There are many factors taken into account when underwriters are considering your case for life insurance, including the better-known ones, such as age, gender, and health status. However, you may be wondering how your financial background comes into play and whether underwriters look into your credit history.
Your credit history is an indicator of your ability to repay your debts. To measure this, underwriters may look at1:
- the number and types of credit accounts you have
- how long each account has been open
- the amounts you owe
- how much of the available credit you have actually used
- whether you pay your bills on time
It may be a way for underwriters to get a summary of how well you’ve managed your finances in the past, and to consider how well you will probably manage them in the future. Your credit history can also be used to determine if the amount of insurance is suitable for your needs.
With a basic understanding of your credit history, you can see how it may indirectly impact your life insurance rates. While you may always pay the same month-to-month premium during the life of your policy, if an underwriter notices you don’t always pay your bills on time, they may deem you as more of a risk. As a risk, you might be susceptible to higher premiums.2
It will benefit you to have an understanding of your credit history when thinking about getting life insurance. For more information about life insurance and the impact credit history has on it, meet with a local licensed life insurance agent.
Investopedia, Credit History, 2019
Smartasset.com, How Bad Credit Can Affect Life Insurance Premiums?, 2019
Categories: Insurance, Life Insurance