Disclose risky leisure activities

In business, and in life, you are a results-oriented, goal-setting high achiever.

It’s no surprise, then, that you’re also attracted by the adventure and precision required to excel at high-risk sports.

Which means you need to familiarize yourself with how insurers look at risky activities. Life insurance companies reduce their risk when taking on an insurance policy through a variety of means:

• pricing;
• duration of products;
• guarantees;
• non-medical questionnaires; or
• medical testing and reports.

As part of the non-medical underwriting procedure, you will be asked to disclose any risky hobbies or sports. A lifestyle questionnaire specific to the activity is an additional requirement for the underwriter’s review. This document asks questions related to your participation and skill level.

It’s important for you to share all details of your sports activities with the insurer. Any omission could result in cancellation of your policy or a denied claim on the grounds of material misrepresentation. The more details provided to support any advanced skill level or professional training you have, the better the opportunity to show the underwriter that the activity is a controlled risk and extra premiums may be minimized.

If the insurance company deems the activity as a significant risk, they have several options:

• decline coverage;
• apply an additional premium to the policy; or
• exclude the activity for life insurance claim purposes.

This can leave you with very limited insurance options. Shopping around with various insurance companies to find coverage options is worth the effort, and the best life insurance premium in these situations.

It is also good practice to stay in contact with your life insurance company over time, since you may lose interest in high-risk sports later in life. If that happens, review your premiums. And remember the insurance underwriter does not look at the sporting activity in isolation, but instead as a part of your entire risk profile.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.