By BOB MACKEY
Did you know traditional life insurance policies exclude all aviation risks except flying as a passenger onboard a schedule air carrier?
No? Well, you are not alone.
Can you have a traditional life insurance policy modified to include personal aviation? Yes, but it is expensive and you still might have some types of flying — like aerobatics or Phase 1 fly-off restrictions — that may be excluded.
There’s another problem.
Let’s say you purchased a 30-year term life insurance policy with $250,000 coverage when you were 30 years old and just starting a family. At 30 years old you were able to get insurance for about $250 a year.
Now you are 50 years old and you have decided to get your pilot license and either build or buy an airplane. When you contact the broker who arranged your original life insurance policy, he will need to go back to the insurance company that wrote your traditional term life insurance policy and it’s like starting all over again.
First the insurance company will re-underwrite the base policy using your current age. Second the insurance company will likely require you to complete a full medical and those extra pounds you have acquired — and maybe your elevated blood pressure — may come into play. The bottom line is the new premium goes up to $550.
Next the insurance company will have you complete a questionnaire about your aviation experience, the type of airplanes you intend to fly, and a number of other aviation questions.
When the questionnaire is completed and reviewed, the underwriter will offer up what the company will and will not cover under the extended coverage for aviation. Of course, there will be a jump in premium to $1,550 a year.
You can see this can get expensive in a hurry.
There is an option. Special interest groups, like amateur sport car racing associations, scuba diving associations, and any number of other recreational organizations, have found they can help their members by putting together a group plan where individual members can find insurance coverage via an accidental death insurance policy to fill the gap in a traditional life insurance policy.
By doing this, individuals do not need to change their traditional life insurance policy. Instead they can buy a separate insurance policy to fill the gap in their insurance protection.
The Experimental Aircraft Association has done exactly this with the EAA Aviation & Non-Aviation Accidental Death and Dismemberment Insurance Plan. Using the example above, a 50-year-old EAA member can obtain $250,000 coverage for an annual premium of $492.89.
EAA, Falcon Insurance Agency, and Starr Indemnity & Liability Insurance Co. worked together to develop the EAA Aviation & Non-Aviation Accidental Death & Dismemberment Insurance Plan. You can find complete details at EAA.org/Insurance.
Bob Mackey is senior vice president with Falcon Insurance Agency, the official administrators of EAA Insurance Solutions. He has been involved in the aviation insurance industry for over 35 years and is a commercial pilot with an instrument rating. If you have any comments about this article or if would like to see a specific aviation insurance topic addressed in a future article you can email Bob at [email protected].