When most of us hear the word “underwriting” we immediately associate it with a client’s medical and/or financial history. However, there are several other factors that can affect the pricing of a risk, including avocations
An avocation is an activity that people engage in outside of their regular occupation — specifically, a hobby. Examples of avocations include
aviation, scuba diving, race car driving, skydiving and mountain climbing. Below, we will further explore two of the most common avocations encountered during the underwriting process.
Aviation is one of the most common avocations seen during the underwriting process
. There are several questions life insurance carriers will request when determining how to price aviation risk, including:
- Is the client a student pilot? A student pilot is at the beginning stages of his or her training and is unable to fly without being accompanied by a flight instructor.
- Does the client have an instrument flight rating (IFR)? A pilot with an IFR is trained to fly by referencing the instruments located within the aircraft and is specially trained in how to safely operate a plane when the weather is deemed too severe to fly by visual reference only.
Pilots with an IFR are more experienced than those with only a visual flight rating (VFR) and are generally offered lower premiums by the carriers.
- How many hours has the client flown in the past, and how many hours does he or she intend to fly in the future? Carriers generally like to see at least 100 hours of solo flight experience and 26-150 hours per year to avoid adding a flat extra or table rating to the premium.
Several other factors — type of aircraft flown, business flying and flights to foreign countries — can also affect how a carrier assesses an
Scuba diving is another common avocation encountered during underwriting. Like aviation, there are several questions carriers will request
when determining how to price scuba risk. These include:
- How many dives per year?
- Maximum scuba diving depth?
- Average scuba diving depth?
- Type of scuba diving? (recreational scuba diving only/no cave or wreck scuba diving)