Can Cops Get Life Insurance? They Sure Can...But There's More
Can Cops Get Life Insurance? They sure can. I think because of the nature of their job a lot of people worry that it’s a high risk profession.
Hey, this makes sense as their work requires them to deal with criminals – which means the life insurance company that offers coverage may take on greater risk to protect police officers.
Conversely, if someone convicted of a crime applies for life insurance, insurance companies consider this to be a higher risk as well.
Fair enough…But let’s get back to the good guys. How do life insurance companies view their applications?
I am going to dig into how rates are impacted, the choice of products available and why independent coverage may be your best bet when it comes to police life insurance.
Between 2006 and 2015, in this database, Alberta, British Columbia, Ontario, and Quebec combined
for 45 fatalities for police officers, or a rate of 0.7 fatalities per 1,000 police officers. In total, 40 of these fatalities were for a male police officer.
Who Am I & Why Do I Care?
My name is James Heidebrecht and I am the owner of Policy Architects. We are a boutique life insurance company operating out of Canada.
I love my job. It allows me to meet terrific people and to help them protect their families. As an extrovert I can’t think of a better career.
Life insurance is one of those purchases that a lot of people don’t want to talk about. Come on let’s face it who the heck wants to think about death? The thing is, life insurance is more about life and love than it is death. It’s a way to make sure that your family is taken care of even when you’re gone.
Can Cops Get Life Insurance That's Affordable?
Did you know your lifestyle and profession alter how underwriters view your life insurance application? In fact, there are a number of jobs and personal choices that are considered high risk.
So does being a police officer fall into this category?
Well, let’s find out.
Why is Life Insurance for Police Officers Potentially Higher Risk?
- Traffic Accidents – law enforcement officers have a higher likelihood of being involved in a high-speed car chase than your ordinary citizen. Not to mention, many of them patrol highways or busy traffic areas where there are higher risks for accidents.
- Shootings or Violent Acts – Police are more likely to experience a traumatic injury or disorder that results in a fatality than the general population.
- First Responders – Police members are often the first to arrive on the scene of an accident, criminal incident or hazardous situation.
- Higher Job Stress & Suicide Rates – According to studies, “police officers are at higher risk for suicide than any other profession.”
The fact Police officers put themselves in harm’s way has to be considered by underwriters. After all, if they don’t assess risk properly, insurance companies will go out of business.
I've Got Good News... If You Are Wondering
Can Cops Get Life Insurance That's Affordable, Even When They're High Risk?
The answer is YES! Police Officers are NOT in the same category as hazardous occupations like Commercial Fishing, Logging or Mining.
Remember, each situation is evaluated on a case by case basis which means underwriters assess your personal health and exposure to danger. If you have a dangerous occupation, the insurer may tack on a “flat extra” to your rate.
This is an additional charge that is added to your premium as a percentage to make up for the increased risk.
This is not the case with police officers. So congratulations, it looks like cops get a “get-out-of-jail-free card” when it comes to life insurance rates and dangerous professions.
Psst: As an aside commercial airline pilots are looked at favourably as well.
Bottom line, if you’re a law enforcement officer in Canada, you have an excellent chance of receiving standard rates or better on your life insurance application!
GOOD NEWS: If you’re a SWAT, ERT, TRU or tactical officer, you can also qualify for Standard insurance rates with traditional carriers!
Your Health is Always Important
Truth is, life insurance companies find it easy to underwrite police officers because they complete annual physicals. By the way, underwriters love data, the more test results the better. Recently, a colleague of mine had a client who was a Toronto Police Officer and his client received preferred life insurance rates with Ivari Canada.
Just like anyone else, If you have any moderate health issues, you may be rated or declined by a traditional life insurance company. In this case, you may want to ditch the health exam altogether and explore simplified or no-medical life insurance.
The Benefits of Simplified Issue Life Insurance When You Are a Cop
If you a police officer with a medical issue like diabetes or are in a REAL high-risk profession you may want to check out simplified issue term life insurance instead of traditionally underwritten coverage.
You don’t have to undergo a physical exam. You are asked a battery of questions to determine if you qualify for better rates. It’s quick and easy and surprisingly affordable.
If you have serious medical problems and think you’ll be denied coverage, then you need to speak with an independent high-risk insurance broker to confirm that that’s the case. If so, you may be better off to stick with topping up your existing group coverage.
Keep in mind, most consumers overestimate the severity of their health issue when it comes to applying for life insurance. I find the majority of the time, clients are healthier than they realize. So it’s very important to double-check. After all, it could mean saving a lot of money.
NOTE* If you have a moderate to serious health condition, you may qualify for up to $500,000 of simplified issue term life insurance with Canada Protection Plan, one of the top non-medical providers in the country.
Why Would a Police Officer Want to Buy Life Insurance Outside Their Union?
That’s a great question.
Police officers are given life insurance as part of their group benefits package. It’s one of the perks of the job. Not to mention, it’s free! So why the heck would they want to buy a policy independently?
Well, that’s an easy question to answer and it’s three-fold.
1. An Individual Life Insurance Policy is More Portable
The first issue is portability. If you have police officer insurance benefits through the OPP, TPS or the RCMP, it’s attached to the job. This means if you quit, your coverage terminates.
If you’ve developed any health issues while you’re a police officer, you could become uninsurable outside of your group plan.
For example, let’s say you’re a 45 year old constable and decide to quit the force. You have high blood pressure and depression and want to pursue a job that’s not as taxing. Perhaps you even want to start your own business.
Once you leave the police service your benefits are gone and now you have to apply for coverage. Your age and medical condition make protection extortionately expensive and in fact, the depression may even disqualify you from traditional coverage depending on the circumstances.
Ugh. That’s why having your own coverage helps. If you apply while you’re young and healthy life insurance is way more affordable.
2. Individual Life Insurance Offers Higher Coverage Amounts - Group Insurance Death Benefits Are Limited
The second issue is inadequate coverage. While cops enjoy some of the best benefits around, group life insurance for police officers is usually limited to 1 to 4 X salary. So, for example, if you’re working for Ontario Provincial Police earning $100k annually, your max life insurance protection may be $400,000.
Sounds like a lot of money doesn’t it?
Let’s say you’re 40 years old, earning $100k annually and are set to retire at age 55. That means over the next 15 years, you’re going to earn at least $1.5 million of income for your family. Oh, don’t forget the government’s going to take 30-40% of that in taxes, depending on how much overtime you’ve worked.
If God forbid, something happens and you don’t come home tomorrow, your family is not going to see that $1.5 million you would have earned. Instead, your police officer insurance benefits will pay out a maximum of $400,000 to your loved ones.
This replaces your after-tax income for maybe 5 years. Then what?
Why not top up your group insurance with a personal plan so your family isn’t burdened with unnecessary financial stress you pass away? A $500,000, 20 Year Term policy with RBC life insurance costs a 40-year-old, non-smoking, male, $47.61 per month.
His female counterpart pays $34.57 per month for similar protection with Wawanesa Life.
3. Individual Life Insurance Is More Affordable & Has Superior Options Compared With Police Group Benefits
If at any point you want to exchange your individual term coverage for permanent insurance, you can do so. Also, depending on the carrier you’re with, you may have a few choices: whole life, universal life or Term to 100. Most group plans don’t have options for this and if they do, they are very limited.
Yes, it’s true your employer pays the premium for your base life insurance policy (usually one or two times your gross salary). But if you want to top up your coverage amount, you have to pay extra. Depending on your age, topping up group life insurance is often more expensive than purchasing an individual life insurance policy. See the example below.
Police Officer Insurance Benefits vs Individual Life Insurance
Let’s look at an example.
Kevin joins the Ontario Provincial Police when he’s 27. Fast forward 10 years, he’s now 37, married with 2 young children and a $500,000 mortgage. As a first-class constable, Kevin earns approximately $100,000 annually and is expecting to retire with a full pension at age 57.
His friend and co-worker, Pete, recently purchased a personal life insurance policy so Kevin’s trying to figure out if it’s something he should consider. He’s done some research online and feels that $1 million of term coverage would leave Emily, his wife, in a good position financially if something were to happen to him on the job.
Police Life Insurance Benefits for Kevin
Kevin checks out his OPP group benefits booklet and discovers that his current police life insurance is 1 X his annual salary – approximately $100,000. If something happens to him, Emily and his two daughters will receive a $100,000 tax-free cheque from Wawanesa Life, the company that underwrites all the OPP life insurance plans. This money is there to help them adjust to life without his salary as a breadwinner.
This doesn’t seem like a lot of money considering Kevin will earn $2 million-plus in salary over the next 20 years leading up to his retirement at age 57. Thankfully, he continues reading and sees the option to purchase extra life insurance to supplement his base amount of $100,000. According to his booklet, active members can purchase up to 3 X Salary on top of their base amount. The cost? Thirty-seven cents per thousand dollars of coverage.
For Kevin, that means he can purchase an additional $300,000 of coverage (3 X $100k salary) through his police officer insurance benefits. It will cost him $111.00 per month ($0.37 X 300 = $111.00) to secure this extra protection. Sounds reasonable but is that a good deal? He wants to find out.
Police Life Insurance Benefits vs Individual Life Insurance - 20 Years
37 Year Old Male, Non-Smoking, Standard Rating
Option 1 - Apples to Apples
Kevin decides to comparison shop for an individual life insurance policy to cover him for the additional supplement until retirement (age 57). Remember, he’s 37 years old, male, healthy and a non-smoker. For the purposes of this example, we’re comparing the cost of topping up his police officer insurance benefits (Max $300k) with purchasing an individual $300,000, 20-year term policy with Empire Life.
Police Life Insurance, $300,000
$111.00 per month (OPP)
$26,640 Total Cost
Individual Life Insurance, $300,000
$26.91 per month (Empire Life)
$6,458 Total Cost
For Kevin, a policy with Empire Life will cost him 75% LESS per month than the cost of topping up his existing group benefits life insurance plan. A savings of $20,182 over 20 years!
Option 2 - More Coverage
Ok, Kevin’s pleasantly surprised at how affordable a $300k, 20 year term policy is. Now he wants to know how much will it cost him for $1 million of coverage? This was the amount he originally thought would make him sleep well at night knowing his family was protected.
Police Life Insurance, $300,000
$111.00 per month
$26,640 Total Cost
Individual Life Insurance, $1 Million
$71.10 per month
$17,064 Total Cost
Kevin's shocked to learn that a $1 million 20-year term policy with Empire Life of Canada will only set him back $71.10 per month. Hard to believe, he'll receive three times the coverage he's eligible for with his police benefits top-up, at 35% LESS cost! Not too shabby.
Option 3 - Longer Term
Kevin’s definitely sold on purchasing an individual life insurance policy but he’s thinking he might want coverage beyond retirement. After all, his mortgage is amortized over 25 years not to mention, he’s thinking of starting a business when he retires from the OPP at age 57. He’s wondering how much it will cost him for a longer term?
His independent life insurance broker makes a great suggestion. Why not split his coverage between Term 20 and Term 30?
Police Life Insurance, $300,000 (OPP top-up for 20 Years)
$111.00 per month
$26,640 Total Cost
Individual Life Insurance, $1 Million ($500k Term 20 + $500k Term 30)
$88.65 per month
$21,276 Total Cost
A combined $ 500,000 30-year term policy + $ 500,000 20-year term policy with Empire will cost Kevin $88.65 per month. That means he has $1 million of coverage for 20 years until his retirement and then $500k for 10 years more until age 67. Also, his premiums will drop to $60.30 for the last 10 years of the policy. Now he has protection during and beyond retirement.
Can Cops Get Life Insurance? YEP
But You Need to Speak to an Independent Agent to See What Your Best Options Are!
So Can cops get life insurance? Yes, they can and, at the same rates as the general public. The question is what sort of coverage works best for them and why.
It’s always a good idea to check your benefits package to see if your coverage is adequate to keep your family in the lifestyle they’ve become accustomed to. Chances are it’s not. If you have a young family, I recommend a minimum, 10 – 15 times your gross salary in coverage. So if you make $60K per year I would recommend at least $500K to $1 million in coverage.
Another issue to consider is longevity. Will you be in the police force forever? If not portability should be considered. This is another reason to consider purchasing coverage independently. Not to mention, buying an individual life insurance policy as an alternative to topping up your existing Police group coverage is almost always cheaper (see example above).
We work with the best life insurance companies in Canada. Even if you have health issues we can get you protected. Thankfully simplified issue life insurance plans provide a safety net for those who would be denied a traditional policy.
If you have any questions please give us a call. We’d love to help!