etc. A misdemeanour is likely to affect neither your insurability nor premium rates since life insurance companies do not treat them as a serious crime. If you have been convicted of a misdemeanour or a smaller infraction, were recommend you apply as a normal applicant would. However, if you are not sure about your record, consider speaking to an independent broker first.

How to be insured as a felon

If you have been convicted of a felony, getting life insurance may not be as easy as it would be for someone without a conviction. Since a criminal record never disappears, you will always pay a higher premium.

Unless you have been convicted of a serious crime — such as murder, rape, kidnapping, child molestation, or drug trafficking — there is a good chance you will get approved for life insurance. Here are a few things to keep in mind while applying for life insurance if you have a felony on your record.  

• Apply early to save money

Applying early helps you to save money while you are younger and healthier.

Do note that some life insurance companies will not insure you until a year has passed from the date your probation ended. Other providers have a longer waiting period, like 2 years, 5 years, or even 10 years.

If more time has passed since your felony, you are more likely to get approved for insurance. This is because insurance carriers want to see that you have changed before offering you a policy. For instance, a convicted felon who has been a law-abiding person for seven years is likely to be considered a lower risk than someone who was only released from jail 13 months ago.    

Still, it's recommended to apply early. If approved today, you'll lock in a lower rate. If not, you'll know the requirements for when you can re-apply again in the future.

If you need a life insurance policy right now, a short-term plan might be a good fit. For example, it might be worth the cost if you have just had your first baby and want to ensure your family will be able to stay afloat in your absence. Once a considerable period has passed since the completion of your probation period, you can reapply and take out a new policy at a lower rate.

• Pick the right agent or broker

Different insurance companies treat felonies differently. An experienced broker, like Dundas Life, can help you identify providers who are more likely to grant you a policy. So, instead of applying on your own, you are likely to be better off working with an agent or broker if you have a less-than-perfect past.

• Look at other options

If a felony on your record makes traditional life insurance inaccessible, consider a group policy offered through work, a guaranteed issue plan, or an accidental death and dismemberment policy. Each one of these is discussed in detail in the next section.

Alternatives to life insurance for felons

If a traditional policy is out of reach, consider these options:

Group life insurance 

If your employer offers group life insurance as part of its employee benefits package, sign up without hesitation. Since applicants do not have to take a medical exam or disclose their criminal past, felons can easily receive coverage.

Moreover, employers often provide the benefit for free, and you have the option to purchase additional coverage. Even when you must pay for group life out of pocket, signing up for it makes sense. This is because group life insurance rates are much lower than those of individual life plans.

The maximum coverage amount available is usually one or two times your annual salary. For most people, that may not be sufficient, but something is better than nothing. Other drawbacks include a lack of flexibility and portability.

You cannot customize a group life plan by adding certain riders to suit your specific needs. And if you lose or leave your job, the policy is likely to be terminated. For these reasons, group life insurance is not a substitute for an individual policy, though it can complement it nicely.  

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Guaranteed Accepted Life Insurance

Guaranteed accepted life insurance is a kind of permanent life insurance. That is, it provides coverage you cannot outlive. It is also referred to as final expense insurance or no-medical life insurance.

There is a reason why this life insurance product has the word “guaranteed” in its name. Acceptance is guaranteed if you are in a particular age group, meaning the insurer cannot turn you down on account of poor health or a criminal past or any other reason. The upper age limit is usually 70, but some insurers have a higher cap.

Since the provider does not investigate your insurability, there are none of the medical exams or health questions that are part of a traditional life insurance application. If you meet the age requirement and can afford the premium, getting coverage is easy.

Simply, grab quotes from several providers and pick the best option. Compared to traditional plans, which can take up to six weeks for approval, guaranteed issue policies can be approved within a few days —sometimes even on the same day.

However, despite these conveniences, guaranteed acceptance insurance should be your last option. Consider it only if you do not qualify for a fully underwritten individual life policy or a group life policy. This is because:

•  It is much more expensive than traditional policies. In the case of a guaranteed issue, the insurer has very little information about you to go by. So, the insurer assumes extra risk by insuring you, which it compensates for by charging you a higher premium rate.

• The coverage amount is rather small. Generally, the maximum death benefit amount is $25,000. However, some providers are willing to cover your life for up to $50,000. Because of the small benefit amount, a guaranteed issue policy is suitable for neither income replacement or debt management. Most people who purchase this type of policy, use it to cover their end-of-life expenses, such as funeral costs, or to leave a small inheritance to their children or grandchildren.

• There is a waiting period involved. Typically, the waiting period is two years, but it can be longer depending on the insurer. If you die from natural causes within the waiting period, the insurer will not pay the coverage amount but refund the policy premiums. Accidental deaths, however, are covered during the waiting period.  

Accidental Death and Dismemberment

While accidental death and dismemberment is not a life insurance product, it can help felons ensure their loved ones receive financial help if they die or are seriously injured in an accident. It pays your beneficiary an agreed amount if you pass away due to an accident or incur a loss of limb, sight, or hearing. However, it does not cover death from illness, disease, or an underlying medical condition.

Conclusion

Having a criminal past does automatically make you ineligible for traditional life insurance. You cannot get life insurance if you are on trial, in jail or on probation, or if you have been found guilty of certain serious crimes such as murder, drug trafficking, rape, kidnapping, or child molesting.

Life insurers may offer you a traditional policy if you are out of jail or have completed your probation. However, you will have to wait at least one year before you can apply. If you do not qualify for a traditional policy, think about buying guaranteed issue life insurance, accidental death and dismemberment, or group life insurance.

Since providers consider applications with a criminal history on a case-by-case basis, you should consider speaking to an independent broker, like Dundas Life. Our experts will answer any questions you have and help you find the best possible coverage.