The Impact of Virgin Galactic’s Fatal Crash on Life Insurance Policies

Today almost all life insurance policies exclude from coverage deaths resulting from operating a private airplane. This forces many private pilots and those flying private airplanes as passengers to buy additional life insurance coverage due to the heightened risk involved in such activities.

Space tourism, however, is not on a list of exclusions in a life insurance policy. This is likely to change after the fatal crash of a test flight of a Virgin Galactic space ship on October 31, 2014.

Virgin Galactic’s SpaceShipTwo was built to carry 6 tourists on two-hour suborbital flights. It crashed after its release from a launch plane killing one pilot. Space tourism is developing rapidly.

There are several projects to develop space tourism and about 800 deposits for a ride into space have already been made. As space tourism is becoming more and more attractive to people, insurance companies will start working on changing their life insurance contracts so as to exclude coverage for deaths occurring while traveling to space.

Insurers may also start changing their life insurance applications to include a question about space tourism. In the future, life insurers may also expand coverage to include space tourism.

Adding space tourism to life insurance policies and applications may take a very long time. The main issue is calculating the risk involved in space tourism.

Usually, insurance companies carefully assess the risk involved in various activities.

They consider such factors as age, height and weight, medical history, family medical history, marital status, number of dependents, outstanding debts, occupation, sports and hobbies, smoking or tobacco use, alcohol consumption, foreign travel, purpose of the insurance, income, etc. In evaluating the risk involved in hobbies/activities and occupations, they look at safety data.

Since there is too little space tourism safety data, it is almost impossible to assess its risk.

Those who have plans to travel into space should disclose their plans when applying for life insurance. This will help avoid a denied life insurance claim in the future.

Insurance companies can contest a policy up to two years after it was written. During the contestability investigation, insurance companies search for information which may show that the applicant misrepresented facts.

If they find that there was a misrepresentation made on the application for life insurance coverage, they will deny a claim. Thus, if someone planned to travel on a spaceship but failed to disclose it on the application, the insurance company may deny their beneficiary’s claim in the event of death based on misrepresentations on the application.

This is true even if the insured died of natural causes or his death had no connection to the misrepresented fact.

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About the author

Attorney Tatiana Kadetskaya has over 10 years of experience in life insurance law representing beneficiaries and policy owners. She is best known for successfully collecting denied and delayed claims and settling complex beneficiary disputes and interpleader lawsuits.

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