Hangar Flying: Life insurance for pilots

 - May 19, 2008, 12:08 PM

Someone I used to know–a father and general aviation pilot–questioned why he needed life insurance, because, quote, “I won’t be around to enjoy it.” He could well afford it, but apparently his survivors’ welfare didn’t warrant the few bucks a month a policy would cost.

Faced not long ago with obtaining life insurance on the open market, as opposed to through an employer-organized program, I stumbled into the thicket that can stand between a pilot and a policy. Unlike many of you reading this, I’m not a salaried pilot, and that put me in the category of “weekend pilot.” Worse yet, I built the airplane I fly on weekends.

The good news for you salaried corporate pilots is that your cockpit job might not raise your premiums at all, such is the maturity and demonstrated safety of corporate aviation. But on the other hand it might, if you don’t do your homework. In an unscientific survey of life-insurance providers recently, I was told that a 46-year-old nonsmoker in good health, employed as a corporate pilot flying four times a week (with some international trips) could expect to be able to buy a $500,000 fifteen-year term life insurance policy for about $740 a year ($61 per month). But another underwriter cautioned that a business jet pilot would incur a higher rate.

An agent at Harvey Watt, an Atlanta broker, said that the policies it sells rate a business-jet pilot in only the third-best category, while an airline pilot would qualify for the very lowest premiums, illustrating a clear bias against even a professionally trained and salaried corporate jet crew. A Prudential broker said that that company does not penalize even weekend pilots, “as long as they are fully qualified” and do not fly “excessively.” But mention of the word “pilot” usually elicited a “Hmmm” that implied an added level of complication, which quickly translates into higher premiums.

It was this sort of reaction that prompted me to approach Pilot Insurance Center (PIC), a broker based in Addison, Texas, that has built a reputation for offering good rates for pilots. Its president, Bill Fanning, founded the company on the theory that pilots these days are not the bad risk they are perceived to be by insurors, and he has worked hard to convince those same insurors of his case. It turned out that I was able to obtain a $500,000 fifteen-year term policy for less than I would have paid elsewhere as a healthy nonpilot.

The premium with Lincoln Life, through Pilot Insurance Center, is less than $60 monthly. It helped my case that although I am now a weekend pilot I have more than 150 different types in my logbook, along with seaplane, helicopter, multiengine and instrument ratings in my wallet. Also, the Kitfox I built and fly is about as simple and docile as a homebuilt can be, unlike some of the high-performance fire-breathers with rip-snorting engines and vestigial wings. But if I come to grief in the airplane I built in my garage, I’m covered. My research showed that that sort of coverage would have been impossible to get at any price from some providers.

Piloting, unfortunately, is still regarded as a sufficiently risky business by the insurance industry that it warrants its own special question on policy applications, typically worded as, “Do you act as a crewmember in aircraft other than those flown by U.S. airlines in regularly scheduled service?” The form doesn’t ask if you plummet down double-black-diamond ski slopes or drive motorcycles, which are about 30 times more likely to be involved in traffic accidents than cars. It probably also worries providers that suicide can be harder to prove when it involves an airplane.

Fanning has built Pilot Insurance Center on the insurance industry’s ignorance of aviation. As an example, he points out that the pilot of a business jet used for emergency medical transportation can find himself lumped in with the pilots of EMS helicopters by insurance providers, despite the fact that these two segments of aviation have markedly different operating environments and safety records.

The insurance industry is not above bait-and-switch tactics either. Convinced by an attractive price for a policy, an applicant undergoes the medical exam that is required for policies of more than $100,000, thus setting the hook for the insuror. A little later, the insuror comes back with news that, after scrutiny by underwriting, the rate will be a little higher–but not by much, say $20 a month more. Reluctant to endure the needle-sticking of another medical exam, the applicant buys the 20-year policy–for $4,800 more than originally anticipated. In my case, the final monthly premium through PIC was actually lower than the original figure by $12 a month.

The application can be something of a minefield, and an aviation-savvy agent can help you avoid surprises. For example, pilots who take unusual-attitude or upset training should not check the “yes” box when asked if they partake of aerobatics. Instead, point out that these maneuvers are performed for safety purposes. According to PIC, the premium differences can be huge.

Age is also a factor. Some insurance companies set their rates based on the applicant’s age at last birthday, while others consider the proximity of the next birthday. It could be that applying for a policy just before a birthday, rather than procrastinating until after it, will save you some money.

NBAA has affiliated with the Atlanta-based Harvey Watt agency for its members, and Todd Browning, vice president of that agency, said in the middle of last month that an agreement with PIC is in the works that will help corporate pilots get the best rates.    

The watchword is to shop around for life insurance no less diligently than you would shop for any other important and costly purchase.