Life insurers like it when their customers participate in sports.
It usually means you're leading a healthy lifestyle and present less of a risk.
But when it comes to life insurance for extreme sports, that's a different story.
If you're an extreme sports enthusiast, you shouldn't have to give up your hobbies to get covered.
While it can be difficult to get life cover, it isn't impossible.
This guide will explain the ins and outs of life cover and extreme sports.
Extreme sports include hazardous or risky activities like skydiving, water sports, motorsports, snow sports, and rock climbing.
Not all life insurers will cover extreme sports, but some offer additional levels of coverage or special policies that do cover extreme sports.
People with risky occupations may face similar challenges when shopping for life cover, but can often find cover at an increased premium.
Sports and life cover
First, let's look at how life cover treats sports in general.
Australians love sport, so it's only natural that over half of the population participates in some sort of sport or physical activity.
It's not practical for life insurers to exclude all of these activities, or they wouldn't have a customer base.
Most regular sports are covered by standard life insurance, as long as you are not a professional.
While some sports may have a minor effect on your premiums, many are included at no extra cost.
These are sports such as:
However, if you are paid for your participation, or if you are involved with combative sports like kickboxing, you may need special coverage.
Sports inherently involve some level of risk, however minor.
The more dangerous the sport, the more you are likely to pay to get covered for it.
Defining extreme sports
Now let's go over what it means to participate in an extreme sport.
This isn't a legally defined term, but refers to sports that carry an increased level of risk.
Extreme sports are often performed at high speeds, perilous heights, or under dangerous circumstances.
It's up to individual insurers to define extreme sports under their policies.
For a detailed list of which sports are included, always refer to the Product Disclosure Statement, or PDS.
Why are extreme sports hard to cover?
If you're a regular participant in an extreme sport, you may have already encountered difficulty in getting life cover.
This is not only because you're more likely to be injured in an extreme sport, but because the injury is more likely to be serious.
If you carry a high risk of death or serious injury, it will cost you more to get insured.
An insurer will consider the potential cost of an extreme sports injury or death when calculating your premiums.
In most cases, the cost is simply too high to justify under a standard plan.
That's why insurers often offer specialised extreme sports policies, or increase the premium depending on your situation.
Let's take a quick look at the four most common types of life insurance:
Term life cover: Pays a lump sum in the event of your death.
Total and Permanent Disability Insurance (TPD): Pays a lump sum if you are totally and permanently disabled and unable to work again.
Trauma insurance: Pays out a lump sum if you are unable to work due to a serious illness or injury.
Income protection insurance: Ongoing payment replacing up to 70% of lost income if you are temporarily unable to work due to an injury or illness.
You can see why an increased risk of death or injury raises a red flag to life insurers; people who participate in extreme sports are more likely to claim on all types of life insurance.
The same is true for people who work in high-risk occupations, which we'll discuss further on.Compare & Save
How your insurer considers extreme sports
Before insuring anyone, an insurer conducts an individual risk assessment.
This usually involves answering a number of questions about your age, health, and lifestyle.
You may be asked some of the following questions:
Do you participate in any hazardous activities?
Do you participate in any combative sports?
Do you participate in any motor sports?
If you answer yes to these or similar questions, your insurer will likely ask more detailed questions about your level of experience.
They may also request information about any extreme sports associations you are a member of, relevant training you have undertaken, and how often you participate in the sport.
How extreme sports affect your life cover
Insurers vary widely in their coverage of extreme sports.
Some will not cover extreme sports at all.
Others will, but at an increased premium.
Some insurers even offer specialised cover specifically designed for extreme sports.
These policies don't come cheap, but can provide peace of mind.
For example, insurer TAL provides Adventure Sports Cover as an extension to its Accident Cover, a form of life cover.
You can opt-in to the extreme sports that you participate in, such as skydiving or scuba diving.
We've already mentioned the importance of reading a PDS before purchasing life cover.
But it's not enough to just read through; pay close attention to any exclusions listed in the policy.
Exclusions are defined situations where your insurer will not pay a benefit.
Your insurer may list specific sports, such as surfing, or simply reference 'water sports.'
Some insurers require you to hold an additional rider, like sports cover, before you can be covered.
Never assume you are covered for any sport with life insurance; always check the PDS and ask if you are unsure.
Risky occupations and life cover
It's not just your hazardous hobbies that can affect your life insurance; it's your job, too.
If you participate in a risky occupation, you may find that life cover is more difficult to get or simply more expensive.
Your job title doesn't automatically place you in a heightened risk category.
Just as with life insurance for extreme sports, your insurer will first need to assess your level of risk.
They may ask you some questions about the nature of your work, the machinery you use, your level of experience, and whether or not you work at heights or with explosives.
Life insurance for extreme sports and risky occupations
So are those who work in risky occupations or participate in extreme sports destined to be denied life cover?
Shopping around for a policy that covers high-risk jobs and hobbies could be your ticket to getting coverage.
Here are some of the things to consider when you're comparing policies for extreme sports and risky occupations:
Are risky activities included automatically?
Do I need to take out an additional policy to cover my job or hobbies?
Can I pay an increased premium to include specific risks?
Does the insurer offer a special policy to cover risky jobs or extreme sports?
What is excluded from the policy?
What are the terms and conditions of the policy?
These questions can help you identify which policy truly offers the cover you want, so you can get the peace of mind you're looking for.Compare & Save
This guide is of an informative nature only and not representative of Compare Club products. It should not be taken as medical or financial advice. Check with a financial professional before making any decisions.