Do Life Insurers Discriminate Against Divers?

If you’re like any diver, you don’t dwell on the notion that scuba diving will shorten your life. A week on the Palau Aggressor or at Captain Don’s in Bonaire just doesn’t compare with the danger of scaling Half Dome.

Insurance companies give it more thought. If you’ve ever applied for life insurance, you may have had a question like the one faced by subscriber Chuck Heddin of Tucson: “Do you participate in a hazardous avocation or occupation (e.g., scuba diving, flying as a pilot, rock climbing, vehicle racing, etc)?” That red flag at best signals a hefty premium hike, at worst a downright rejection.

We contacted Undercurrent subscribers for whom we have email addresses to ask them about their life insurance experiences.

Subscriber Rich Meitin (NYC) reports, “My wife applied to William Penn for $300,000 in term life insurance, and the rates went up nearly fourfold when she revealed she was a diver.” However, adds Meitin, American Mayflower did not raise rates at all. Melinda McIntyre (Yakima, WA) was denied coverage by Transamerica, “due to my scuba leisure activities.” Fortunately, her local broker, Dave Cote, was able to place her with New York Life.

While divers like to argue that scuba diving is associated with a lower death rate than many common activities such as driving a car, not all statistics bear that out, especially when the death rate is based on the time one actually engages in the activity. Furthermore, diving doesn’t require one to be in particularly good physical shape. An industry that bases its profit on careful statistical analysis of death rates understands that.

Life insurance broker Dave Cote (Yakima, WA) told Undercurrent that engaging in a hazardous avocation is just one “limiting factor” in setting rates. Others include health issues (obesity magnifying all other factors), dangerous occupations, and moral risks, such as associating with gangsters. These and other factors are lumped together and scored to set premiums. “Underwriting is like golf,” says Cote. “You want to get the lowest score.”

Ted Wilson, a diver and semiretired Chartered Life Underwriter from Paterson, NJ, further explains that carriers “must charge higher rates for risk in order to keep rates lower for those who do not have these risks. The alternative is to charge higher rates for everyone to even out the costs.”

Not all insurers follow the same guidelines. Jack Kelly, a C.L.U. from Bloomfield Hills, MI, points out, “Some carriers do not adversely rate divers at all. Others don’t want any part of them. To confuse the issue further, the roster of who loves divers vs. who doesn’t changes constantly, so I can’t just list carriers who are liberal because they may not be next week! At any rate there are carriers who will treat divers fairly – even tech divers. The insurance broker/consultant just has to be familiar with this line of business.”

John Blanks (Macon, GA) has had a Lincoln National Life policy for years and reports that he’s “never been charged for scuba diving (cave diving is different).” He’s been a Lincoln agent for more than 30 years and claims, “I have gotten many divers covered at preferred rates.”

As Jack Kelly puts it, “I’ve been in the business for over 25 years ... and it’s all in the presentation to the carriers.”

Other insurance brokers and companies aren’t so dialed in. Ohio National refused to insure Scott Brody (Los Angeles, CA) when he answered “yes” to the question “Do you dive under 60 feet?” While his broker acknowledged that every diver insists that going under 60 feet is not extreme, that didn’t sway the underwriters. Brody’s wife Melyssa says that they were so frustrated, “our decision to buy a 20-year term life policy is on hold.”

Typically, says Cote, when an underwriter finds that an applicant is a diver, that will trigger an additional questionnaire to fine-tune the degree of risk — from the carrier’s often-arbitrary perspective. Questions might include certification level, number of dives the past year, anticipated dives the next year, average and maximum depths dived, and pursuit of commercial, specialty or solo diving.

When Michael Holland (Houston, TX) filled out a questionnaire from Trans American Occidental Life acknowledging that he dived below 100 feet, he had to explain that such depths were permitted by his NAUI advanced scuba diver certification. Next, the underwriters requested that he undergo a physical. “After their nurse came to my office to give me a once-over,” says Holland, “they approved the policy and I have been automatically renewed every year since then.”

Several insurers turned down Elaine Hopkins (Bratenahl, OH), who logs more than 150 dives a year. Lincoln Benefit Life eventually extended coverage after asking her to itemize all her dives for the last three years and then summarize the depths and time underwater. She told Undercurrent, “They were also concerned about the locations, especially the Pacific.” Fortunately, Hopkins keeps good dive logs. Also fortunately, she points out, “the price for the policy was not much more than the other companies wanted for the same coverage for nondivers.”

When Jodee Anderson (Holmdel, NJ) and her husband first told their agent they were scuba divers, she recalls, “His face turned white!” The agent, who’s also a lawyer, eventually worked up a strategy for the Andersons, who are warm-water divers. After researching various policies, he advised them to declare that they do not dive below 80 fsw, and don’t do wreck dives. “We ended up getting the preferred rate from Principal Mutual and Prudential,” Anderson reports.

However, a dive computer tells all. As we reported in the January 2006 issue, the British carrier Lloyds TSB refused to cover recompression treatments for an injured British diver who exceeded his policy’s 30-meter limit, which they determined by reviewing his computer.

Ted Wilson warns: “Failure to disclose pertinent information or telling an outright lie is fraud that can be punishable through the legal system, assuming the perpetrator is still living of course. However, it is also a valid reason to rescind (cancel retroactively) the policy outright.”

However, Dave Cote told us that most policies have a two-year contestable period, during which the insurer can deny a claim due to a misrepresentation (such as understating your dive depths). After the policy’s been in force for two years, misrepresentations are incontestable. Also, once an insurer accepts you and you pay a premium, your policy becomes a unilateral contract, and your premiums are locked in. In other words, if you begin diving after signing up, or engage in more risky diving, you won’t trigger rate increases. One reader has another suggestion: “The best way to get insurance as a diver is to stop diving for a couple of years so that you can truthfully tell the insurance company you don’t dive.”

Many folks shop for insurance on the Internet, but fine print, such as limiting factors, isn’t always posted on websites. So working with a knowledgeable agent could shortcut the process. If you want to do your own research, Ted Wilson recommends going to the library and looking up carriers in A.M. Best or a similar rating organization. He cautions, “Spend the time now or pay more later.”

Three agents we spoke to believe they can help divers get life insurance policies at fair prices. They are :

John Blanks, Macon, GA, jbscuba@mindspring.co
Dave Cote; Yakima, WA, 509-494-7808
Jack Kelly, Bloomfield Hills, MI, 248-646-4444

Divers Alert Network (DAN) offers group term life insurance for its members (ages 18-64) in some states, through The United States Life Insurance Company. No physical is normally required, and the policy is renewable to age 70. For basic coverage (from $25,000 to $200,000), there’s no depth limit. DAN offers an optional benefit up to $25,000 in case of death during a recreational scuba dive that, by definition, cannot exceed 130 ft.

– Larry Clinton, Jr.