Why Do Credit Scores Affect Life Insurance Premiums?

Can my credit score affect the price of life insurance?

It can, but usually only under specific conditions. When analyzing your finances during underwriting, the insurer will want to know your credit attributes, not so much your credit score.  The #1 reason or credit attribute that life insurance companies find most concerning are bankruptcies. 

A life insurance company can look at a bankruptcy as poor financial decision making. It can even be an indication that there are medical problems since some bankruptcies are because of medical bills. Now back to the original question: Can your credit score affect the price of life insurance. Can it determine if I’m approved or declined?

Not usually, but it can!

Even though life insurance companies may look at your credit history, they usually don’t go through the trouble unless a red flag pops up on your application that makes them want a closer look. The red flag that is most common is filing for bankruptcy. 

For example, depending on the type of policy you’re applying for — if you filed Chapter 7 within the past 12 months, you’ll typically get declined automatically with all companies. There is usually a waiting period of 12 – 24 months that life insurance companies require after a bankruptcy has been filed.

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