Does Credit Score Affect Your Life Insurance Premiums? – Policygenius (2024)

FAQs

Does Credit Score Affect Your Life Insurance Premiums? – Policygenius? ›

Your credit score doesn't have a direct effect on your life insurance premiums. However, when you apply for life insurance, insurers will do a soft inquiry of your credit report and the same factors that hurt your credit score can also hurt your options for life insurance coverage.

Yes, indirectly. Most insurance companies will not reject applications for insurance based only on a low credit-based insurance score, but they may only offer that applicant a policy with a higher premium or higher monthly rate. Paying a higher premium or rate could cost consumers hundreds of dollars per year.

How much your score affects your rates varies between states. Four states — California, Hawaii, Massachusetts and Michigan — ban companies from using your credit report to determine insurance rates. Instead, companies in these states base rates on your driving record, location and other characteristics.

In some cases, having negative information on your credit report can cause an insurance company to deny your application for a policy outright, regardless of how healthy you are. If you're in the midst of bankruptcy proceeding, for instance, you might have a hard time getting an insurance company to offer you coverage.

While it doesn't affect your credit score – it indirectly influences your CIBIL score. Timely payments reflect positive impacts on the score. On the other hand, negligence in paying the insurance premium on time may result in a lowered CIBIL score.

In most states, insurers can consider your credit history when deciding whether to insure your home and when calculating your monthly premiums. (California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon and Utah either prohibit or greatly restrict credit-based insurance decisions.)

Most insurance companies using credit information will include it as a factor in determining your rate. For example, someone with a relatively high credit score may pay a lower premium than someone with a relatively low credit score.

A credit-based insurance score allows insurers to quote the fairest, most appropriate rate for every customer.

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Yes, Geico does use your credit score as a factor when determining your car insurance rates, as do most major insurers. However, credit checks by auto insurers do not harm your credit score and are only done in states where it is legal for your credit score to affect your rates.

What will disqualify me from life insurance? ›

They can include engaging in risky hobbies and behaviors like skydiving; having a history of DUIs or speeding tickets; having a dangerous job like roofing; having a criminal record or a less than ideal financial history; being a smoker; and failing a drug test.

People are typically denied life insurance because they fall into a high-risk category. This is often due to health challenges like diabetes and obesity, as well as non-health related life insurance disqualifiers like a dangerous job or hobby, a history of speeding tickets or using tobacco products.

For example, applicants might lie about their age, income, weight, medical conditions, family medical history or occupation. It's also relatively common for applicants to lie about their alcohol or drug use.

Insurers will look at your credit report to identify any signs of financial risk, like bankruptcies or multiple missed credit card payments. Your credit score itself won't affect what you pay for your life insurance policy.

Your credit score doesn't have an impact on your insurance premium, but your overall credit history does. Learn what insurance companies consider when determining premiums.

Getting insurance quotes doesn't hurt your credit-based insurance score or other credit scores.

Borrowing against a life insurance policy does not require an income or credit check because the loan is fully secured, with the policy's cash value serving as collateral.

Typically, the higher your credit rating, the less you will pay for home insurance in the states where credit is considered a rating factor. Although it is only one factor in setting rates for home insurance, data shows that the credit-based insurance score is an important one.

Not only do credit scores affect your insurance premiums but paying premiums on time and having continuous health insurance coverage for a long duration also improves your credit rating.

Multiple factors impact how much a credit life insurance policy costs, including the type of credit, the type of policy and the loan amount. “It's generally a little more with credit life insurance because there's a greater risk associated with the product and that makes for higher premiums,” Lynch says.