Can you get life insurance if you are unemployed? It’s possible, but not guaranteed. Insurance companies approve or deny applicants based on the risk posed by their health and lifestyle.
Risk is based on several factors, one of which is income. As a result, unemployment can pose a challenge in acquiring life insurance.
Regardless of your employment status, we understand that you have loved ones to protect.
When you apply without a job, life insurance companies consider the length of unemployment, reason for unemployment, and existing assets to approve or deny coverage.
Considerations for Getting Life Insurance Without a Job
Insurers use your income to measure your life insurance needs. They evaluate the economic hardship your dependents would experience if you were to pass away.
If you’re unemployed and have no income, this evaluation becomes tricky, leading to potential reluctance from insurance providers.
What do life insurance companies look at?
Duration of Unemployment
If your unemployment is short-term, like a lay-off, there’s a good chance you’ll be approved for life insurance — particularly if you have a history of steady employment and will work again soon.
If you have a valuable skill-set and recently made decent money, there is a good chance your application will be approved. Experienced, skilled individuals are desirable job candidates.
If you worked in an industry that typically has jobs-a-plenty, insurance companies will view your application more favorably.
If you worked in an industry that is on a decline, such as a dial-up Internet installer, you might have a little more trouble getting insurance.
» Compare: Term life insurance quotes
If you stopped working to be a stay-at-home parent, this is a different situation. While you are technically “unemployed,” your household contributions are incredibly valuable. Childcare is physically and emotionally exhausting.
Typically, life insurance companies will allow a stay-at-home parent to have coverage equal to their working partners. If their partner makes a substantial amount of money and has a substantial amount of life insurance coverage, insurance companies may cut the coverage for the stay-at-home parent in half.
Regardless, having life insurance coverage on both parents is vital.
Assess Your Assets
Eligibility and risk assessment are based on your health records as well as your financial history.
Because life premiums are a primary source of revenue for life insurance companies, they need proof you can afford long-term payments.
Life insurance companies have costs to cover beyond death claims. Of course, they have typical business expenses like admin and marketing, but they also pay for applicants’ medical exams and testing. These costs can take years to recover.
How do premiums generate income?
- Insurers invest them in a diverse range of low-risk, profitable assets
- If a policy lapses, the insurer keeps the premium payments — making a profit
- If a cash value policy is surrendered, the insurer profits by keeping premiums and returning your cash value minus surrender fees
If you are unemployed, but have other means of income or are a good penny-pincher and have a decent savings, the insurance company may approve your application there’s proof you can pay the premiums.
If you have been unemployed for some time and it’s uncertain where the money for premiums will come from, then your life insurance application most likely will be postponed or declined altogether.
See what you’d pay for life insurance
Buying Life Insurance While Unemployed
There are two types of life insurance: permanent life insurance and term life insurance. Term life insurance is the most affordable type of life insurance coverage and much easier to get approval for if you are unemployed.
To increase your chances of getting life insurance, consider the following:
- Work with experience – Quotacy has experience working with many life insurance carriers so we can shop your case with multiple insurers and find which company is more favorable to your situation.
- Be able to show you are capable – Having a copy of your resume ready to send to the insurer, and perhaps even having a list of jobs you are applying for may help your case. The key is to demonstrate that your unemployment status is short-term.
- Show your financial strength – Having evidence that you are financially stable, and have a track record of it, may sway a company to see your application more favorably. Proof of this can include saving and/or investment accounts, having little to no debt, and having good credit.
- Apply for a lower amount – If you are unemployed, but apply for a $1,000,000 policy, the insurance company is going to be a little leery of this. The more coverage, the higher the premiums and the insurer is going to be concerned that you won’t be able to keep up with the payments. Applying for a lower amount will be much easier to get approval for.
Getting a term life insurance quote with Quotacy is free and your personal information isn’t required until you are ready to apply. We want to make buying life insurance easier and will help you get the coverage right for you.
» Calculate: Life insurance needs calculator