As a recovering alcoholic who is responsible for others, you may be wondering, "Can I get life insurance?"
The short answer is probably yes. However, you may not be able to get a fully underwritten policy for at least a few years. In the meantime, a guaranteed issue plan or a group life insurance policy can be purchased. You'll generally be eligible for standard life insurance rates after five years of sobriety.
In this post, we'll discuss why and how alcoholism affects your life insurance premiums, as well as how to get life insurance while in recovery at the lowest price.
Why would a life insurer care about your drinking habits?
Life insurance companies make money by collecting monthly premiums in exchange for offering life insurance.
When an insurer issues a policy, they are hoping that you will live long enough for them to collect more money than the death benefit payable upon your death. Someone with no health conditions is more likely to live longer than someone who has a serious condition, such as COPD. As a result, they often pay less for the same life insurance coverage.
Similarly, someone who does not drink will pay a lower rate than someone with a history of alcohol abuse.
Why is excessive alcohol consumption such a big risk? Many serious health conditions are linked to prolonged alcohol abuse, including:
- Heart damage
- Liver disease
- Neurological disorders
- Mental health disorders such as anxiety and depression
If you have a drinking problem, an insurer will investigate your health history. Chronic heavy drinking may disqualify you from obtaining a desired policy or make it significantly more expensive for you.
How much alcohol is considered heavy drinking?
Every insurance company has its own definition of "heavy" drinking. However, if you consume 3 to 4 drinks per day, you will most likely be flagged. Insurers typically classify men who consume more than 14 alcoholic beverages per week as heavy drinkers. The limit for women is around ten drinks per week.
How does being an alcoholic impact your life insurance rates?
Life insurance premiums for recovering alcoholics are determined by how long they have been in recovery and how many times they have relapsed. The longer the recovery period, the less expensive life insurance becomes.
The following are some general guidelines for how a history of alcohol abuse affects your life insurance rates.
- Less than two years in recovery – During the first two years of sobriety, life insurers may refuse to write you a traditional policy or charge you a significantly higher rate.
- Between two and five years in recovery – You can get a traditional policy, but you will be assigned a substandard rating, which will result in higher premiums.
- More than five years in recovery – As long as you are in reasonably good health, you will have no trouble qualifying for a traditional policy. Most insurers will provide you with standard rates.
How can recovering alcoholics get life insurance?
A history of alcohol abuse can cause delays in the application process and higher premium rates when applying for life insurance. However, if you have been sober for five years or more, you should be able to purchase a fully-underwritten policy.
A shorter period of sobriety, on the other hand, may limit your life insurance options. However, there is still time to get life insurance. If life insurers are not willing to write you a traditional policy yet, other options worth considering are:
Group Life Insurance
As part of their employee benefits package, many Canadian businesses provide group life insurance. If it is offered through your work, do not hesitate to sign up. Since group life insurance requires little medical underwriting, you can be approved even if you have a pre-existing condition.
Final Expense Insurance
Final expense insurance is a type of permanent life insurance that is designed for older applicants. However, unlike other permanent policies, it is only intended to cover funeral and end-of-life medical expenses and does not provide an opportunity for wealth accumulation.
Your final expense policy may have no waiting period, a partial waiting period, or a two-year waiting period, depending on the insurer. If your policy has no waiting period, your beneficiary will receive the entire payout from the start.
A partial waiting period, on the other hand, means that your beneficiary will only receive a portion of the death benefit during the first couple of years. The insurer does not pay any death benefit during the first two years of a regular waiting period, but will refund all premiums paid into the policy.
Guaranteed Issue Life Insurance
Guaranteed Issue Life Insurance does not require you to take a life insurance exam or answer medical questions. As a result, your approval is not conditional on your health.
As long as you meet the age requirement, you can get a policy regardless of your health. It is often the only way for early recovering alcoholics who do not yet qualify for any other type of life insurance to ensure their loved ones receive financial assistance when they pass away.
However, there are some disadvantages. For one, the payout is typically not more than $50,000. As a result, it is unsuitable for income replacement. You can use it to pay for final expenses and leave a small inheritance.
There is also a waiting period. The standard waiting period is two years, but a three-year wait is not uncommon. If you pass away while the waiting period is in effect, your beneficiary will not receive the death benefit. They will instead receive the premiums you have already paid into the policy.
Three, the premiums are much higher than those of medically underwritten policies. By eliminating both the life insurance medical exam and the medical questionnaire, the insurer assumes more risk, which it then passes on to you.
How much does life insurance cost for recovering alcoholics?
The cost of life insurance is determined by how risky you are to insure. Applicants with poor health or a high-risk lifestyle are given a lower rating and higher rates.
When it comes to recovering alcoholics, the insurer may look at how long they have been sober first. The longer this period lasts, the lower the premium.
Most (if not all) traditional life insurance companies require you to be sober for at least two years before they will consider you for a policy. The lowest rates, however, are not available until you have been sober for 10 years or more.
Generally speaking, you can expect to receive the following rates, depending on how long you have been sober.
- 2-4 years: Substandard rates (premiums can be up to 500% more than the preferred rate)
- 5-10 years: Standard rates
- More than 10 years: Preferred plus or preferred rates (provided you are in good health)
Recovering alcoholics who have sought treatment for alcohol abuse, like counseling, may be rated more favorably than those who have not.
Other factors that change the cost of life insurance for alcoholics
When calculating the monthly premium, the insurer will consider many factors besides your alcohol use. These include:
Whether you have an alcohol use disorder or not, your health is something that an insurer will always consider during the underwriting process. The better your health is, the better your life insurance rating will be.
Because heavy drinking can have serious health consequences, it increases your chances of being rated as a high-risk applicant. Long-term problems associated with alcohol misuse include:
- Liver cirrhosis
- Heart problems
- Stomach problems (like gastrointestinal bleeding)
- Brain damage
- Memory loss
- Many types of cancer (including liver cancer, mouth cancer, head and neck cancer, and breast cancer)
If you have any of these conditions, expect to pay more for coverage.
Other lifestyle choices
Heavy alcohol consumption can have a negative impact on all aspects of a person's life, not just their health. As a result, before rating you, an insurer will want to know how it will affect the rest of your life.
An insurance carrier would like to know things such as:
- Have you ever received a DUI or been involved in an alcohol-related car accident?
- Do you have a steady job? The inability to hold down a steady job may go against you and lead to a higher premium rate.
- Are you a part of a support group, like Alcoholics Anonymous, or have you initiated treatment for your alcohol addiction? Being part of a support group or initiating treatment yourself may reduce the chance of a relapse and secure a better life insurance rate.
Being involved in an alcohol-related car accident within the previous year will raise the premium. Too many DUIs, combined with a history of alcohol abuse, may even disqualify you from obtaining traditional life insurance. Inability to maintain steady employment or lack of membership in a support group may also work against you when applying for coverage.
How can I reduce my life insurance cost as an alcoholic?
A history of alcoholism raises your life insurance rates, often significantly. The most effective way to reduce this cost is to seek treatment. Participating in support groups like Alcoholics Anonymous can improve your chances of recovery while also making life insurance more affordable. Life insurers prefer applicants who are seeking treatment for an alcohol addiction over those who are not.
Choosing a term life policy over a whole life policy may also reduce insurance costs. Term life insurance is typically 10-15 times less expensive than whole life insurance.
Another thing you can do to lower your premium rate is to accept a lower death benefit for the time being. You can reapply if you have been sober for more than five years.
Should I wait until I’m sober to apply for life insurance?
We purchase life insurance to ensure the financial security of those who rely on us. Consider this: Would someone be financially harmed if you died tomorrow?
If this is the case, do not wait until you are sober to buy life insurance. Life is unpredictable, and anything can happen between now and the time you are eligible for a low premium rate. If life insurers are unwilling to offer you an affordable rate because of your drinking habits, consider purchasing a smaller policy. Any insurance is preferable to no insurance.
Is life insurance for alcoholics or recovering alcoholics worth the cost?
There is no way around it: alcoholics or people who have recently stopped drinking have fewer options for life insurance and will pay more for coverage. Nonetheless, if someone relies on you financially, paying a higher rate is preferable to going without life insurance. Your family may struggle to stay financially afloat after you die if you do not have life insurance.
After two years of sobriety, former alcoholics can apply for and acquire a standard policy, albeit at a higher rate. Sobriety for at least five years is required to qualify for standard rates. It's possible that you'll need to settle for assured issue or final expense life insurance if you've only recently given up alcohol.
Concerned that your drinking past would make it difficult to secure the right insurance? Dundas Life is here to assist you. We have relationships with several of Canada's leading insurers and can provide you the best possible policy at a reasonable cost.
Frequently Asked Questions
Can you get life insurance if you are a recovering alcoholic?
Yes, you can. Recovery alcoholics can get life insurance, regardless of how long they have been sober. With two years of sobriety under your belt, you can purchase a medically-underwritten policy. However, you will pay more than someone without a history of alcohol abuse.
By contrast, recovering alcoholics who have been sober for five or more years can expect a standard rating. They will pay the same premium rate as the average person of their age and gender. If it has been less than two years since you became sober, your options are rather limited. You can buy group life insurance, funeral insurance, or guaranteed issue life insurance but not a fully-underwritten policy.
What life insurance options are available to someone who has been sober for more than five years?
Recovering alcoholics who have passed the five-year mark can easily buy a fully-underwritten policy, like term life, permanent life, and universal life.
Term life insurance gives you life insurance protection for a limited period, like 10, 20, or 30 years. Your beneficiary receives the payout if you pass during the policy term. Once the term expires, your coverage ends, although you can renew it up to a certain age. Compared to whole and universal life insurance, term life insurance is 10-15 times cheaper.
Whole life and universal life insurance, on the other hand, do not come with an end date. Your coverage lasts as long as you do, provided you pay the premiums. These policies also build cash value, which you can tap into at any time during your lifetime. In the case of whole life insurance, the cash value grows at a fixed rate. Whereas, the growth rate of a universal life policy fluctuates according to the current market rates.
Does being a recovering alcoholic impact my cost of life insurance?
That largely depends on how long you have been sober. If you have less than five years of sobriety, yes, being a recovering alcoholic will affect your premium rate. But make it to five years without a relapse and you will be on a par with the average person of your age and gender.
How do life insurers measure alcohol consumption?
If you consume more than three drinks a day, most insurance providers will classify you as a heavy drinker. Apart from your daily alcohol consumption, life insurers look at the results of your blood tests for signs of excessive alcohol consumption.
What if I lie about my alcohol use to the insurance company?
It is not a good idea. Lying on your life insurance application puts your dependents at a significant risk of not receiving the insurance proceeds. If you pass from an illness related to alcohol abuse within two years of buying the policy, the insurer can revisit your application and deny the claim if it finds out you lied.