If you have a criminal record, you may still be able to buy a life insurance policy. There are, however, a few things you need to know before you jump into the shopping process.
For starters, if you’re currently on probation, you will not be able to purchase life insurance. No life insurance company will accept an application from someone who is in jail, awaiting trial, or is currently on probation.
You’ll need to wait at least a year until your probation period is over to apply for a life insurance policy, and even then your life insurance policy may be prohibitively expensive. Most insurers charge an additional flat fee on top of your annual life insurance premiums for the first five years after your probation period ends. This fee is usually around $2.50 per $1000 of coverage. So if you purchased a policy with $100,000 in coverage, you would be charged an additional $250 per year (or approximately $21 per month) for your life insurance policy. The exact fee will vary by carrier.
Why do life insurance companies tack on this extra fee for people with criminal records? The first thing you need to know is that this isn’t a personal or moral judgement on the part of the life insurance company. Life insurance look at everyone in the context of data. They use scientific studies to make best guess judgements about the likelihood that an individual person may die during the term of their life insurance policy.
In English: They judge how risky you are to insure based on a ton of data. And insurers’ data shows that people with criminal records tend to live shorter lives.
Life insurance companies do not look at every crime the same way. They typically view misdemeanors and white collar felonies with the most leniency. Multiple felonies or a major felony, like a violent crime, organized crime, or drug trafficking, may get you declined no matter how long you’ve been off probation.
Your best strategy for buying life insurance as someone with a criminal record is to wait as long as possible after your probation period to buy life insurance. If you wait long enough, you’ll eliminate the flat extra fee and save a ton of money year over year. Alternatively, if you need a policy right now, buy it for a short term. This may be worth it if you just had a baby and want to make sure your family is protected, for example. If you buy a policy with a short, 10 year term, you can shop for life insurance again without the same concerns over your criminal record from the insurer. You can also your agent about an advanced strategy for saving money on life insurance, often referred to as the "ladder strategy" for life insurance.