How Alcohol Affects Your Life Insurance Premiums

Written by Sanford Ellowitz on March 22, 2010 & Posted in Life Insurance

You may enjoy a glass of wine a day or have a few alcoholic beverages a week; however, exceed that amount and life insurance premiums may be higher for you than for someone considered a social drinker.

Why Excessive Use of Alcohol Raises Your Rates

Life insurance companies set their rates based on the financial risk they take on when insuring you. Excessive use of alcohol can result in significantly lower life expectancy, and may increase the possibility of an earlier than expected payout. Insurance premiums reflect this increased risk with higher rates.

How Your Use of Alcohol Is Measured

Life insurance companies use several strategies to measure your alcohol consumption. One indicator of alcohol use can be found in the series of "lifestyle" questions on the initial application. Specifically, one question asks for details about your drinking habits.

You are also given a paramedical exam and blood test. The blood test checks your liver function, as well as for evidence of drug-use and nicotine-use. Blood test results that show elevated liver enzymes may indicate excessive alcohol consumption. However, using ibuprofen may also cause elevated enzymes, so further blood tests may be ordered.

Your Physician's Report

Next the insurance company reviews your Attending Physician Statement (APS), which is submitted by your doctor. The underwriter checks your APS to see if your doctor noted your use of alcohol.

Your Driving Record

Finally, the insurance company reviews your motor vehicle record. Being convicted of driving under the influence (DUI), just once can raise your rates. More than one conviction can increase your rates substantially--if not making you entirely uninsurable.

Setting Your Rates

An underwriter evaluates your responses to lifestyle questions, the results of your blood test, APS, and your driving record. If it's determined that you exceed company guidelines for moderate alcohol use, you may be offered a policy but at a higher than usual premium rate.

A Useful Tip

If several years have passed since a DUI conviction, and you've maintained a good driving record, you may ask to have your policy reviewed. Your premiums might be reduced to reflect your improved record.

This also applies if you have a policy that has been given a less than favorable risk rating because of excessive alcohol use, or you had a health problem due to alcohol use. If you've stopped drinking and your health has improved, you may also apply to have your policy reviewed.

Applying for Life Insurance

To find a life insurance policy, fill out the quote form above. A knowledgeable insurance agent can help you find a policy best suited to your needs.

Sources

http://www.small-business-ideas.org/elevated-liver-enzymes.shtml / http://www.investopedia.com/articles/pf/08/what-to-expect-insurance-application.asp / http://www.californiadui.com/articles/dui-effects-insurance.php

About the Author

Sanford Ellowitz is a New York State licensed insurance agent. He is also a Certified Financial Planner and a Certified Employee Benefit Specialist. He has over 25 years experience in the insurance and financial services industries. His experience includes financial analysis, product development and marketing. He provides insurance planning and product sales.

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