Life insurance companies like to avoid risk. So whether you’re a recovering alcoholic or a problem drinker, this will affect your life insurance rates. The good news is, you can get life insurance with history of alcohol abuse and sometimes at decent rates depending on the criteria life insurance companies use to determine your rates. So let’s discuss what the companies will look at, the possible outcomes and the best course of action.
In short here is what you need to know about getting life insurance coverage:
- You can get life insurance coverage.
- Ideally you’re over age 30 (or 40, depending on the company) and it has been at least 3 to 5 years since your last point of consumption.
- Most typical case is a substandard table rating.
- Worst case is a decline at which point you can consider a guaranteed issue life insurance policy.
- Work with an independent agency familiar with this risk. (Hint: it’s us).
If you’re ready to start shopping for coverage, contact us and let us do the work for you. Otherwise, let’s get into detail of what it takes to get covered.
Factors Life Insurance Companies Consider
Life insurance carriers go through a process called underwriting. During this process they thoroughly evaluate the applicant to determine their rate. If you have a history of alcohol abuse these are the factors that life insurance companies will look into to qualify you.
Current Age – Usually the older the better. Each company’s tends to vary when it comes to this, but if you’re over 30 or 40 years of age, it will reflect more favorably on the underwriting outcome.
Amount of alcohol consumption declared, past or present – The company will want to know the severity of the alcohol usage. The rate of consumption let’s them gauge the potential abuse risk of the applicant.
Official Diagnosis – Whether it’s an ongoing psychological or physiological issue, the underwriters will want to know specific details. Is there history of dependence? Is it qualified as alcohol abuse, problem drinking or alcoholism?
Length of Abstinence – If you have been abstinent, they want to know for how long. The longer the abstinence the more favorable the rate.
Number of Relapses – The more times you relapsed the higher risk you seem to the underwriters. Less relapses will influence the application more positively.
Treatment – Life insurance want to see what you are doing to treat your problem. They will want to see any memberships of self help groups as well as any medical treatment. Details of treatment success will help drastically.
Driving History – Overall driving history affect your rate, however specifically they will be looking for history and frequency of DUI’s.
Overall Health – The company will look at your health outside of the alcohol abuse. If you have any other medical complications it will directly influence your rate.
Lifestyle – If you have other lifestyle habits that can be deemed high risk you can expect to be rated up. This can include things like dangerous hobbies or tobacco consumption.
Medical Exam Results – if you have history of alcohol abuse it’s best to go the traditional exam route vs simplified issue policy that is better suited for healthy people. In the typical life insurance process a nurse will come out to your home and perform a simple medical exam which will include a blood and urine sample. These results will be reviewed to make sure your health is stable.
Possible Outcomes
There are a few possible outcomes that are based on the factors above. The life insurance companies will take all of it into consideration to determine your rate. So let’s look at some possible outcomes.
Alcoholism
If you have suffered from Alcoholism there are a few different scenarios you can expect. The best case scenario is that you are over the age of 40 and it has been more than 5 years since your last consumption. If all other factors are favorable, you can expect a standard rate by a few select companies.
The most typical result is a substandard table rating if things are other than perfect. This can be due to a younger age, less time passed since last consumption or history of relapse. A substandard rating is a rating that is used for high risk applicants. It ranges from table 1-10 with a 25% increase in premium for each table.
Problem Drinking
If you don’t have full blown alcoholism but suffer from problem drinking then you can most likely qualify for a substandard rate ranging from tables 2 to 6 if all else is favorable.
Worst Case
The worst case scenario is as expected, a decline. If your last consumption was under 3 year time frame or your treatment has proven unsuccessful with a frequent history of relapse, then you will most likely be declined. In this case your option is to get a guaranteed issue life insurance policy. This type of life insurance is issued with no questions asked and no medical exam required. There are two drawback to this type of coverage: cap on coverage amount and waiting period. The cap is usually $10,000 to $25,000 depending on the company and has a typical waiting period of 2 years. This means that there won’t be a death benefit payout if you die within the first two years but only a return in premiums paid in. However, if you happen to die after the two year mark, your beneficiaries will receive the full payout.
How We Get the Most Favorable Outcome
There are a few things your agent can do to make sure you get the best result. The first thing to keep in mind is that if you have history of alcohol abuse then running quotes online won’t give you a good picture of what you’re dealing with. Each company can vary their guidelines slightly and those slight differences can mean big premium savings. So the lowest rate on the quote engine is not the lowest rate for you. In the case of alcohol abuse, here are steps that can be taken to get the desired outcome.
Proper PreQualification – Your agent should ask you detailed questions about your condition. If they don’t, then they probably aren’t familiar with handling huge risk cases. An overview of your situation will give the agent a good idea of which company to apply with.
Running a “Quick Quote” – This is a name for a sort of dummy application that is sent to the life insurance companies. It doesn’t include your name or any of your information. It only details your overall health and condition. Based on this, the life insurance companies respond with a potential underwriting decision. From these, we pick the company that provided the best response and apply with them.
Constructing a Cover Letter – Once we are ready to apply, we attach a cover letter to the application for the underwriter’s review. If you’ve had positive lifestyle changes and your treatment has been effective, it’s important to include these details in the cover letter. This can be a large influence on your approval and it is important information for the underwriter to take into consideration.
Recommended Course of Action
If you have’t applied for life insurance before, you can see it can be difficult to navigate on your own. I recommend letting the professionals do all the work for you. At InsureChance, we shop around with over 60 companies to get you the best rate at no extra cost to you. We have worked with many high risk clients in the past so we know exactly what steps to take to get you approved. If you have any questions regarding getting a policy, call us at 888-492-1967 or hit the chat button below. Welcome to InsureChance!
***If you or someone you know is suffering from alcohol addiction please visit: http://www.aa.org/
