Scuba diving can be relaxing and awe-inspiring, but it does come with some risk. The most recent DAN Annual Diving Report recorded 228 scuba diver fatalities in 2017, most due to diver inexperience. With upwards of 2.8 million scuba divers in the US the same year those fatalities were reported, the chance of dying during a dive is slight. However, there is some inherent danger. Scuba divers may find it harder to purchase life insurance due to the risk involved and may pay higher premiums, depending on the risk level assessed by their insurance carrier.
Why does scuba diving matter to life insurance companies?
There is some debate among industry experts about whether scuba diving is risky. The current fatality rate is approximately one diving death per 200,000 dives. Ultimately, from an insurance carrier’s point of view, it comes down to the frequency, location and type of dives. Jeremy Hallett, Founder and CEO of Quotacy explains, “Scuba diving can be considered high risk, but only in certain circumstances. Recreational diving is fairly common, and insurance companies still allow the best rates for people who occasionally dive.”
Although recreational scuba diving is relatively safe, things can go wrong, especially as you take more significant risks, such as diving past 100 feet or exploring caves or shipwrecks. Diving alone is also considered much riskier, with as much as 86% of recorded fatalities occurring during a solo dive or when divers became separated from their diving partner.
It would be unusual for a life insurance carrier to deny coverage for scuba diving. However, life insurance premiums may be more expensive based on the higher probability something could go wrong when compared to someone who does not dive.
When purchasing a life insurance policy, it’s vital to disclose the fact that you’re a diver, even if it’s an occasional recreational activity. Insurance agent Travis Price advises, “Never, ever, omit information that could be considered risky from an application. Insurance companies have a contestability period. This means if the insurance company can find something that you did not disclose at the time of application, they would only be required to return premiums in the event of your death (if you pass away in the first two years). Even if you die in a car accident, if you refused to disclose that you were a diver or even a smoker, the full death benefit might not be paid.”
Scuba diving factors that affect life insurance
Life insurance companies take various considerations into account when scuba divers apply for life insurance. The most important factors affecting your life insurance premiums are:
- Experience level: Since many deaths and serious injuries occur because of diver error due to inexperience, life insurance providers want to know about what type of certification you have and how long you’ve been diving.
- Frequency of dives: How often you dive is also an important determinant of your premiums.
- Level of risk you take: Insurance companies will want to know what type of diving you do. Is it diving past depths of 130 feet? Is diving an occupation or a hobby? The underwriter may even want to know about the quality and age of the equipment you typically use. The level of risk you take when scuba diving is important for an insurance company to know.
- Age and medical impairments: Older divers or those with respiratory or cardiovascular impairments may also be considered higher risk and pay higher premiums.
Most carriers will have you complete a supplemental questionnaire if you indicate that you occasionally or regularly dive. Some of the questions you may need to answer include:
- How many dives have you completed in the last 24 months?
- What was the average time and depth?
- Do you plan on diving in the next 12 months?
- What was the date of your last dive?
- Do you engage in any competitive, salvage, deep free, cave, night or ice diving?
Underwriters use your answers to develop a risk profile and determine premiums accordingly. According to Michael Cohen CLU, President of the Eugene Cohen Insurance Agency and member of the Risk Appraisal Forum, “Insurance companies may put a proposed insured into a high premium class. Someone that scuba dives, say 35 feet, once every couple of years and has never gone deeper than 75 feet may not have any surcharge. If someone is a professional for, say, a fire/rescue team, they may have more trouble obtaining traditional coverage.”
Your classification as a diver can also make a difference in the cost of your life insurance. According to Sam Price, a broker at Assurance Financial Solutions, “Recreational divers can qualify for preferred rates so long as they’re certified in diving, dive in groups, and typically keep to a minimum depth on their dives.”
Riskier diving comes with higher premiums to match. Price of AFS calls them “flat premiums, typically added on to the policy for a specific period. For example, if your life insurance provider underwrites you at standard rates, the insurer can add $5 per every $1,000 of coverage to the premium you pay.”
If you buy a $500,000 policy, it could cost another $2500. “The result of a flat premium is a drastically increased premium for your coverage compared to what a normal person might be required to pay,” explains Price.
Types of life insurance for scuba divers
Choosing a life insurance policy is a personal decision. You’ll need to determine how much life insurance you need and whether you’re buying coverage to manage your wealth, plan for estate taxes after you pass or to ensure that loved ones and dependents are cared for financially if you pass suddenly. Three types of life insurance to consider are:
Term life insurance
A scuba diver who wants to purchase a simple, affordable life insurance policy that could leave loved ones with a lump sum should look at term life insurance. When buying term life insurance, you’ll need to choose a coverage length such as 10, 20 or 30 years, a death benefit amount and name one or more beneficiaries. Your premiums won’t change for the term of the coverage, but it is important to note that once the term expires, so do the benefits. Since term premiums are typically less expensive, it is likely that you will have to undergo a medical exam and answer questions about your lifestyle to qualify, so this option is likely better for lower-risk divers.
Whole life insurance
If you’d like an indefinite term and a savings component with your policy, whole life may be the answer, as it’s a permanent policy with no end date. The coverage is in effect as long as your premiums are paid and the policy is up to date, regardless of your age or any medical conditions that may develop. You’ll also grow a cash value amount with every premium payment, which is yours to access while you’re living. The cash value amount earns interest similar to a savings account or money market. While whole life insurance is typically more expensive than term, and you may have to take a medical exam or answer lifestyle questions upon applying, the coverage is lifelong. It may provide more flexibility for divers who want to increase their participation in the sport over the long term.
Guaranteed life insurance
Younger high-risk divers may want to consider guaranteed life insurance, which is guaranteed as the name implies. Guaranteed policies are solely based on your state, age, gender and the amount of life insurance you want. There is no medical exam, and it is almost impossible to get denied. However, this type of policy is typically capped at a benefit of around $25,000, and the premiums are generally expensive since the risk for the insurance carrier is much higher. Still, if you prefer not to disclose much information to the insurance company and want at least some guaranteed benefit, this is a viable option.
Frequently asked questions
What is the best life insurance company?
The best life insurance company depends on the type of coverage you’re searching for and how much you can afford. Many reputable companies have been around for over 100 years and are good contenders for the title: State Farm, New York Life, Prudential and Transamerica are some worth considering. To find the best company for your needs, get several provider quotes to compare. Consider speaking with a licensed insurance agent to ensure you are getting the best coverage for your situation.
What’s the difference between term life and whole life insurance?
There are advantages and disadvantages to both term and whole life insurance, depending on your needs. Term life coverage is only active for a set amount of time, such as 10 or 20 years. Whole life insurance is permanent, with no end date to the policy. Term insurance is typically less expensive, but whole life insurance adds a cash value component that can provide a growing asset. It’s usually a good idea to speak with a licensed insurance agent to determine which type of policy is best for you.