Insurance cover for adrenalin junkies

Insurance cover for adrenalin junkies
06 March 2011

RISK: we love it and fear it. It's part of living and without it, where would we be? Extreme sports fans, in particular, thrive on risk, but fear it at the same time: what would happen to your loved ones if you were no longer around?

It is possible to strike a balance between taking risks we enjoy and taking care of our happy homes and families if something goes wrong. Here's how…

Take calculated risks

Generally speaking, engaging in any action where the outcome is uncertain is risky, but that shouldn't put you off from living your life to the full.

We face some degree of risk everyday simply by existing, so it's not about whether or not you take risks, but how skilful and prepared you are in doing so.

For example, I'm reasonably confident that I will make it to and from my office safely by car, but not confident that I won't cause some sort of accident on Sheikh Zayed Road if I take a more risky mode of transportation, like a unicycle.

I could list certain dangerous variables, like the fact I don't actually have any expertise riding a unicycle or the fact that SZR is one of the most accident-prone roads in the world, but I'm sure you get my point.

Be prepared

Not only do you need to measure the amount of risk before you sign up for an unusual activity (like urban unicycling), but you also need to prepare for any unnecessary risk financially.

This way, you and your dependants will remain in good shape during and after any activity, particularly if you decide to partake in a hazardous, yet thrilling, sport.

It's perfectly fine to participate in a potentially dangerous sport or pastime as long as you fully understand what would happen to your estate if something went wrong and take certain precautions.

Consider financial security

So what could this mean in terms of my family's financial security? I'm glad you asked. If you decide to take part in a potentially hazardous pastime or enjoy a potentially dangerous hobby such as rock climbing, scuba diving or caving, you may find certain types of insurance difficult to obtain.

Engaging in such activities might affect life insurance, income protection insurance, permanent health insurance and even mortgage protection insurance.

If your exciting pursuit or hobby is regarded as a "high risk", you might be asked to pay a slightly higher premium than somebody who isn't as adventurous due to the increased risk of injury – leading to time off work or even premature death.

Buy early

On the bright side, once you have secured a life insurance, the rates can't be raised until renewal time (or not at all with a term plan) and the policy can't be cancelled after the 'contestability period', which is generally two years.

However, if you take up a dangerous hobby before you apply for cover and then neglect to inform your insurer, it will have the right to cancel the policy during this period, if it finds out.

That said, if you start a dangerous sport after securing a policy, your life insurer can't cancel the plan as long as nothing was misrepresented upon application. For example, if your policy was in existence for a year and then you decide to take up skydiving and something dreadful happens, the company still has to pay out.

The most common reason a claim is rejected is because of 'material misrepresentation' on the original insurance application – so be honest.

How to get the best rates

There are some things you can do to get the best insurance rates without giving up your extreme hobby. Follow these tips:

  • Get serious about your sport. Take safety-training and certification courses. Training from a certified and credible professional company might reduce the cost of insurance. Buy only highly-rated safety equipment and tell your insurer: this might also help lower your premium.
  • Limit how often you engage in your extreme sport then tell your insurer that you only do it from time-to-time.
  • If you don't want to pay extra charges for high-risk life insurance, you might be able to work out a deal with your insurer where you will be covered for any fatal event except your extreme sport.
  • Shop around for insurance that covers extreme sports through a qualified adviser or broker, or on the internet.

Pic credit: hinnamsaisuy/ FreeDigitalPhotos.net

Do you indulge in extreme sports? What impact has this has on your insurance costs? Do you worry about your family's financial security if something went wrong?

Comments

  • mahmoud
    mahmoud
    2011-03-07T09:35:58

    Very important stuff indeed. Living in Dubai, it's easy to get carried away with the exciting outdoor activities you can do here wiothout thinking about the insurance implications. Thanks for the reminder.

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Independent Financial Advisor
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