Can I Get Life Insurance if I’m Unemployed?
We understand that you have loved ones you want to protect. If there are people who depend on you, life insurance can help if you die unexpectedly.
But what if you are unemployed? Can you still get a life insurance policy?
There are some factors the life insurance company will take into consideration if you want to apply for life insurance and are not working.
How Long Have You Been Unemployed?
If you are in a bout of short-term unemployment, such as a lay-off, there is a good chance you can still be approved for life insurance. If you have a history of steady employment and plan on working again soon, many companies would approve your application.
If you have a good skill-set and have made a decent income in the not-too-distant past, there is a good chance your application would be approved since the chances of you getting a job are good.
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,” you still work. The duties of a stay-at-home parent total many jobs in one.
Typically, life insurance companies will allow a stay-at-home parent to have coverage equal to that of the working spouse. If the working spouse 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. Needless to say, having life insurance coverage on both parents is vital.
What Assets Do You Have?
Along with figuring out how your health plays into the company’s risk to insure you, they also have to consider your financial situation. You pay to keep your coverage active, but the insurance company pays costs too. The insurance company pays administration costs, marketing costs, costs of death claims, and the costs of your medical exam and testing.
These costs take years to recover. Policy lapses due to a policyholder not being able to pay are not something they look forward to. So before offering coverage to someone who is unemployed, insurance companies will want to know with some degree of certainty that you have the ability to steadily pay premiums.
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 if they feel you have the means to 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.
Term life insurance is the most affordable type of life insurance coverage and much easier to get approval for if you are unemployed.
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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
Watch the Buy Life Insurance if Unemployed Video
Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance agency where you can get life insurance on your terms.
I’m Jeanna and I’m Natasha.
Today’s question is:
Can I get life insurance even if I’m unemployed?
There are some situations in which you can get life insurance coverage even if you do not currently have a job. There are a couple factors though that a life insurance company will look at to determine if they can approve your application.
Factors an insurance company looks at for unemployed applicants:
- How long have you been unemployed?
- What assets do you have?
And these factors are: How long have you been unemployed? and What assets do you have?
If your current unemployment situation is expected to be very temporary for example, if you were part of a collective layoff but you have a strong resume, good skill sets, and a history of steady employment, then many insurance companies would still consider approving your life insurance application. The industry you are working in would be considered as well.
For example, if you worked in an IT field, you probably won’t have an issue getting a new job. However, if you worked in a declining industry that provides fewer and fewer jobs the insurance company may want to postpone your application until you are employed again just in case.
And there are some “unemployment” cases that don’t really fit the mold.
For example, if you quit working to be a stay-at-home parent, this is an entirely different situation altogether. While you are technically unemployed, you still work. Stay-at-home parents can definitely obtain life insurance and they should.
Most insurance companies have two general rules when it comes to insuring stay-at-home parents.
Getting life insurance as a stay-at-home parent
- The working parent needs to have life insurance coverage in place already.
- The stay-at-home parent can’t get more coverage than the working parent.
The working parent needs to have life insurance coverage in place first, and the stay-at-home parent cannot be insured for more than the working parent.
The second factor insurance companies consider if you’re unemployed and applying for life insurance is your current financial situation. They want to be sure you have the means to pay your policy’s premiums.
If you are unemployed, but have other means of income such as a large inheritance or you’re a penny-pincher and have a decent savings, the insurance company may approve your application. If you have been unemployed for some time and don’t have the funds to keep up with policy payments, your life insurance application will likely be postponed or declined altogether.
If you’re currently unemployed and looking to buy life insurance Natasha and I have some tips to help you increase your chances of getting approved.
Tip number one: work with an experienced life insurance broker or independent agency.
Quotacy has experience working with many top rated life insurance companies and can shop your case with multiple companies to find the one that will consider your situation the most favorably.
Tip number two: be able to show that you are capable.
Have a copy of your resume handy to send into the insurance company and maybe even a list of jobs you are applying to. The key is to demonstrate that your unemployment status is temporary.
Tip number three: show your financial strength.
Having evidence that shows you are financially stable may sway the insurance company to consider your application more favorably. Examples of financial strength can include savings and/or investment accounts, having little to no debt, and having good credit.
Tip number four: apply for a lower face amount.
If you’re unemployed, but apply for one million dollars of life insurance coverage, insurance companies may be a bit leery of this. The more coverage, the higher the premiums; therefore, the insurance company is going to be concerned that you won’t be able to keep up with the payments. Applying for a lower amount, may be easier to get approved for.
Just because you’re unemployed, doesn’t mean you don’t have a need for life insurance. Quotacy can help.
If you have any questions about life insurance, make sure to leave us a comment. Otherwise, tune in next week when we talk about how to buy multiple life insurance policies. Bye!
Photo credit to Giuseppe Milo. Photo edited for size.
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