Your credit rating reveals information about how you handle your financial responsibilities, and your credit score is among the major factors a bank relies on to find out the amount of interest you'll pay on that loan you would like. Increasingly, credit rating is being factored into a lot more decisions about our lives including auto insurance, adoption, and employment. Yet, with regards to life insurance coverage, insurers might not see this kind of information the same way other industries do.
Keep in mind: underwriting guidelines vary from insurance company to company, and thus we can’t talk to what every individual insurer will appear at. For this, we’ll focus on the guidelines for the Haven Term policy, that is issued by our parent company MassMutual, and how credit attributes enables you to help flag if underwriters need to comprehend more about an applicant. During the application and underwriting process, your credit score is not used to determine premium pricing or eligibility. When you apply for a Haven Term policy, your credit info is only used to see whether additional information is required.
Why might life insurance companies look at your credit?
During the underwriting process, many insurers analyze self-reported lifestyle and health information and pair it with third-party data sources that provide insights about your prescription history, past applications for life insurance, driving records, and criminal background.
Once a life insurance application is submitted, an insurer reviews these public record information to find out if they have to ask follow-up inquiries to understand much more about your financial or health picture. Your credit attributes, not your credit score, may be one of whatever they will review within the underwriting process.
An illustration of a credit attribute that life insurance coverage companies would take a look at is whether or not you've declared bankruptcy. While for many people, bankruptcy can be a result of unfortunate events beyond their control, for other people it may indicate poor decision-making or even be considered a warning sign for medical problems because many bankruptcies would be the result of hospital bills.
Personal records that do impact life insurance coverage premiums
While a life insurance provider isn't looking to decide if you've got a balance in your charge card, there are other public record information that can have an affect on eligibility and pricing.
DUI/DWI convictions, for instance, are members of these public record information and can display in the underwriting process. Multiple convictions of drinking and driving can illustrate for an insurer a design of high-risk behavior that may ultimately increase mortality risk. Exactly the same can probably be said for having a criminal history.
Additionally, your prescription history will be reviewed and in contrast to the information reported within the application. For example, at Haven Life, once a credit card applicatoin is submitted, these public record information are reviewed in real-time. Should there be follow-up questions about a prescription drug you have taken in the past, you'll receive them in the same session.
(Read more on factors that impact your life insurance premium here.)
When you are looking at buying life insurance, for most of us, your credit attributes are much less important than how old you are and health history. The amount of information reviewed by an insurer could be intimidating, but it's important to realize that, generally, the less assumptions an insurer is making regarding your health insurance and lifestyle choices, the less expensive and personalized-to-you the pricing will be.
If you're shopping for coverage and concerned about the way your public records may impact your pricing or eligibility, reach to our customer care team. They are pleased to assist you to understand whether it could be either an issue or slow down the approval process.
Finally, you should check with your state's insurance department to discover your state's laws on whether and just how insurers can use your credit information within the underwriting process.
Kimberly Rotter is definitely an editor at Haven Life along with a credit and personal finance expert. She provides consumers with understandable, actionable information that can help them improve their financial and credit health.
