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How the information on your credit report influences your life insurance rates.
Your credit score affects your ability to rent a home, take out a loan, and apply for a credit card, and it can also affect the rates you pay for many types of insurance.
With renters insurance, car insurance, and homeowners insurance, your rates are directly influenced by your credit score. But with life insurance, the correlation between credit score and rates are less transparent.
Many factors affect your life insurance rates, and your credit score is just one of those factors. Many life insurance companies will make a soft inquiry of your credit report, and the information on that report may be taken into account when they decide to insure you and for what rate.
In addition to your credit report, there are several other reports that life insurance companies pull to determine your rates, including your Medical Information Bureau (MIB) report, your LexisNexis risk score, driving history, your prescription drug history, your medical records, and your criminal records.
Read more about the scores and reports that life insurance carriers use to determine your rates:
The actual number of your credit score does not affect your life insurance rates, but some of the information on your credit report could affect your rates or your ability to purchase life insurance.
For example, all insurers have rules about bankruptcy, and many require that the bankruptcy be discharged for 12 to 24 months before your can purchase a policy. Others may see former bankruptcies on your report or other credit risk factors and offer you modified rates.
If you have a history of bankruptcy, you should read more about more about life insurance and bankruptcy and work with an insurance advisor who can help you pick the right company for you.
If you know you have a low credit score, talk to your advisor about a company that may be friendlier to someone with your specific profile.
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Your credit score and accompanying credit report are just one of the many factors in determining your life insurance rates. Some other reports that life insurance companies will look at include:
LexisNexis Risk Solutions uses a proprietary algorithm to establish its own risk score, also called a risk classifier. The algorithm uses several data points, including credit score,driving history, and other data derived from public records, to determine an applicant’s risk and distills it into a numerical score that some insurance companies use.
The MIB serves as a clearinghouse for information about your recent life insurance applications, and your MIB report will have info about any past life insurance applications you’ve filed.
Read more about the Medical Information Bureau, including how you can request a copy of your MIB report.
Driving accidents and tickets are a big warning sign to insurers that you may be a higher-risk applicant than you first appear, so insurers check your motor vehicle report.
Read more about how your motor vehicle report affects your life insurance rates.
When it comes to prescription drug use, the medicines you take, as well as the dosage and length of use, can indicate past and present health issues and their severity. Many states have a prescription drug database of some sort, and insurers can also buy aggregate data on your prescription drug use from third party data brokers like IntelliScript and MedPoint.
In addition to attending physician statements (APS), which are statements from your current doctors about any medical treatments or diagnoses you currently have, the insurance underwriters may also request medical records from any doctors you’ve ever seen.
Insurers also look at your criminal history in order to assess your risk.
If you’re currently being charged with a felony, you will likely need to wait until charges are dismissed before you can apply for life insurance. If you’re convicted or serve time, most carriers will postpone the application until you’ve been out of jail or off probation or parole for at least 12 months.
Read more about life insurance and felonies.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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