A whole life insurance policy, also called a permanent insurance policy, is the insurance that protects you for your whole life. You may think that all you have to do is apply for a policy, but did you know that your credit rating may actually impact your ability to get a whole life insurance policy? What does credit have to do with insurance? Take a look.

Over the years, insurance fraud has been cited as the cause for premium increases, stricter rules and tougher investigations. Penalties for insurance fraud include fines and jail time. But prevention is always preferable to dealing with the problem and insurance companies are taking proactive stands against insurance fraud.

With that in mind, some insurance companies are taking time to look at various aspects of a person’s life before approving applications for insurance. Whether you’ve applied for term insurance, universal life insurance, whole life or permanent life insurance, you could very well undergo a credit check by the insurance company as part of the application process.

Expect the Whole Life Insurance Company to Check Your Credit History
Considering the potential for a large claim against a life insurance policy, the life insurance companies want to first assure themselves that new clients aren’t taking out life insurance policies with the intention of committing fraud. With that in mind, companies will check into the person’s debt history, payment of bills and money currently owed in the form of loans, mortgages and payments. If you have extensive outstanding debts and it appears that you may be in financial trouble, you could be denied live insurance coverage.

In addition, your life insurance company may be looking at your ability and willingness to make payments. Your whole life insurance policy is, after all, a long-term commitment by you and the insurance company. The company will invest time into writing the policy and will uphold their end of the deal as long as you are making payments.