How DUIs can wreck your chance to buy life insurance
Published 11:30 a.m. UTC Sep. 26, 2015
A drunken driving conviction comes with a lot of well-known, long-term consequences, including probation, license suspension, a potential jail sentence and years of higher car insurance rates. But a DUI (driving under the influence) conviction can also have a significant effect on the price you pay for life insurance — or whether you can even get it.
Life insurance companies often charge more to applicants who have had a DUI (or DWI – driving while intoxicated) conviction within the past five or 10 years. Many carriers will deny coverage altogether to an applicant with more than one recent DUI. The reason is simple: “Drunk driving is a risky behavior, and a deadly one,” says Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry trade group.
A fatal car crash is one possibility, of course. According to the National Highway Traffic Safety Administration, the risk of a driver with one or more DUI convictions getting into a fatal crash is about 40% higher than a driver without one. The agency also found that, based on 2007-2011 data gathered from 22 states, 30% of drivers convicted of DUI are repeat offenders.
Drunken driving can also be a sign of alcoholism, which raises the risk of dying in other kinds of accidents, or from health problems such as high blood pressure, heart disease, stroke, liver disease and certain cancers, according to the Centers for Disease Control and Prevention.
“The mortality rate for people who have been convicted of DWI is higher than those who have not, all else being equal,” reports Mike Vaughan, associate vice president of life insurance at Nationwide.
Here’s what people convicted of drunken driving may face when applying for life insurance.
Barred from the best rates
Many carriers will deny coverage completely to applicants who have had a DUI conviction within the past year. Some companies, such as AIG, Banner and SBLI, will make applicants wait two years after a DUI until they will consider them for coverage.
nsurers that do offer coverage to individuals after a DUI generally charge higher rates, although the “lookback” period varies.
Most carriers will deny applicants their best, “preferred” rates if they have a DUI within the past five years, no matter how healthy they are. Some insurers, like Minnesota Life and Symetra, make people wait 10 years after a DUI before they’ll be eligible for preferred rates. Companies generally don’t provide “standard plus” rates, which are between standard and preferred rates, for three to five years.
Insurers that will sell a policy soon after a DUI charge extra, on top of standard rates. Nationwide and Prudential, for instance, say that’s true within the first year after a DUI.
Expect to pay up to $7.50 more for every $1,000 of coverage, either temporarily or for the life of the policy, according to Jason Fisher, owner of Waterway Financial Group in Myrtle Beach, South Carolina. For a $250,000 term life insurance policy, that’s up to $1,875 more a year.
Nationwide’s Vaughan said customers may request a rate reduction two or three years after a DUI if they have no more incidents of risky behavior on the road, such as a reckless driving conviction. They can also be considered for preferred rates after seven years.
Multiple drunken driving convictions complicate the situation further. Some companies, including Accordia, Genworth and Nationwide, won’t sell a life insurance policy to an applicant with more than one DUI in the past five years. Others are more flexible.
“Multiple offenses are evaluated on a case-by-case basis,” reports Tom Farrell, vice president of underwriting for Prudential Individual Life Insurance. “An underwriter must use judgment when dealing with these situations and take into account the whole picture.”
How to buy life insurance after a DUI
If you’re looking for life insurance and have a DUI conviction on your record, shop around. Many insurers will consider each case individually, which opens the door for you to find someone to evaluate your situation favorably. Since some insurers impose surcharges for only a year after a DUI, it may pay off to wait to apply. Have a life insurance agent help you navigate the options. Some agents, like Fisher, specialize in helping high-risk clients buy life insurance.
It’s important to be honest about your DUI to your agent and on your life insurance application. Insurers routinely check the motor vehicle records of applicants, so it’s unlikely you’ll be able to sneak a DUI past an insurer. Any lies on an application are considered fraud and can cause the insurer to rescind the policy in the first two years if the lie is uncovered, meaning they can deny payment to your beneficiaries.
Prepare to answer lots of questions about your driving record and alcohol use. A history of moving violations or medical indicators of alcohol abuse, which would be revealed in a life insurance medical exam, may cause insurers to reject you or propose higher rates.
Be sure to ask the agent or insurer whether you could apply for a reduction in premiums in a few years, and factor that in when deciding which company to choose.
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Aubrey Cohen is a staff writer at NerdWallet, a personal finance website. Email: acohen@nerdwallet.com. Twitter: @aubreycohen. NerdWallet is a USA TODAY content partner providing general news, commentary and coverage from around the Web. Its content is produced independently of USA TODAY.