Does your life insurance cover you for space travel?

The issue of private space travel has been back in the news in recent weeks. The crash of a Virgin Galactic craft in California has put back the possibility of ‘space tourism’ while new blockbuster film Interstellar has once again opened up a debate about the space race.

If anything were to happen to you while you were travelling in space, would your life insurance cover you? Industry experts in the US believe that insurers would have to pay out in this scenario although insurers are likely to start changing the rules for new policyholders.

Keep reading to find out more.

Current policies would probably have to pay our for death on a space trip

While private pilots and skydivers have to take out extra life insurance to cover the added risk inherent in their hobbies, space tourists don't need special cover for their trip. That’s the view of industry experts who believe that because American life insurance policies don’t ask about space tourism or exclude it from cover insurers would have to pay out if a claimant died on a space trip.

However, that loophole is likely to disappear following the recent fatal crash of Virgin Galactic’s SpaceShip Two.

The Daily Mail reports that ‘insurance companies, which say they are considering what to do about space tourists after the Virgin crash, are likely to start adding questions about space travel and may even explicitly exclude space coverage.’

Former insurance lawyer Burke Christensen said: “I suspect in insurance company offices all over the country right now - as a result of what's happened to the Virgin Galactic plane - it's being discussed.”

New policyholders likely to have declare intended space travel

While many current life policies would probably pay out in the event of death, applicants for new cover should disclose plans to travel into space or risk a dispute with an insurer, said Steven Weisbart, chief economist at the Insurance Information Institute.

At present, insurers typically have up to two years after a policy is written to contest the application. This allows them to investigate whether the insured person has misrepresented facts such as failing to declare their intentions to travel into space.

In this case it is possible that an insurer could avoid paying out on a claim if someone bought a policy and died in a rocket crash during the two years period.

Insurers set to rethink covering space travel

Prudential spokeswoman Sheila Bridgeforth said: “If we had an applicant with such plans, we would postpone any underwriting decision until they returned” while US insurer MetLife says that it has no plans to start offering space travel insurance.

Northwestern Mutual said that it is paying close attention to the issue after the crash, but that there is too little safety data to assess the risk of space tourism.

Pembroke Managing Agency offers a policy that pays up to $5 million (£3.1 million) per space passenger or up to $20 million (£12.5 million) per trip, according to parent company Ironshore International, which launched the policy in June.

Neil Stevens, a space insurance expert and member of the UK's Satellite Finance Network advisory board, believes that insurers will look at satellite policies when deciding how to price insurance premiums for space tourism. These policies charge between 2.5 per cent and 10 per cent of insured value meaning that a policy that were to pay £1 million would cost between £25,000 and £100,000.

Mr Stevens said: “Getting on a space flight is a material change in risk. Put yourself in the place of the insurer. Would you charge the same premium?”