How DUI Affects Life Insurance Rates-2017…verything You Need to Know
So you probably figured that getting a DUI affects life insurance rates, but you need to know how much.
The truth is it depends on your sutuation.
While unsatisfying, this tends to be the answer to all nearly life insurance underwriting situations.
Because different carriers have different appetites for certain risks, your specific situation matters.
The Information Underwriting Uses to Make a Decision
In addition to the usual health questions and exam, underwriting will pull a driving history report (MVR) and look for suspensions and major infractions.
The application will ask if you have been convicted of DUI in the last 5-10 years depending on the carrier. Be truthful, as the MVR will report the incident even if it was expunged in criminal court.
Applications with a DUI will generally be scrutinized for elevated for excessive alcohol use. This scrutiny will be applied to liver enzyme tests-noting that elevated enzymes can be a marker for over use.
Additionally, you may be asked to take a questionnaire about frequency of alcohol consumption.
Likely Underwriting Ratings for DUI
Assuming that you are otherwise in great health, your underwriting rating will come down to the carrier chosen.
This is because some carriers will not make offers at Preferred/Preferred Best without 7 years between DUI and application. Other carriers will allow for preferred rates after 5 years.
If there is less time between DUI and application, underwriting gets tougher. An application 2 years after only DUI will likely "top out" at standard/standard plus rates.
There are a very limited number of carriers who will go standard with less than 2 years between DUI and application.
Also, note that with the exception of expensive simplified issue policies, there are no "no exam" options for applicants with a DUI history.
These cases tend to find their way into the simplified issue/final expense category. Available, but far more expensive than traditional life insurance.
Use an Independent Agent for DUI life Insurance
Because carriers all have different appetites for specific risks, and they price policies with underwriting classes, the only way to guarantee the best offer is to shop with an agent who has access to lots of carriers.
As an example of the pitfalls of not working with an independent agent, imagine if your the "captive"agent works for a carrier who is more stringent on DUI and takes the application anyway, who does this work out for?
Certainly not you the customer.
It only works out for the agent who had a financial incentive to send your application to the "home" company.
If you later found out you could have saved 35% had he been able (and willing) to send your application to a different carrier, how would you feel?
Probably Angry, at both the agent and yourself.
Avoid this situation with an experienced independent agent.
Key Take Aways
- Access to more carriers will result in better pricing.
- It may be worth paying slightly more if there is a strong permanent conversion product.
- Only independent brokers have the freedom to offer the best deal at all times.
DUI Life Insurance Case Study
The following example demonstrates why using an independent agent when shopping for life insurance with a DUI (or any other situation) is imperative.
Male Non Smoker $250000
Age 50 Perfect Health 20 Year Term
DUI 4 Years Ago
This looks like a preferred/standard plus/standard case. Let's take a look at some rates.
|CARRIER||MO. PYMT||CARRIER||MO. PYMT||CARRIER||MO. PYMT|
This table which shows only a few of the major life insurance companies available illustrates the difference in rates. For standard rates Prudential is 12.5% more expensive than Lincoln.
On it’s face this seems like a pretty straight forward choice and if underwriting grades between carriers is the same, it really can be that simple.
This kind of easy price shopping is particularly useful for younger folks in good health and demonstrates why you want to use an independent Agent.
For people who have a DUI or any other serious issue, it gets much more complicated.
Because life insurers manage their appetite for specific risks by being more lenient or more stringent with underwriting grades, you need to know which company will grade you a preferred plus risk and which ones will grade you as standard.
In the case above Prudential (the most expensive rate) is likely to be the best deal because they would rate the applicant as preferred.
This is something you can’t know by simply looking at the lowest price. In this hypothetical using an independent agent could save you 28.5% (the difference between Pru @ Preferred and Lincoln @ standard.
Your Next Step
Now that you know the information you will need to receive the most accurate quote possible, it’s time to gather the information and speak to an independent Agent (raising my hand).
Simply give us a call or shoot an email over and we can get you started.
We are committed to totally transparent pricing (we’ll even share our computer screen with you if you’d like), and making the application process as painless as possible.
If you have any questions, give us a call or drop us an email.
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