Life insurance companies don’t play favorites. Every applicant is assessed objectively using the same underwriting principles. But insurers do tend to offer lower rates to those who regularly engage in physical activity.
Why is that so?
The reason is simple: Leading an active lifestyle helps improve life expectancy.
Riding bicycles is one of the easiest ways to improve your health. Apart from helping you lose weight, regular cycling improves your cardiovascular health, reduces your risk of certain health conditions, and promotes better mental health. It can also help reduce your cost of life insurance.
If you are a cyclist and looking for a life insurance to protect your loved ones from life’s uncertainties, this post is just for you. We discuss everything you need to know about life insurance for cyclists, including how insurance companies calculate premium rates, different life insurance options, and more.
How Cycling affects Your Life Insurance Rates
Canadian insurance companies consider many factors when deciding what premium rate to charge you. Several factors, like age, gender, and family medical history, are not in your control, but you have full control over lifestyle factors. By exercising regularly, eating a healthy diet, and saying no to smoking, you can improve your physical and mental health. Being healthy, in turn, can help you secure a lower premium rate.
Lifestyle choices, like cycling, won’t lower your rates on their own. But the health benefits of cycling can persuade insurance companies to approve you with a more favourable risk classification.
How Insurers Classify your Health Class
When you apply for life insurance, you may be asked to undergo a medical exam and answer some health-related questions. Based on your health history and lifestyle choices, the insurer will assign you a risk class. Your life insurance health classification in turn determines the rates you’ll pay for coverage.
While each insurer underwrites differently, every applicant is assigned one of the following six risk classes: Preferred Plus, Preferred, Standard Plus, Standard, Table ratings, and Smoker ratings.
Preferred Plus
- The best rating you can get
- Lowest premiums
Preferred
- The second-best rating you can get
- Premiums are low, but slightly higher than what Preferred Plus applicants pay
Standard Plus
- Third-lowest premiums, slightly higher than Preferred.
- Generally reserved for people who are overall in good health, though they may have one or two minor health concerns
Standard Rating
- Most people are assigned this rating
- Fourth-lowest premiums
Table Ratings
- Table ratings typically range from 1-10 or A-J
- An “A” or “1” table rating means you will pay the Standard rate plus 25%.
- For each level down the table, 25% is added to the Standard rate (e.g. someone with a B table rating pays the Standard rate plus 50%; a person with a C rating pays the Standard rate plus 75% and so on)
Smoker Ratings
- Premiums could be 200% to 300% higher than non-smoker rates
- Assigned to those who smoke or those who have used tobacco or nicotine in the last 12 months
How Cycling May Improve Your Health Rating
Here are five reasons why cycling may get you a lower rate on life insurance:
- Lower all-mortality risk
Life insurers use advanced statistical models to calculate the premium rates, but it all boils down to one thing: The lower the mortality risk, the more affordable the premiums will be.
Research shows cyclists who ride for 3 hours per week or more have an almost 30% lower risk of all-cause mortality than those who do not cycle. By increasing life expectancy, cycling may help you secure a better premium rate from your insurance provider.
- Lower risk of heart disease
Heart disease is one of the two leading causes of death in Canada and is a cause of concern for life insurance companies. Anything that puts you at an increased risk to cardiovascular disease will likely bump up your premium rate. The opposite is equally true.
Regular cycling is found to reduce the risk of heart disease by up to 18% and hence increases your chances of getting a better health classification.
- Lower the risk of diabetes
Life insurers reserve their top health ratings for people who are in top shape and don’t have any underlying health issues. While pre-existing conditions, like diabetes, do not necessarily disqualify you from life insurance, they make qualifying for lower rates more difficult — sometimes, even impossible.
Cycling lowers your risk to diabetes and helps keep it under control if you already have it. By preventing or managing diabetes, you may receive a better health rating from the insurer.
- Lowers the risk of obesity
One of the key aspects of your health that insurers will look at is your BMI. A high BMI invariably translates to higher life insurance rates. Cycling, when combined with a balanced diet, can considerably reduce the risk of obesity and improve your chances of getting lower premiums.
- Improves mental health
A mental health condition, like depression or anxiety can impact your insurability. However, as in the case of a physical illnesses, managing it well may convince the insurer to rate you more favorably.
Regular physical exercise, like cycling, has been found to have a significantly positive impact on ADHD, anxiety and depression. Combining it with therapy and treatment can help reduce your life insurance costs.
![Cyclist on the road](https://cdn.prod.website-files.com/5fcaa18646fa255dcf0fc425/65eb4e65f24fa1fea208dc84_Blog%20post%20body%20-%201100%20x%20650-2.jpg)
Types of Insurance for Cyclists
Cycling improves your physical health and leads to a better health classification. So as a regular cyclists, you will likely have access to all the types of life insurance. While choice is a good thing, it does mean you should understand the pros and cons of each option to be able to decide which one fits your needs the best.
Term life and permanent life are the two main types of life insurance. Permanent life insurance is available in several subtypes, such as whole life insurance, universal life insurance, and guaranteed issue life insurance. Here’s a quick rundown of what each one covers.
1. Term Life Insurance
The Basics
- Coverage lasts for a specific period. The most common term lengths are 10, 20 and 30 years.
- Offers simple, low-cost life insurance protection with the aim of replacing part or all of your income should you pass.
- Premiums and the death benefit remain the same throughout the policy term
- Doesn’t accumulate cash value
How it works: With term life insurance, you get coverage for a predefined period. The longer the coverage period, the higher the premiums, all other things being equal. Your policy pays out if you pass while the policy is active. Once your plan reaches the end of its term, the coverage terminates automatically, unless renewed. In most cases, you can renew the policy until you reach a certain age without taking a new medical exam. However, at each policy renewal, your premium rate will go up.
Who is it for: Term life insurance is a good choice for most people because it costs just a fraction of permanent life insurance and provides coverage only for the years you need it.
Downside: There is no payout if you survive the policy term.
2. Whole Life Insurance
The basics:
- Combines permanent life insurance coverage with the cash value
- Premiums are fixed, as is the death benefit
- Cash value grows at a fixed rate set each year by the insurance company
How it works: Whole life insurance provides coverage for your entire life. It comes with a savings element, to which a part of your each premium payment is routed. Your policy’s cash value grows tax-deferred at a fixed rate and is available to you while you are still alive. Generally, your beneficiaries receive only the death benefit, not the unused cash value.
Who is it for: Whole life insurance is a better choice for people who need lifelong coverage and don’t mind paying extra for various guarantees that this type of policy provides.
Downside: Whole life premiums are 10-15 times higher than term life premiums, on average.
3. Universal Life Insurance
The basics:
- Provides permanent coverage and builds cash value
- Premiums and the death benefit may be flexible, within limits
- Costs less than whole life insurance but can be more complicated
How it works: Universal life insurance provides lifetime coverage and includes a cash value component. But the cash value growth rate is not fixed; rather, it fluctuates according to the market rates. Some universal life plans allow you to adjust your premium payments and the death benefit within certain limits.
Downsides: Universal life insurance policies require more involvement and are more complicated compared to whole life insurance plans.
4. Guaranteed life insurance
The basics:
- Provides permanent coverage; may or may not have cash value
- Has level premiums, meaning they remain the same throughout
- The death benefit also doesn’t change
How it works: Also known as funeral, final expense, or burial life insurance, guaranteed issue life insurance is a small permanent life insurance policy which doesn’t require taking a medical exam. It is designed for people in poor health and the coverage amount is usually just enough to pay for end-of-life expenses and leave a small inheritance.
Who is it for: People who do not qualify for standard life insurance plans because of pre-existing conditions.
Downsides: Guaranteed life insurance has smaller death benefits and higher premiums than other types of policies. In addition, it has a waiting period or a graded benefit. If your policy has a waiting period — two years, typically — your beneficiary will not receive the death benefit if you die from natural causes during this period. Instead, they will receive the premiums paid by you plus interest. If your policy has a graded benefit, the insurer will pay a partial death benefit if death occurs during the first few years after you buy the plan (e.g. 25% in the first year, 50% in the second year, and 75% in the third).
5. Group life insurance
The basics:
- Is available only through work
- Coverage can be temporary or permanent
- Doesn’t require a medical test
- The employer pays all or most of the cost
How it works: Many employers offer group life insurance to their employees. The base amount is usually free for employees, with the option to purchase more.
Who is it for: Everyone. If group life insurance is available, you should sign up for it, since coverage is either free or fairly inexpensive.
Drawbacks: The base coverage amount is usually limited to one or two year’s salary, which is not enough for most people.
Should You Get Life Insurance as a Cyclist?
Most people buy life insurance to secure the financial future of their dependents. If someone in your life depends on you for their wellbeing, you should get life insurance.
As a cyclist, you may be exposed to more risk than the average person, so having adequate coverage becomes all the more necessary. While bike riding is a lot of fun and something that can be enjoyed by just about everyone, it’s not absolutely safe. Every time you sit on your bike, there’s a small risk of an accident, even if you are a cautious rider and ride it in areas with low traffic.
Conclusion
Cycling is an excellent way to stay physically active and may impact your life insurance rates positively. As far as life insurance options go, as a cyclist you will likely have the full range to choose from.
If you’re a cyclist and looking for life insurance, Dundas Life can help you. Our experts will take the time to understand your needs and recommend solutions tailored to your unique situation. Book a free 15 minute consult today.
FAQs
Do insurance providers consider the type of bike when determining coverage for cyclists?
Typically, life insurers do not consider the type of bike you ride when determining your insurability and premium rate. Factors that impact life insurance coverage include age, health, personal medical history, family medical history, and lifestyle choices.
What effect does participating in competitive cycling events have on life insurance premiums?
There’s no one-size-fits-all answer to this question. It all depends on the type of cycling events you prefer and how frequently you participate in them. If you frequently take part in extreme cycling events, you might have to pay more for coverage than someone who cycles to keep themselves fit or for leisure.
Is life insurance coverage impacted if I cycle in high-risk areas or countries?
Cycling in high-risk countries could result in higher premiums or certain exclusions. Life insurers are likely to consider the risk associated with specific geographic locations, such as accident rates, road conditions, safety conditions, etc., to determine your insurability and premium rate.