Most Americans Oppose Using Credit, Crime and Marijuana in Life Insurance Prices – Forbes Advisor

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Most Americans think people with bad credit or heavy marijuana use shouldn’t pay more for life insurance, a new Forbes Advisor survey found. Respondents were less forgiving of risky drivers and those with dangerous hobbies such as skydiving.

In addition to age, gender and health, life insurance companies regularly use driving records, criminal records, credit, dangerous hobbies and marijuana use when setting rates or deciding whether to even offer coverage. The survey of 2,000 adults gauged opinions about insurers’ practices.

Here’s what Americans think about the lifestyle factors that affect the cost of life insurance.

The majority say that bad credit should not affect life insurance rates

Credit is one of many factors that can affect life insurance rates, but 70% of respondents don’t think life insurance applicants with bad credit should be penalized with higher quotes. More than half (52%) strongly disagree with the pricing tactic.

To what extent do you agree or disagree with the following statement: “People with bad credit should pay more for life insurance”?

Over half say don’t increase life insurance quotes for marijuana use

Medical marijuana is legal in 37 states and Washington, DC, and recreational marijuana is legal in 19 states and Washington, DC, but you may pay higher life insurance rates if you’re a cannabis user. The effect on life insurance quotes — and whether you can even buy life insurance — will depend on how often you use marijuana.

The results of the survey show that most people think this is unfair – 57% of respondents do not think it is good for regular marijuana users to pay more for life insurance. Many had strong opinions on the matter: 41% strongly disagreed that regular marijuana use should mean higher quotes for life insurance buyers.

To what extent do you agree or disagree with the following statement: “People who use marijuana several times a week should pay more for life insurance”?

A Forbes Advisor analysis of life insurance rates for marijuana users found that:

  • A 30-year-old man who uses marijuana occasionally (two or less times a month) pays an average of 23% more for term life insurance than men who don’t. A 30-year-old woman pays 22% more for occasional use.
  • For those who use it more than twice a month, the quotes can be even higher – 47% more for men and 34% for women.

Only 24% believe past felonies should affect life insurance buyers

Nearly half (49%) of people think a felony conviction should not be a reason for life insurance companies to charge a higher premium. And almost a third (32%) feel strongly about the issue.

Life insurance companies regularly consider criminal records when evaluating applications. The number of convictions and type of crime can affect life insurance applications. For example, a felony, such as grand larceny or theft, can mean higher life insurance quotes for someone with less than five years of probation. Multiple felonies or felonies such as murder or drug possession with intent to deliver can result in life insurance being denied.

To what extent do you agree or disagree with the following statement: “People with felony criminal records should pay more for life insurance”?

Risky drivers should pay more for life insurance

Although many respondents believed in leniency for marijuana users, people with bad credit and people who had committed a crime, many frowned on unsafe drivers. More than half (56%) think risky drivers should pay more for life insurance. Less than a quarter (21%) disagree.

Buyers of life insurance should expect their driving records to be checked. Some life insurers won’t give the best rates to someone who has had a DUI/DWI in the past five years – and some will deny coverage – even if the person is in excellent health. More than three moving violations could also put a life insurance buyer out of the running for the best life insurance rates.

To what extent do you agree or disagree with the following statement: “People who are risky drivers (ie, often get speeding tickets) should pay more for life insurance”?

Thrill seekers have to pay the price for the dangerous life

Life insurance companies view dangerous hobbies — such as skydiving or piloting airplanes — as high-risk behavior, so they typically charge more to people who do these types of activities. Only about half of Americans agree: 51% think it’s okay for people who engage in dangerous activities to pay increased premiums.

To what extent do you agree or disagree with the following statement “People who have dangerous hobbies (such as skydiving) should pay more for life insurance”?

Covid and life insurance: vaccinations, claims and bottom lines

Many life insurance companies do not take Covid vaccination status into account during the application process, although some may if you are at high risk due to other health conditions.

Public sentiment somewhat supports this: One-third (33%) strongly disagree that unvaccinated people should pay more for life insurance. This is twice as many (15%) who strongly believe that unvaccinated people should pay more.

Connected: Will Covid deaths mean higher life insurance rates?

To what extent do you agree or disagree with the following statement: “People who are not vaccinated against Covid should pay more for life insurance”?

Uncertainty about life insurance claims and Covid

Life insurance will pay out for a Covid-related death. But when asked if they believed life insurance companies could reject claims for people who died from Covid, 12% said yes. Just under a third (63%) correctly said no.

The impact of Covid death claims on the financial health of life insurance companies

Death benefits paid out by life insurance companies increased by more than 28% from 2017 to 2021, according to a report by AM Best. Despite the pandemic’s damage to the industry, life insurance companies are not suffering financially.

We asked respondents if they thought life insurance companies were in financial trouble due to Covid-related death claims. Although 20% of survey respondents said they were, the increase in claims did not materially affect the industry’s bottom line. In fact, AM Best reports that the life insurance industry’s pre-tax operating results grew over 20% from 2020 to 2021.

Buyers of life insurance should check the financial strength of the company. Rating agencies such as AM Best evaluate insurers’ ability to pay benefits in the future and issue ratings such as A+.

Since a life insurance policy may not pay out for decades, it is wise to buy one from a company that will be financially stable in the future. Although 41% of people knew what a financial strength assessment was, there was still a lot of confusion.

What do you think is a “financial strength rating” for life insurance companies?

Almost half say they don’t have enough life insurance

Almost half of people (48%) say they have no or enough life insurance. Here are the answers to the question of whether they currently have enough life insurance:

  • Yes: 40%
  • No: 27%
  • I have no life insurance (N/A): 21%
  • Don’t know/prefer not to answer: 12%

Broken down by gender, the survey found that more men (45%) said they had enough life insurance than women (38%). And nearly a quarter (23%) of women don’t have any life insurance, compared to just 17% of men.

Connected: 10 things women need to know about life insurance

If you don’t have life insurance or don’t have enough, don’t worry about the cost—it may be more affordable than you think. More than 50 percent of people overestimate the cost of life insurance by three or more times the actual amount, according to LIMRA and Life Happens, both industry-funded groups.

If you’re not sure how much coverage to get, you can use our calculator for how much life insurance you need before shopping for a policy.

And life insurance needs can change as your lifestyle changes – maybe you’ve paid off a mortgage or want to supplement your income after retirement – so it’s wise to evaluate your policy if you already have life insurance to make sure everything still meets your financial goals.

Research methodology

This online survey of 2,000 American adults was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Society for Market Research’s code of conduct. Data collected from June 2 to 7, 2022. The margin of error is +/- 2.2 points with 95% confidence. This survey was overseen by the OnePoll research team, which is a member of MRS and has corporate membership in the American Association for Public Opinion Research (AAPOR). For complete survey methodology, including geographic and demographic sample sizes, contact [email protected]

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