Does your credit affect your life insurance premiums?
When you go to secure life insurance, your agent will consider various personal factors when determining your rate. For instance, things like your age, lifestyle, and current health all play a major role in your premium calculations. However, it may come as a surprise that some insurance providers will also reference your credit score when determining your rate. But why do some insurers look at your credit and how does your score influence your life insurance costs? Here’s what you need to know.
How does my credit affect my life insurance rates?
Insurers use your credit history to see a connection between how you handle your credit and your risk of dying early. Supposedly, having a bad credit history could indicate that you are irresponsible and more likely to engage in risky behaviors. This could mean that you are viewed as more reckless and, therefore, more risky to insure. This, in turn, could translate into higher life insurance rates for you.
Do all insurers reference my credit history?
The use of credit history as a factor in life insurance premium calculations is controversial. Financial experts point out that using credit history to price for life insurance is a way to penalize low- and moderate- income individuals who are more likely to have a poor credit history. Despite this, there are currently no legal safeguards preventing insurers from factoring your credit into their rate calculations. If you want access to lower life insurance rates, then one of the things that you should do is focus on is improving your credit score.
This is how your credit score can affect your life insurance rates. Do you have additional questions regarding your life insurance coverage? If so, then contact the team at Steve Wilk Insurance for assistance today. Check out our new office at 310 S Main Street, Suite C, Lombard, IL 60148.