Most life insurance applicants know that life insurance underwriting involves many health related questions as well as an abbreviated medical exam. After all, your overall health is the major determining factor of your health class rating. Did you know that in addition to your overall health, life insurance companies will review many more factors such as your occupation, hobbies and even your driving record? The goal is to better determine if you’re a risky applicant. In this post, we will focus on how your driving record affects your life insurance rates.
How Does the Life Insurance Company Access My Driving Record?
When you sign a life insurance application, you are allowing the insurance company permission to access your motor vehicle records. Your driving record is important in helping the life insurance company assess your risk as an applicant. If your driving record shows regular speeding tickets, DUIs or license suspension, you will be deemed a high risk applicant. If you are considered a risky applicant, you can expect to pay much higher rates, your application could be postponed or you could even be declined coverage.
Can Get Life Insurance with a DUI or Speeding Tickets?
Speeding Tickets – You are allowed a certain number of moving violations on your driving record without it impacting your life insurance rates. Each company has its own underwriting guidelines but for the most part, you can still qualify for ‘Preferred Best’ rates with some companies if you have no more than 2 citations for moving violations in the last 3 years. Many other companies will allow no more than 1 citation for a moving violation in the last 3 years for ‘Preferred Best’ rates. If you have 3 citations for moving violations in the last 3 years, you could qualify for ‘Standard’ rates with some companies. If you have more than 3 moving violations in the past 3 years, you will most likely receive a substandard rating and you will be require to pay a flat-extra for a certain period of time such as 2 or 3 years.
DUI’s – Most companies will require that you do not have DUI, OWI or reckless driving violation for at least 5 years before you can qualify for ‘Preferred Best’ rates. If you’ve had one DUI in the last 3 years, you might be able to qualify for a ‘Standard’ rating or even a ‘Standard Plus’ rating with one particular company. Once you’ve had multiple DUIs, it gets tricky. Most companies will flat out decline you for coverage if you’ve had 2 or more DUIs in the past 5 years or postpone coverage until a specified period, such as 2 or 3 years, before they will consider your application. There is one company out there that may offer a substandard rating if you’ve had 2 DUIs in the past 5 years, but it will depend on other factors.
How Do Multiple Driving Violations Affect Your Life Insurance Rates?
If you’ve had multiple speeding tickets or DUIs, you can expect to pay a higher base rate for life insurance. You will most likely be given a substandard or table rating, which carries a higher premium. The life insurance company may also impose a flat-extra to the base premium for a period of time such as 2 years. A flat-extra is an additional amount of premium per thousand dollars of coverage that is added to the base premium. For instance, if you have a DUI that is a year old, an insurance company may approve you for coverage but add a flat-extra of $3.50 per thousand dollar of insurance. So if the base premium for your $500,000 policy is $1,500 annually and a flat-extra of $3.50 is added to the policy for 2 years, your annual premium would be $1,500 for the base premium + $1,750 for the flat-extra amount (500 (thousand units) x $3.50 per unit = $1,750) for a total annual premium of $3,250. You will only have to pay the flat-premium amount for 2 years and then your premiums would decrease to the base premium amount of $1,500 per year as long as you continue to keep your driving record clean. Flat-extras not only apply to DUIs but also to excessive speeding tickets and reckless driving violations as well.
Applying for life insurance when you have multiple moving violations could end up costing you quite a bit extra. Unfortunately, having more than one moving violation or DUI makes you a greater risk to insure for life insurance just as it would auto insurance.
What are Some Specific Questions Asked About Your Violations?
If you’ve had excessive speeding tickets, the life insurance company will want to know:
- How many MPH over the speed limit for each violation? If the MPH over the speed limit is very excessive for all of your tickets, you can expect to be penalized with a flat-extra and/or substandard rating.
If you’ve had a DUI, the life insurance company may want to know:
- Penalty imposed? (jail, fine, license suspension, mandated classes)
- Is license currently valid?
- Any history of alcohol or drug abuse or asked by a physician to abstain from drinking?
- Do you currently use alcohol or recreational drugs?
Make Sure You Apply with the Right Company
Each company has its own underwriting guidelines, so applying with the right company is very important. Certain life insurance companies are a little more lenient than others when considering driving violations. If you were declined life insurance because of your driving record, it might be that you simply applied with the wrong company. If you have any violations on your driving record and you need life insurance, be sure to contact us first. We will show you all of your options and make sure you know which company will most likely give you the best rating.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
