Does Your Credit Score Affect Your Life Insurance Premium?



We all know how powerful our credit score can be. For example, it can determine your interest rates when you get a credit card, buy or rent a home, get a personal or car loan, and more. But did you know that it can also affect how much you pay for certain types of insurance?

Your credit score has a direct impact on your rate for insurance products such as home insurance, tenant insurance, and auto insurance. However, life insurance is a little different and how your credit score plays a role in your rate isn’t as clearly defined.

We know that there are a number of factors that go into determining your life insurance rate. Your credit is just one of those factors. Many life insurers will conduct an informal investigation of your credit report (meaning your score will not be affected) and the information in your report can be used when deciding whether to insure you and how much you will pay.

There are also a few other reports that life insurance providers will use to make the decision to insure you, which we’ll cover in a bit more detail below. For this article, however, we’ll focus on whether and how your current credit score can impact your life insurance premiums.

The correlation between credit and life insurance

Remember that your actual credit score will not affect your life insurance rate. It’s the information about your credit report (such as bankruptcy) that could potentially affect your rates, or even your ability to purchase life insurance.

For example, all insurers, including life insurance providers, have specific bankruptcy guidelines. Although the guidelines vary, many life insurance companies have provisions that say you must be out of bankruptcy for one to two years before you can purchase a policy.

Other life insurance providers may consider bankruptcy within two years to be a significant risk, but not high enough to deny you coverage, so they will give you a higher rate. Again, these are just examples of how your credit COULD affect you.

The funny thing, however, is that even if insurance companies don’t use your score directly, something like bankruptcy would definitely decimate your credit score – so they are looking at your score indirectly.

When it comes to bankruptcy, if you have one, you should take a look at our list of the best life insurance providers to see which ones are not only right for you, but will also insure you with a default on your credit.

And if your credit rating is low for other reasons, it may be worth working with an insurance broker like Political genius who can put you in touch with several life insurance providers and maybe even recommend some that will suit your situation.

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What other reports are used for life insurance?

While you may be worried about your credit, there are several other reports that life insurance companies will look at to determine your life insurance rate. Some of them are listed below, and if any of the issues below alarm you, you should fix the errors as soon as possible.

Previous medical records

It may seem like a total invasion of your privacy, but remember that you are asking an organization to provide financial benefits if you die. They should therefore know all they can about you. Life insurance providers can retrieve your past medical records and review any recent diagnoses and treatments you have received.

Additionally, some life insurers will want to go through your entire medical history if they see anything of concern, so they might get records of any healthcare professionals you’ve seen.

History of prescription drug use

This one might come as a shock, as this is highly private information. But you do publish these private records when you buy life insurance, and that’s a big deal. The prescription drugs prescribed for you and taking can be an important indicator of your overall health and your life expectancy.

As such, insurers will want to see this to determine if there are any issues or alarming trends that indicate you might be risky to insure. You may not already know it, but many states already have a drug database that contains your prescription drug consumption. In addition to this, insurance companies can purchase data that shows your past use of prescription drugs. And yes, it is legal.

Report of the Medical Information Office

The Medical Information Bureau is a non-profit, member-owned organization. Its’ underwriting services are used exclusively by MIB member life and health insurance companies to assess an individual’s risk and eligibility when underwriting life, health, disability, critical illness and insurance policies. long-term care ”.

The MIB strives to mitigate “the risk of candidate errors, omissions and misrepresentation. MIB can help reduce the cost of life and health insurance for consumers. “

Driving record

If you have traffic tickets or car accidents on your record, it could indicate to your life insurance provider that you are at a higher risk to insure. For this reason, life insurance companies may examine your motor vehicle report to see if there are any red flags.

Criminal record

Life insurers will also want to know if you have a criminal history, which is another factor in your overall risk level. In most cases, having a minor criminal offense on your record will not prevent you from purchasing life insurance.

The problem arises when you are charged with a felony, ordered to serve, or are currently serving a prison sentence. If you’re charged with a felony, you’ll likely have to wait until the charges are settled before you can purchase life insurance.

And if you are ordered to serve a prison sentence or if you are currently serving a sentence, almost any insurer can put your claim on hold until you are out of jail for at least a year. Again, this is a dramatic situation that I hope most of you don’t face, but it helps to know that your criminal record plays a role.


LexisNexis is a global company providing both legal and business research. One of the products they offer is called Risk Solutions, which uses an algorithm they created that allows insurance companies to develop a risk score. There are a number of different data points included in the risk score: things like your driving history (if you can believe it), your credit score, and public records help create a unique risk score for each individual.

The use of credit for life insurance caused a stir

While insurers have pretty much always used your credit as a determining factor (especially for things like auto insurance), it’s relatively new to the world of life insurance. In fact, most life insurance providers have only been reviewing consumer credit reports for about a decade.

But the use of credit for insurance purposes has been somewhat controversial. For example, a few states have laws in place that prohibit insurers from using your credit history as a determining factor for auto insurance. However, no state has addressed the credit used for life insurance approvals.

Life insurance providers say they use your credit history in a different way than a lender. But it can get really sticky when you think about it. Insurers really don’t have to use your credit report to find out your income, but they can assume this information by looking at loan balances, defaults, etc. And while your credit score is technically not a factor, the data in your credit report has a direct impact on your credit score and unfortunately there are no clear guidelines on this.

To be fair, tools like LexisNexis will collect a lot more data than your credit history, but you can see where that gets controversial. Also, things like your medical history and prescription drugs are reviewed – which I think makes sense for life insurance, but again there are no guidelines.

Remember, your credit history is only one factor

Your credit profile is just one of many factors used to determine your eligibility and rate for life insurance. As you can see from the list above, life insurance companies want the full picture – including your medical history, criminal history, etc.

More and more insurers are using proprietary software and advanced algorithms (like LexisNexis does) to analyze data and determine your level of risk. It’s called predictive analytics, and it’s a growing field.

So the more data they have about you, the more they can “feed” their model. Machine learning gets smarter as it continues to analyze data over time. In short, as insurers better use their data to predict risk, the more frequently they can offer life insurance policies at excellent rates without the need for you to undergo a medical exam.

This not only makes it easier for you as a consumer, but also easier and faster for insurance companies to sell policies.

Final result

This is not designed to panic you, but more importantly to make you aware of how your data, especially your credit history, is used as a determining factor for life insurance. If you are denied coverage or feel your rate has been adjusted unfairly, contact the insurer directly to understand the exact reasons.

Now that you know that your credit history will have an impact (even a minor one) on your ability to purchase life insurance or get the best rate, it’s a good idea to make sure you review your credit regularly. If there are any inaccuracies or errors, be sure to dispute them. Everyone should get a copy of their credit report and check it at least once a year (and it’s free).


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