Your driving record may affect more than just auto insurance rates – it also can play a factor in the price you pay for life insurance.
Motor vehicle records can be used to predict the potential length of an individual’s life, according to a study carried out by LexisNexis and RGA Reinsurance Co. The study analyzed more than 7.4 million motor vehicle record requests, all randomly selected from the states. It then checked these requests against the Social Security Death Master File (a computer database that records the deaths of people who had Social Security numbers). Through this analysis, the study found that motor vehicle records can be used to predict an individual’s likelihood of death for any reason.
People with major violations on their motor vehicle records, such as DWIs and excessive speeding, have death rates that are 70 percent higher than people without major traffic violations, according to the study.
“Every time someone applies for life insurance, the insurer will take into account their driving record,” says Leonard Raskin, owner of Raskin Global, a financial services company in Maryland. A good driving record more likely will lead to lower rates than a poor one, he says.
Deciphering driving records and death rates
In the study, people were divided into segments accordingto the total number of violationsthey had on their driving records.The more violations a person had, the higher that person’s relative death ratio was, regardless of the severity of the violations. Those who had two to five violations experienced 24 percent higher death rates. Six or more violations increased a person’s death rate by 80 percent.
While higher numbers of traffic violations on a person’s record generally led to a higher death rate, people with major violations showed even greater risk. Having just one major violation, for instance, increased a person’s chance of dying by 51 percent. For the study, major violations were defined by RGA Reinsurance and include:
- Alcohol or substance-related infractions.
- Excessive speeding.
- Reckless or negligent driving.
Women tend to have a lower incidence of poor driving records, according to the study. However, women with a major driving violation show a 100 percent greater chance of death than women who do not. On the other hand, men with a major violation have a 61 percent greater chance of death than men who do not.
The study found that, by and large, most drivers have solid records. Sixty-one percent of people analyzed had clean driving records, and 26 percent had only minor violations on their records. Minor violations include failing to stop at a stop sign or failing to wear a seat belt.
How driving records can affect life insurance rates
When a consumer take outs a life insurance policy, an insurer generally requests his motor vehicle record to help determine rates. “Insurers have to understand the liability they’re taking on,” says Kirk Shamberger, owner of CK Financial Resources in Vermont.
Here are four ways your driving record could affect your life insurance policy:
1. Your insurance carrier will take a careful look at on-the-go citations.
Every moving violation will be considered by insurance companies in calculating premiums, says Andrew Flusche, a defense attorney in Virginia who focuses on traffic and misdemeanor offenses. Moving violations include speeding, running a red light and zooming through a stop sign. A non-moving violation usually involves misdemeanors when your car is not in motion, such as parking illegally.
If you get a traffic violation, the period that it will stay on your driving record varies from state to state. In some cases, you may be able to reduce a charge by completing a driving improvement course. In other instances, an attorney may be able to help reduce or keep a charge off your record.
2. A great record can bring benefits.
For life insurance, “clean motor vehicle reports can increase your likelihood of getting lower rates,” says Elliott Wallace, vice president and general manager of life insurance at LexisNexis Risk Solutions.
3. The exact consequences of traffic violations will vary.
Just like any other impairment a person may have, violations listed on your driving record ultimately might not affect your life insurance, says Glenn Stevick, assistant professor of insurance at The American College in Pennsylvania. If you have a minor speeding ticket or two, these may not harm your rates.
On the other hand, your insurance carrier may view a major charge, such as reckless driving, as a factor that places you into a higher-risk category. A major violation could bump your rate from preferred status – which is generally less expensive – to standard, which tends to result in higher premiums.
4. Other factors will be considered.
When it comes to determining whether you’re eligible for life insurance, insurance carriers typically do not make a decision solely based on motor vehicle records, Wallace says. Other considerations, including your age, weight, health history and tobacco use, will be weighed to help determine how much you'll pay.