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Underwriting Pilots for Life Insurance

Insuring pilots for life insurance is one of the more complicated issues in the underwriting process.

To most people it would seem fairly simple: You either fly a plane or you don’t.

Unfortunately for the underwriter, the consideration is far broader than that.

When a potential aviation risk is presented to the underwriter, the need for information goes far beyond the fact that the individual has a pilot’s license.

First and foremost, they’re interested in what type of license the person holds, such as a student license, private license, commercial license, etc.

Just this factor alone can have a dramatic effect on what people will pay for their coverage because they are a pilot.

Big, costly risks

The greatest risk to the insurance carrier is those people flying with student and private licenses.

The National Transportation Safety Board conducted a study that showed that 94% of fatal aviation accidents occurred in what’s called “general aviation.”

That category includes private small planes flown by amateurs, as well as professionally piloted corporate flights in high-powered aircraft, such as Gulfstream jets.

By contrast, commercial aviation had no fatal accidents that year.

Statistics from the NTSB show that general aviation aircraft average nearly seven accidents per 100,000 flights, compared with an average of 0.16 accidents per 100,000 flights for commercial airlines.

Furthermore, an October 2012 report from the Government Accountability Office found that the highest incidence of fatal accidents in general aviation occurred with single-engine piston planes, on personal flights, in which pilots lost control of their aircraft.

In some cases, bad weather was to blame, and according to the Aircraft Owners and Pilots Association, nearly 75% of weather-related accidents are fatal.

Between 2008 in 2012 there were 7,502 general aviation accidents in the United States.

Types of flying

The type of flying a pilot does becomes vitally important.

Types of flying may include but are not limited to:

  • Student.

  • Private (pleasure).

  • Scheduled passenger airline.

  • Full-time company pilot.

  • Non-scheduled or charter.

  • Crop dusting or aerial spraying.

  • Student instruction.

  • Military.

Another item which can – and most often will – have an effect on a life insurance offer is what type of “aircraft” the person flies, which can include:

  • Prop or jet aircraft.

  • Helicopters.

  • Hot air balloons.

  • Gliders.

  • Experimental aircraft.

Through the underwriter’s eyes

Each of these aircraft presents its own set of mortality risks, and therefore each one is handled differently.

Normally, there isn’t a problem insuring those serving in the military.

However, those who are serving and flying fall into a separate category.

And beyond this, they have additional job demands that need to be examined as to what they do or fly for the military.

Since they could be doing anything from flying fighter jets to reconnaissance planes, it can make a difference.

Determining the offer

After some of the above is determined, there are some things that can help and hurt the situation to a greater degree.

Two of the major items would be time in the air and whether or not the individual holds an instrument flight rating.

Time in the air

With regards to “time in the air,” insurance carriers are concerned about two issues:

  • Is the pilot flying regularly? Do they fly a minimum number of hours per year? The carrier feels that a person that flies sporadically is a greater risk that a person who actually spends some time in the air.

  • Excessive time in the air can pose a problem, as well. Most carriers don’t want to see a pilot flying more than 150 to 200 hours per year, although there are some that will consider up to 300 hours per year. Flying more than this will have a detrimental effect on the offer.

Instrument flight rating

Perhaps the greatest single item that will help improve an offer for a pilot would be for them to have an instrument flight rating (IFR).

An IFR is the qualification that a pilot must have in order to fly an aircraft using only the instruments as opposed to flying the plane visually.

It requires additional training and instruction beyond what is required for a private pilot certificate or commercial pilot certificate, including rules and procedures specific to instrument flying, additional instruction in meteorology, and more intensive training in flight solely by reference to instruments.

The reason the IFR is so important is that most general aviation accidents involve some kind of pilot error.

There are many factors that can contribute to this, and as was previously mentioned, bad weather is the number one culprit.

Since 75% of weather-related accidents are fatal, the IFR becomes vitally important for a pilot to operate in bad weather conditions and/or conditions where flying the plane visually is not possible.

Life insurance underwriting for pilots

This is just a brief overview of what an underwriter will be looking at.

Where you send the pilots’ life insurance application is just as important as the aviation risks themselves.

Life carriers are literally all over the board with what they will offer.

The fact is that there is not one other single item in the underwriting process that has as many individual items that are considered.

The bottom line is that when your client is a pilot, you need to run the case specifics by your General Agent to select the right carrier.

In this case, it’s not a choice but a necessity – never “fly” by the seat of your pants!

What unique challenges have you experienced when seeking to insure pilots?

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