A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

Fox Business must have had a slow news day, because in a recent article it entertained the hypothetical question of whether a prison inmate can obtain a life insurance policy. Basically, the answer–to those who are curious, and you are quite likely few in number–is negative.

According to the article, 7 million Americans, or 2.9% of the adult U.S. population, are circulating in the criminal justice system. So the issue does affect a large number of people. But essentially all life insurance companies will not consider an application from a prison inmate. The reason why is pretty obvious: prison is a dangerous place, and many people in prison do not have safe lifestyles. Interestingly, there are some insurance companies who will offer policies to active-duty military personnel, even though they may also find themselves in harm’s way.

If you think about it, how would a life insurance company conduct a medical test on an applicant who is in prison? It’s probably not feasible for a paramedic or nurse to go to the prison and draw blood and take urine from a prisoner.

Not only is prison an unsafe place, which increases the mortality risk for a prisoner-applicant and makes them an unattractive risk, but there is the moral hazard issue. If someone is incarcerated for a serious crime like murder or child molestation, an insurer is probably not going to want to insure them based on their past actions and also that such a person will foreseeably run into various types of trouble whether in or out of prison.

All that said, if a person with an existing life insurance policy enters the prison system, he will get to keep his policy so long as the premiums are timely paid. Generally speaking, policies do not contain a clause invalidating them once a person enters prison.

Getting back to how insurers will offer policies to persons in the military, it presents an interesting issue because, as I pointed out, they also find themselves in unsafe environments. Similarly, life insurance companies will offer insurance to daredevils such as skydivers even though they put their lives on the line in a way most of us do not. It seems that with prisoners the key difference, in the eyes of life insurance companies, is the moral aspect, the uncertainty of prison life, and that prisoners are more likely to make enemies.


One Response to “No Life Insurance for Prisoners”

  1. Hey Eric,
    Nice article, as usual.
    While you’re correct that a prisoner can’t be approved for a “fully underwritten” policy, the type that requires a medical exam, that’s not the case for all types of policies.

    Applicants CAN buy life insurance from prison from some simplified issue carriers. Basically, the application can’t ask anything about felonies, arrests, etc., and can’t require a medical exam. In other words, it needs to be a guaranteed issue policy that doesn’t ask about health, occupation, criminal history… nothing.

    For a lot of these types of policies, the only exclusion is if someone is living in hospice care.

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