23 October 2012 0 Comments

How Use Of Alcohol Affects Life Insurance Premiums

Normal use of alcohol has no affect on life insurance premiums.  Abuse of alcohol can not only drive up the cost, but make it impossible to obtain at any price.  The question is, when does use become abuse?  There are several indicators of when this might be the case:  when there are citations for driving under the influence (DUI), when noticeable family/social altercations occur, when blood tests show elevated liver functions or when daily use is being used as self-medication for depression.

A single DUI episode does not in itself indicate that there is a “drinking problem”.  But, even one DUI in the past 3 years would likely preclude your ability to obtain a “preferred” premium and more in that same time frame would probably add some additional charges to “standard” premiums.  Above two DUI’s in the past 5 years could result in the application for insurance being declined.  If you merely “got caught” you might be able to explain away a single episode as a situation that any of us could have experienced.  Beyond that, you’re better off not trying to justify them.  The underwriter will want to know what you have done to correct your problem.

Elevated liver function tests should be a wakeup call for total abstinence—at least until functions are back to normal and you can determine whether the continued use of alcohol at any level can be resumed.  If there is a physiological or psychological addiction in these cases, then total abstinence is what the underwriter will likely want to see.

Some offers might be made after 1 year of abstinence, but the most ideal risks are individuals who accept the fact that they have a problem and have been under treatment and checkups for a 5 year period since their last consumption of alcohol.  Continued attendance in programs such as AA, normal lab studies and a good driving record are important.  The applicant or agent should write a cover letter explaining any previous circumstances in their lives that exacerbated their drinking problem, but have now been dealt with in a manner not requiring alcohol.

If there is a known history of alcohol abuse the agent should ask the applicant to complete an Alcohol Use Questionnaire to be submitted with the normal application.  Candor and acceptance are of primary importance.

Next, I’ll be discussing what has become a major concern for the Baby Boomer generation:  Hepatitis C.

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