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How your addiction affects what you pay for life insurance

addiction affects life insurance

If you have a history with addiction then you’re most likely going to pay a higher premium for life insurance

However not every life insurance company uses the same underwriting criteria. So it’s important to educate yourself before shopping around so you can make an informed decision.

In this article you’ll learn:

  • How life insurance rates are calculated.
  • How different types of addictions impact your rate.
  • What you can do to get the lowest rate possible.

How life insurance rates are calculated

There are three main "rating classes" life insurance companies use to determine rates.

1. Substandard: If you have chronic or severe health issues, then you’ll likely fall into the substandard category. You'll pay more for life insurance than people in the standard and preferred classes.

2. Standard: Think of "standard" as the average class for life insurance rates. If you have average health and some minor health issues, then you'll likely be rated as a standard risk.

3. Preferred: If you have better-than-average health for your age, then you could qualify for a preferred class rating and pay less for your life insurance than those in the standard class.

The number of classes and the names of each class vary by insurance company. However, according to Steven Schwartz, vice president of the Executive Benefits Division at HUB International, a large insurance brokerage in Chicago, most companies consider factors including your age, weight, occupation, medical issues, medications taken, tobacco use, driving record and medical issues, among others.

Insurers largely calculate your rate based on your personal life expectancy. And since people who struggle with alcohol or drug addiction typically have a lower life expectancy, insurers will charge them more for life insurance.

Here are the most common addictions and how they impact life insurance rates.


Typically, your life insurance rate won’t be affected if your alcohol consumption is moderate, meaning one to two drinks per day, says Karen Lee, a certified financial planner at Karen Lee and Associates, a financial advisory firm in Atlanta.

However, if you have a history with alcoholism or alcohol abuse, then you’ll be considered a substandard or standard risk, and your rates will be higher than average.

Lee says, "If you're placed in one of these riskier pools, then you'll be charged on average 20 to 25 percent more for the coverage than a nondrinker."

If you have a history of alcohol abuse but no longer drink, you can still qualify for the preferred rate depending on how long you've been sober.

Most life insurance companies want to see at least two to five years of sobriety before they’re willing to offer coverage. And when you reach five years of continuous sobriety you may qualify for coverage with no penalty.

Life insurance companies look at how many years you have been sober and the condition of your liver, using a blood test that measures the level of irritation caused by alcohol. These tests are performed by licensed paramedical examiners in your area.


Smoking causes more deaths than alcohol, illegal drugs, car accidents, shootings and HIV combined. So it should come as no surprise the cost of a life insurance policy is about three times higher for smokers than for nonsmokers, Lee says.

Most companies require you to be tobacco-free for two years before they consider you to be in the "preferred nonsmoker" class. And you may be able to qualify for a "standard nonsmoker" rate after one year of being tobacco-free.

Not all insurance companies use the same underwriting criteria. "There are a few companies that will allow for a 'celebratory cigar' defined as no more than one a month, and will still give you a nonsmoker rate," Lee says.

And since e-cigarettes contain tobacco, most life insurance companies will still charge users their “tobacco rate” or “smoking rate” according to Huntley.


Even though more states are legalizing marijuana for recreational use, including Alaska, Colorado, Oregon and Washington, life insurers aren’t relaxing their rules regarding the drug.

When it comes to marijuana use, there are two main factors insurance companies consider: the frequency of use and whether the user has a medical prescription for it.

"If marijuana is used recreationally two to three times per week, an applicant may still find standard nontobacco ratings with some carriers," says Christopher Huntley, independent insurance agent at Huntley Wealth Insurance in California.

A standard rate class is still typically a 100 percent increase over the preferred rating class.

As with alcohol and cigarettes, the underwriting criteria vary from company to company. Lee says some companies will decline you for “current regular daily use” but a few companies are marijuana-friendly and may offer you a standard rating class rate.

And just because you have a prescription for medical marijuana doesn't mean you will qualify for better rates. "(Your rate will depend on the) underlying medical condition that warranted a marijuana prescription," Huntley says.

Other drugs

Most experts agree if you use illegal substances (other than marijuana) you’ll almost always be declined life insurance coverage.

"Any illegal substances such as cocaine (and) heroin will result in an instant decline, and most policies require a paramedical exam, so they’ll absolutely find it in your blood and urine samples," says Matthew Trujillo, a financial planner for the Center for Financial Planning in Southfield, Miss.

If your drug of choice is prescription drugs that aren't prescribed by a doctor, you'll also be declined coverage. Lee adds that even prolonged use of prescription painkillers (as prescribed) can get you declined for life insurance.

Life insurance companies generally like to see at least two to five years' worth of sobriety, without relapse, for recovering addicts before they're willing to offer coverage of any type. After that amount of time, you may qualify for standard rates, assuming you have completely stopped all drug use.

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