How does credit impact your life insurance?
When life insurance providers calculate your rates, they will take various factors into account. For instance, they will consider your age, overall health, lifestyle, and so on when determining your premiums. However, many people are surprised to learn that their credit may also affect the cost of their life insurance. Curious to learn how your credit score impacts your life insurance premiums? Then please read on.
- The Connection Between Credit Score and Life Insurance Rates
If you have a low credit score, then this can be a red flag for life insurers. Insurance providers will worry about your ability to pay your premiums consistently. Because the carrier would have to absorb the cost of your missed payments, this makes you risky to insure. Additionally, many insurance carriers see a link between how people handle their personal finances and their risk of dying early. Typically, insurers consider individuals with low credit scores to be irresponsible and more likely to make reckless decisions that could lead to an early death. For both of these reasons, life insurance providers may charge more to cover people with poor credit.
- Do All Life Insurance Providers Look at Credit Scores?
The practice of using credit to determine insurance rates is controversial. Critics argue that, because lower-income individuals are more likely to have lower credit scores, the practice of using credit to determine insurance premiums discriminates against the less affluent. That being said, there aren’t any laws banning the use of credit scores when determining life insurance premiums. While poor credit alone is not usually enough to prevent you from securing life insurance, you should expect it to drive up the cost of your coverage.
- Should I Wait to Get Life Insurance?
It’s never a good idea to put off getting life insurance, even if your credit is bad. This is because you can never predict what life will throw at you. While it may be expensive, failing to secure the right life insurance will leave your loved ones at risk for serious financial hardship in the event of your passing.
So, what can you do to lower your rates? As you work to improve your credit, keep your life insurance provider informed. As your credit score goes up, you may be able to enter a lower-risk classification, which could result in a drop in your life insurance rates.
This is what you need to know about the relationship between your credit and your life insurance premiums. Do you have additional questions about your life coverage? If so, then contact the experts at Scautub Agency in Scotia, New York. We are ready to assist you with all your insurance needs today.