Skydivers, cancer survivors and people convicted of drunken driving have something in common: They all might find an extra charge in their life insurance.

Your age, health, and smoking status are the factors that most affect your life insurance rates. But other factors that raise your risk of death can spur insurers to impose a “flat extra” on your life insurance policy. The charge might be temporary, or it might last as long as your policy does.

Here are three common scenarios in which life insurance companies might charge flat extras.

Extra charges for cancer survivors

Nearly 40% of us will be diagnosed with cancer at some point, according to the National Cancer Institute. And in recent years, life insurance companies have become more willing to sell to cancer survivors. Your premium and ability to buy coverage depend on your specific diagnosis, your treatment and the length of time you’ve been cancer-free.

You’ll have to wait for one to five years to buy life insurance after completing treatments for most types of cancer, though some patients must wait longer, according to Trusted Choice, an organization for independent insurance agents. For example, women who are treated for localized cervical cancer can often purchase life insurance almost immediately afterward, but leukemia patients might not be able to buy coverage until they’ve been out of treatment for 10 years.

Even if you’re eligible to buy coverage, life insurers will probably charge you a temporary flat extra. “Low-risk” cancers, such as non-melanoma skin cancer and early-stage breast cancer, won’t result in higher life insurance rates, according to the Trusted Choice.

The amount and duration of the extra charge varies substantially. It might range from $5 to $20 per $1,000 of coverage, according to the Alabama Department of Insurance. That adds $500 to $2,000 per year to the cost of a $100,000 policy.

Paying more for dangerous hobbies

Jumping out of airplanes might sound fun, but statistics say it boosts your chance of an untimely death — so you’ll have to pay more if you buy life insurance. The same goes for those who engage in other dangerous hobbies, such as hang-gliding, deep-sea diving, and rock climbing.

Skydivers typically pay a flat extra of $2.50 to $3 per $1,000 of life insurance coverage if they jump no more than 50 times per year, at least $5 if they jump between 50 and 100 times per year, and up to $7.50 for more than 100 jumps, according to Trusted Choice. That’s $250 to $750 extra per year on a $100,000 policy. Joining a skydiving club might net you a discount.

Other dangerous hobbies involve different flat extras, according to Archstone Insurance Services in Manhattan Beach, California. All figures are the extra cost per $1,000 of coverage.

• Aviation: $2.50 for pilots over age 26 who fly 301 to 600 hours per year; $5 for those who fly more than 600 hours.
• Hot air ballooning: $0 to $2.50.
• Hang gliding and paragliding: $2.50 to $7.50.
• Diving: Generally $0 for those who dive to less than 100 feet; $3.50 to $5 for deeper dives, depending on number of dives per year.
• Climbing: $2.50 to $3.50 for those who climb up to 13,000 feet; $5 to $7.50 for those who climb higher.
• Auto racing: $2.50 for drag, sprint, and modified racing. Charges for other types of racing vary.

Costs linger after a drunken driving

If you’ve been convicted of drunken driving within the past 10 years, expect to pay an extra charge of up to $7.50 for every $1,000 of coverage, either temporarily or for the life of the policy.

You could be denied coverage altogether if you have more than one DUI conviction because you have a higher likelihood of getting into a fatal crash. In fact, a driver with one or more DUI convictions is about 40% more likely to get into a fatal crash than a driver without one, according to the National Highway Traffic Safety Administration. And drunken driving can be a sign of alcoholism, which raises the risk of death from other types of accidents or diseases.

Shop around for the best rates

If one insurer proposes adding a flat extra to your life insurance premium, don’t assume they all will. Each company assesses risks differently, leading to variation in average life insurance rates, as well as the cost of any flat extras.

Work with an independent life insurance agent if you have a risk that could lead to higher prices. He or she can identify the companies that are the best fit for you.

by Aubrey Cohen

Author: Aubrey Cohen

Source: NerdWallet, Inc

Retrieved from: www.nerdwallet.com