Can You Get Life Insurance With Bad Credit?[Yes, You Can]


Many clients are surprised to learn that some life insurance companies use things like your credit score, in addition to your health, to underwrite a life insurance policy.

In fact, some of the best life insurance companies now use sophisticated credit-based algorithms to asses the mortality risk of their policyholders.

Can you get life insurance with bad credit? Yes, you can get life insurance with bad credit. There are life insurance companies that won’t factor your credit score at all in their financial underwriting as long as you’re not actively in a bankruptcy. However, bad credit can affect your rates with the carriers.

 If you want to get life insurance with bad credit, you shouldn’t have to pay through the nose.

Use our free rate comparison tool to compare the rates of the most competitive life insurance companies for people with bad credit.

Our article will cover everything that you need to know about buying life insurance with poor credit.

Feel free to skip ahead to the sections that are most relevant to you.

Does Life Insurance Require a Credit Check?

Yes, some life insurance companies will look into your credit history, among other factors, when assessing your risk, but they are looking at more than just your raw credit score.

In fact, your actual credit score number likely won’t affect your rates much if at all.

However, items on your credit report, such as bankruptcy, will absolutely be considered.

Life insurance companies have been able to make a case that people in bad financial shape can have a lower life expectancy.

Now, this might seem like a stretch to some people, but life insurance companies believe they can connect the dots.

People with poor financial situations can be more prone to health risks like depression, substance abuse, or even suicide.

Third-party companies, like Lexus Nexus, have proprietary algorithms that assign you a risk score based on public data.

Some non-health items considered in credit-based underwriting are:

  • Credit history
  • Prescription history
  • Bankruptcy history
  • Driving record
  • Public records
  • Criminal history
  • Past application data (MIB)

The addition to the risk score in life insurance underwriting can both help and hurt you, depending on how high your score is.

If you have an excellent score, the life insurance company may approve you for the top discounted rates and waive the exam and medical records requirements.

This accelerated underwriting can conveniently issue a policy within days instead of weeks at affordable rates without the hassle of a medical exam.

This is a great option for clients who want lower face amounts of life insurance quickly for things like mortgage protection life insurance.

However, if you score low, you can not only expect to complete the medical exam, but you may be ineligible for certain preferred-health discounts.

In some rare cases, you may even be declined for life insurance even if you have no pre-existing health conditions.

Does Insurance Affect Your Credit Score?

No, a life insurance application does not affect your credit score.

Life insurance companies do what is known as a “soft pull” when looking into your credit history.

They only need to view the contents of your financial history, but since you’re not looking to increase your credit, your credit score is not affected by the inquiry.

This type of credit inquiry is similar to that of a credit inquiry for employment purposes or a personal credit report request.

They are noted on your personal credit report, so you have a record of who was accessing your credit history and why, but they don’t affect your credit score or are shown to lenders.

The results of your life insurance application will be stored at the Medical Information Bureau (MIB), which shares your application result with other member life insurance companies, though.

The records in the MIB can affect future life insurance applications that you make.

How to Get Life Insurance With Bad Credit

If you were declined for life insurance due to your risk score, you should get a second opinion from a high-risk life insurance broker.

High-risk life insurance brokers work with multiple companies and specialize in matching you with the best life insurance company for your situation.

While many of the best no-exam life insurance companies will use some form of credit-based underwriting or risk score, not all of them do yet.

Some no-exam life insurance companies don’t use risk score calculations and will underwrite financial risk the old-fashioned way.

As long as you’re not going through a bankruptcy, you should be able to get a policy without your credit history becoming an obstacle.

Fully-underwritten carriers are more inclined to approve you even if your risk score is low if they have current labs and medical records showing that you’re in excellent health.

While macro data does make the case that credit-based underwriting is an accurate predictor of mortality risk, as clients age, medical history begins to outweigh the risk score in impact.

Additionally, having your broker write a cover letter for you may help give the underwriter a greater sense of your financial situation.

Sometimes there are extenuating circumstances that play into your risk score that may not tell the whole story.

Any information that you can provide to add greater context to show you’re less of a risk to the insurance company never hurts.

Final Thoughts

Having bad credit can affect your life insurance rates with certain companies, but not all life insurance companies have incorporated credit-based underwriting yet.

Your actual credit score number is not what the life insurance use, but rather your credit and financial history is one part of a larger risk algorithm that generates a risk score for you.

If you have a lower risk score, that can affect your life insurance application by triggering underwriting requirements like the medical exam and medical records request.

Additionally, a low-risk score can disqualify you from preferred discounted rates with some life insurance companies.

In rare cases, you may even be declined if your risk score is low enough; although, this is most common with no-exam underwriting.

Working with a high-risk life insurance broker who sells multiple carriers will increase your chances of getting approved for life insurance at an affordable rate.

You can use our free rate comparison tool to compare the rates of highly-rated life insurance companies that both use and don’t use risk scores in their underwriting.

A credit inquiry by an insurance company is considered a soft pull and won’t affect your credit score, nor will it be shown to lenders as well.