Alcohol Use, DUI's and Life Insurance: Essential Reading

It’s no sweeping statement to say that most people like a drink. At least 65 percent of us drink regularly. If used sensibly, alcohol can be a relaxant, and as such is a very social drug that is readily available, nationwide. It is perhaps the fact that it is so easily available that makes it so dangerous. Alcohol accounted for over 76,000 deaths last year alone, and this figure rises with each successive year.

Not surprisingly, alcohol –like tobacco- is considered to be a high risk factor for insurance companies and they like to know to what extent you use it and whether you have had a history of alcohol abuse or not. When you apply for life insurance, no matter whether whole or term, you will be asked two questions related to alcohol consumption:

• Have you ever been convicted of a DUI (a conviction for Driving Under the Influence of alcohol)?
• How much alcohol do you drink and how regularly?

Your answers to these two questions will affect how much you pay for life insurance. An alcoholic person will pay up to four times more than a teetotaler just as tobacco smokers will pay significantly more as a considered risk. That said, underwriting for life insurance is more of an art than a science, and there is no consensus or consistency among various life insurance companies on how to deal with the answer to either of these two questions, particularly the second one. DUI's on the other hand usually yield similar consequences when applying for a life policy.

What if I have a DUI on record?

Drivers must have a blood alcohol reading of lower than 0.10%, unless they are below the legal age for alcohol consumption, in which case a no-tolerance approach is adopted. After a DUI conviction, drivers will face all manner of problems getting life insurance for at least five years. Generally speaking, having a DUI on your record, unless it was many, many years ago is likely to disqualify you for the best life insurance rating class and therefore cost you significant amounts of money. If it was recent, or if there have been multiple DUI's in recent years, you will be required to pay even more, all other risk factors notwithstanding.

How much is too much*?

Life insurance companies are notorious for cancelling policies for those who have lied about their history, in particular DUI offences, but don't worry! There are some DUI friendly companies, such as GMAC or Progressive, who will offer highly competitive rates, but they will still view your record. It is a myth that there are companies out there that don't.

So in short, on the bright side, your DUI won't stand against you indefinitely, but it will make your life difficult (or at least less affordable) for a good few years. Your best option is to watch your drinking, mind your health, wait for a while, then start looking for a good deal on your life insurance. After enough time has passed, insurance providers will look more favorably upon your circumstances and you can expect to pay less for you premium.

As tempting as it may be to manipulate the truth slightly when applying for insurance, we recommend that you don't. Be sure to be as accurate as possible on your life insurance application about however much you do drink because your policy can easily be (and often is) rescinded if any inaccuracies are discovered (often times after a claim is made).

*Bear in mind the legal limit for driving is 0.8% blood alcohol content; little more than a single beer, shot or glass of wine

Will my blood be tested for alcohol when I apply for life insurance?

Not exactly, since alcohol does not usually stay in the blood for more than 24 hours (hopefully you aren't drinking when the nurse comes by to do the paramedic exam!) That said, alcohol use can be suggested by the presence of elevated liver enzymes which is something that is tested for.

Keep in mind that before you can be issued a life insurance policy (except when it is no-exam life insurance), you will be required to submit a blood sample. Elevated liver enzymes can be an indicator of regular drinking. If you are found to have elevated liver enzymes with your blood sample, several things may happen as a result:

• You will not be issued a policy
• You will be issued a policy but you will be required to pay extra premium
• Your application will be postponed until the cause of the problem can be pinpointed

Modern drinking trends

As you can see from the chart to the left, the United States has a far higher abstention rate that is double that of neighboring Canada, and several times higher than influential EU countries, where alcohol consumption has long been prevalent. The culture of drinking in the US tends to be more relaxed, unlike other countries whereby it is often seen as a necessary accessory to social interaction. This demonstrates a radical change in drinking trends in the past 50 years as public awareness has improved dramatically in the US, with people's wallets being affected by their lifestyle choices as well as their health.

The chart to the right shows that, contrary to general public perception, poorer people drink less than richer people, with almost 60% of lower income women abstaining from drink as compared to fewer than 10% of higher income women who don't. This is reflected in male drinkers also, with eight times as many lower income men abstaining as compared to higher income men. This can be attributed not only to the high tariffs attached to alcohol and the yearly rise in taxes on drink, but also the fact that people who socialise more tend to visit restaurants and bars on a regular basis.

But I don't drink excessively!

Sure, drinking to excess is associated with shorter life expectancy, but there is no agreement as to what is excessive. Is it one drink a day, or two, or is it six? There is also the point to consider that light drinking has been known to increase life expectancy by a few years and cut down on both heart attack and stroke. It is for these reasons that insurers use three determining factors when drawing conclusions as to your drinking habits:

Lastly, two more important points:

1. There are over 100 companies in the U.S. that sell life insurance. Most of these are good, solid companies with excellent financial ratings and some don't even require taking a paramedical examination. Shopping 100 companies obviously is a bit of a chore, (and not recommended) but the point is that you have options. Don't assume that the underwriting from one company to the next will be identical. Life insurance rates vary widely.

2. If you end up with a higher-than-expected life insurance rate because of something alcohol related, remember that your rates can go down over time if you are able to furnish evidence that you have addressed the problem. If you drink moderately, (a glass of wine a day, perhaps) and are in good health, this is unlikely to affect your rates with most insurers unless you have elevated liver enzymes. If your alcohol consumption is more than moderate, with a little diligence and hard work, it should be possible to get excellent rates on life insurance over time.

Talk to Blake, our resident expert on life insurance with DUI's, life insurance and alcohol, life insurance for smokers, marijuana life insurance and the life insurance paramedical exam. He knows from personal experience just how difficult it can be to deal with insurers after a DUI, what you can do to better your situation, who the best carriers are with whom to insure yourself and many other health related insurance scenarios.

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