As if having a criminal record doesn’t have enough problems associated with it, such a history can also cause complications when it comes to applying for life insurance.
Depending on the nature of the conviction, and the time that has elapsed since, getting life insurance with a criminal record can be a difficult undertaking.
Why a Criminal Record Matters to a Life Insurance Company
Life insurance companies consider the risk of extending a policy to anyone who applies.
Each person who completes an application presents a set of risks to the company, and the company will make a decision to approve the policy without limits, to approve it with higher premiums, or to reject it.
Which of these outcomes takes place will depend upon the nature of the risk that the applicant presents to the company.
A criminal record represents a set of risks, in much the same way that health condition and occupation can.
Life insurance companies see a criminal record as presenting a distinct set of risks, some of which could lead to early death, and consequently early payout of the death benefit.
In evaluating someone with a criminal record, the company has to consider the effect of incarceration may have had on the person’s health.
Incarceration is an extremely stressful situation, one that can take a toll on health by itself. But there’s also the possibility of contracting certain diseases while in prison, one that can ultimately lead to death years later.
It’s also unfortunately true that a criminal record is an indication of a high risk lifestyle.
First and foremost may be the possibility of committing another crime.
Drug use is also closely associated with incarceration. Either development can result in premature death.
The company also have to consider the possibility of re-incarceration.
According to the Bureau of Justice Statistics, more than half of prisoners released from prison are re-incarcerated within three years. That holds open the possibility of dying either in the process of committing another crime, or while in prison.
What Kinds of Criminal Activity Matter
The type of criminal conviction is also significant. While misdemeanors can be a problem on a life insurance application, felonies are much more serious.
This is particularly true if the criminal record indicates multiple felonies, or even multiple misdemeanors.
Major felonies, or a series of multiple lesser felonies, will usually result in an automatic decline from the insurance company.
Major felonies include murder, acts of terrorism, rape, drug trafficking and participation in organized crime.
The risks involved with participation in such crimes is considered too high to warrant approval, even with high premium rates.
Current Status Also Matters
There’s a better chance of getting life insurance approval if the criminal record includes either misdemeanors, or of a minor felony in the more distant past.
This of course will not be true in the case of major felonies, or multiple minor felonies.
As a rule, life insurance companies are also highly unlikely to approve the application for a person who is on probation. The problem with probation is that it is a highly contingent circumstance.
The person is still being technically supervised by the criminal justice system, and even a minor violation could result in a return to prison, and all of the risks that are associated with that environment.
This is also an area where even misdemeanors become a problem. Life insurance companies will be equally uninterested in approving a policy application if your probation is the result of a misdemeanor, even a minor one.
Unlike Other Risk Factors There’s No Time Limit on Criminal Convictions
One of the problems with a criminal record is that it doesn’t fall off your history after certain number of years.
For example, a bankruptcy will disappear from your credit report after 7-10 years. And an insurance company will be less concerned with a previous episode of cancer or heart disease that occurred more than a decade ago, compared with one that happened just last year.
Of course the passage of time will be an advantage if the conviction was for either a misdemeanor, or for a relatively minor felony.
A conviction that occurred 20 years ago will have far less impact than one that happened two years ago.
In this regard, applicants with criminal records are one of the few areas where it is generally worth waiting for several years to pass before making a life insurance application.
And naturally, the longer you have been off probation, the better your chance of approval, and the better your premium is likely to be.
How to Get Life Insurance With a Criminal Record
If you would like to apply for a life insurance policy, and you have a criminal record, the best advice is that you not try to hide it.
Whether you fail to disclose it, or you simply ignore questions related to previous criminal activity, it’s simply too easy for an insurance company to find out about your past.
A simple criminal background check, which is virtually routine in the insurance industry, will reveal the omission.
And once that happens, your application will be automatically declined.
Your best bet is to work with an experienced insurance broker, and to fully disclose the criminal record.
Once again, the nature and severity of the conviction, as well as the amount of time that has passed since, will have a significant impact on the type of policy you will be able to obtain, or whether you will get one at all.
If you do have criminal record in your distant past give us a call and we’ll see what we can do. We can’t promise a miracle, but some insurance companies do have a more relaxed view of a criminal record than others.
It’s always worth a try. After all, the worst that will happen is that your application will be declined, and in that case you’ll be no worse off than you are right now. But you won’t know that unless you give it a try.
