By Mark Maurer, CFP®
At FlightPath Financial Planning, one of our focuses is working with clients who are involved in aviation, such as pilots. There are certain considerations for pilots when considering life and disability insurance and since FlightPath is a fee only financial planning firm, we work with outside advisors who can provide you the best possible insurance solution without any conflict of interest. Here is some information from Mark Maurer of LLiS, who focuses on general insurance and has helped and continues to help many of our clients.
Several years ago, life insurance carriers would put an aviation exclusion rider on any policy if the insured was a pilot. This exclusion rider meant the insurance carrier would not pay a death claim if the insured was piloting or co-piloting the plane. They would, however, pay if the insured’s death resulted from a plane accident as a passenger.
After looking at claims data, many carriers dropped this exclusion rider for commercial pilots as they were found to be a good risk. Statistics show that commercial pilots are healthier, more affluent, and live longer than the average person. Many insurance companies will consider giving commercial pilots preferred rates, assuming they fit within the other guidelines (health, family history, other lifestyle habits, etc.). A few insurance companies will only consider preferred rates if they fly domestic flights with a US airline.
While commercial pilots may be eligible for preferred rates, private and student pilots may not be. Private and student pilots may have an aviation exclusion rider, or a flat extra fee added to the policy depending on factors such as how many hours flown, type of flying, certificates, and ratings.
All insurance carriers will also underwrite to ensure no other concerns, such as a history of alcohol abuse, drug use, DUIs, and health conditions, such as epilepsy and untreated sleep apnea.
Even though traditional disability insurance companies do not cover professional pilots, they still need coverage because they are not immune to illness or injury. Some specialty line companies allow for a “Loss of License” application that will cover pilots.
It is recommended for pilots to first enroll in an employer-provided long term disability insurance plan or any pilot association coverage, if available. These coverages would be factored into the specialty lines mentioned above.
Critical Illness is an alternative insurance solution for pilots to fill some of their disability insurance gaps. Critical Illness insurance provides a lump sum benefit for certain illnesses, most commonly heart attack, stroke, or cancer. The benefit amounts can be $5,000 to $500,000 and a policy may pay benefits more than once for multiple conditions.
When applying for either type of insurance, it is essential to work with an aviation experienced agent to find the best solution for your needs, at the lowest premium.
Contact FlightPath Financial Planning for more information and to better understand how life and disability insurance may be a part of your financial plan. LLiS only works directly with advisors so schedule a free consultation today to discuss your insurance and financial planning needs.
Mark Maurer, CFP® is the President and CEO of LLiS who is “The advisor’s insurance advisor”.