Can bad credit influence your life insurance rates?
You know that your life insurance provider will consider things like your lifestyle, age, and health when calculating your insurance rates. However, did you know that your insurer may also look at your credit? In some cases, insurance companies will factor in your credit score when setting your premiums. But how exactly does your credit score affect your insurance costs? Here’s what you need to know.
- How does my insurer use my credit history?
Insurers use your credit history to see a connection between how you handle your credit and your risk of dying early. Supposedly, having a bad credit history could indicate that you are irresponsible and more likely to engage in risky behaviors. This could mean that you are viewed as more reckless and therefore more risky to insure. This, in turn, could translate into higher life insurance rates for you.
- Is this a common practice?
The use of credit history as a factor in life insurance premium calculations is controversial. Financial experts point out that using credit history to price for life insurance is a way to penalize low- and moderate- income individuals who are more likely to have a poor credit history. Despite this, there are currently no legal safeguards preventing insurers from factoring your credit into their rate calculations. If you want access to lower life insurance rates, then one of the things that you should do is focus on is improving your credit score
This is what you need to know about your credit and your life insurance costs. Do you have additional questions regarding your life insurance? If so, then contact the experts at Udell Family Insurance. We are ready to assist you with all your personal coverage needs today.