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Can a history of substance abuse raise your life insurance rates?

By M.K. Guetersloh

Life Quotes, Inc.

The hard partying years after college may have been replaced by the calm of married life. But those past behaviors may haunt you like an unwanted call from a former sweetheart—especially when you try to buy life insurance.

In order to receive standard rates, most insurance experts agree that drug and alcohol abuse problems need to be behind you for a minimum of five years.

Excessive use of drugs and alcohol can cause a number of serious health conditions. Researchers from the University of North Carolina, Chapel Hill, Bowles Center for Alcohol Studies, estimates that alcohol and drug abuse can decrease your lifespan by nearly 10 years. Among the health risks, drug and alcohol abuse can cause high blood pressure, cancer (breast, esophageal, mouth, larynx and pharynx), liver disease, and heart or respiratory failure. The American Cancer Society reports that 2 to 4 percent of all cancers are directly related to alcohol abuse. The mixing of drugs and alcohol can be immediately fatal leading to seizures, coma, heart attack and respiratory failure.

“That kind of behavior can affect your rates catastrophically,” says Ryan Pinney, a high-risk insurance specialist for Roseville, Calif.-based Pinney Insurance Center, Inc. “It’s a health hazard and a moral hazard.”

In addition to affecting your rates for life insurance, Pinney says, drug and alcohol abuse can also affect your health and auto insurance rates. In some instances, if you have a DUI, you might find your auto insurance policy cancelled altogether.

While drug and alcohol dependency is a fairly common obstacle for those seeking life insurance, Dr. Robert Pokorski, Chief Medical Strategist for The Hartford, says that it’s still not impossible to get a life insurance policy at an affordable rate— if you no longer drink.

“The classic case is: you have someone who is getting a little older and realizes they need to take better care of themselves,” Pokorski says. “If they put five years between themselves and those events, they are very insurable and can get standard rates.”

Insurers ask prospective policyholders to be forthcoming on medical questionnaires, but if you pass the medical questionnaire you’re still not out of the woods yet. Insurance companies also review a prospective customer’s medical and driving records along with blood and urine tests.

Pinney says of you have a problem with substance abuse—the best course of action is to talk to an agent about those problems

How do they know?

Insurance companies can access information about a person’s health status through the Medical Information Bureau (MIB). The MIB protects insurers, policyholders and applicants against insurance fraud in the life, health, disability, critical illness and long-term care lines of insurance.

If you’ve been denied life insurance due to a health risk such as substance abuse, a record of the denial is kept in the MIB’s database,

“Any insurance company can look up your information in the database,” says Pinney.

For that reason, Pinney says, “The worse thing they can do is blindly apply to several insurance companies for coverage and omit information, especially after a denial.”

Although drugs are more difficult to detect and some insurance companies such as The Hartford don’t test for drugs, alcohol abuse can be found in several tests used by most insurers to detect problems with liver function. During a paramedical examination, blood samples are subjected to a Carbohydrate Deficient Transferrin (CDT) test to rule out liver disease. Often, when excessive drinking is involved, a person’s liver function will be elevated.

“Honestly is definitely the best policy,” Pinney said. “If you don’t disclose to an insurance company that you have a problem and they find it in your blood work or they find that you were arrested for driving under the influence last year; they won’t be very happy and they won’t insure you. In fact, no one will.”

Allen Hixon, manager of State Farm’s life and health underwriting division, agreed.

If someone is able to hide their problem from an insurance company’s review and a policy is issued, Hixon says insurance companies might balk at paying the claim to beneficiaries if it’s found out later that they hid information.

“If an insurance company can argue that the policy was entered into fraudulently that could limit what the beneficiary receives,” Hixon said.

Hixon and Pokorski add that unlike hard drugs, insurers view alcohol and marijuana a little