Frequently asked questions

Why do I need life insurance?

Life insurance is an essential part of your overall financial planning. The main reason most people buy life insurance is to replace income that would be lost with the untimely death of a wage earner. The cash provided by life insurance can help ensure your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.

Insuring a spouse is just as important as insuring the primary wage earner. Many families are now two-income families and rely upon the income provided by a spouse. Insurance on the spouse helps replace that income in the event of death or provides funds for housekeeping, child care or other services that now must be purchased.

What is term life insurance?

Term Insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period, which can be from one to 20 years. The premium rates generally increase at each renewal date.

Why buy term life insurance?

Term Insurance allows you to pay only for the protection you need and for the time (term) that your dependents need it. It's very affordable since only life insurance protection is provided. There is no cash value accumulation. The term life insurance programs offered through AOPA are among the most reasonable for pilots.

Special considerations as a pilot buying life insurance:

You see it all the time now with pilot life insurance — lures of low premium rates (up to 30 percent lower!). The reality is that with the comparison capabilities of the Internet, you may think you're making apples-to-apples comparisons when the reality is nothing of the sort. Here are a few things to keep in mind:

1. Check the terms — this is often where advertised rates play fast and loose.

Companies may be comparing non-pilot rates to pilot rates, group rates to individual rates, one underwriting class to another or even 10 or 15-year policies to 20-year policies. Term life rates in the marketplace change rapidly. Even a comparison one or two months old may be inaccurate. Read all the fine print to ensure the comparison applies to your situation, as a pilot. Get a current rate quote from the company you are interested in. Ask questions to see if advertised rates are what you're receiving.

2. Read the fine print.

Some insurance appears inexpensive because it does not cover pilots when they are flying. For your own sake, make sure you disclose that you are a pilot and that the insurance covers the needs you have.

3. Look for your rate, not just the best rate.

Beyond flying, your health, build, gender, driving record, avocations and family medical history may all play a part in the rate you receive. The reality is, only a small percentage of us qualify for the best rate of any given policy — yet frequently only the best rate is quoted.

4. Go to the source.

Often insurance sales are handled through brokers, who hand off the policy to one of many companies. This means you may not have a choice about which insurance company you work with. Work directly, and you'll have control over who is insuring you.

5. Qualify the company.

   Go with insurance companies with a proven track record of hassle-free claim payment. By the same measure, be cautious with companies that don't have extensive experience covering pilots; your agent may not know enough details about how his or her company handles pilot insurance to provide you with all the information you need. And it's critical to always ask for the financial rating of the company or look it up on the Internet. Working with a qualified company will protect you in the long run.

   As a pilot looking for insurance protection while you fly, it makes sense to consider buying insurance through a pilot organization. AOPA life insurance programs offer competitive rates, extensive experience insuring active pilots and the backing of a financially sound insurance company.

   AOPA Life Insurance programs with Minnesota Life have been insuring pilots and paying claims for 50 years, so they know pilots and their insurance needs. The programs are constantly improving with both a preferred rate group program and an AOPA Individual Term Life Program with 20-year rate guarantees and "Best Class" underwriting for pilots.

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