Getting Life Insurance as an Alcoholic
Almost three years after treatment for a substance abuse problem and being sober, Bill Dinker has repeatedly been turned down for life insurance because he honestly answers one question.
“Have you ever sought treatment for a substance abuse problem?”
Dinker, 32, and in otherwise excellent health, says he always answers yes, and is always denied life insurance. Dinker is director of admissions at a drug rehab center in Tennessee.
“Since I have been in treatment for a substance abuse problem and try to live my life honestly, I answer yes,” he says. “Every single application I’ve submitted has been denied.”
Where there isn’t a black and white solution to getting approved for life insurance while a recovering alcoholic, there are ways that people with a history of alcohol abuse can get life insurance.
The insurance questionnaire is the first place to start. It helps determine how much alcohol a policyholder uses, with a mild to moderate alcohol user having one to two drinks per day usually not a problem, says Christopher Huntley, a life insurance agent at Huntley Wealth Insurance in San Diego. An applicant who says they have three drinks a day is getting in higher drinking territory and the questionnaire will then go deeper into their drinking habits, Huntley says.
A health exam will include a blood test to see if enzymes in the liver that show damage from alcohol are elevated, Huntley says. Such long-term damage to the liver could be from having five to seven alcoholic drinks a day for years, he says.
Brandi Jo Newman, a banking and retirement income expert, says her father died from a life of being an alcoholic and that he couldn’t get life insurance because the medical test scared him. He couldn’t stop drinking for a few days because he would get the shakes, or seizures, and he was afraid what the bloodwork would uncover, Newman says.
Going through rehab for alcohol abuse doesn’t necessarily exclude someone from an insurance policy, but it can lead to a higher rate. A standard life insurance rate can be offered to a recovering alcoholic, Huntley says, but only seven to 10 years after going through rehab. They’ll also need to not drink any alcohol at all after rehab.
For someone who has gone through rehab but has one to two drinks per day, they’ll likely get a substandard rate that’s at least 25 percent more than the standard insurance rate, he says. “That a lot more risk,” Huntley says of the rehabilitated alcoholic drinking a few drinks a day.
“Most of them will not drink — even if it’s a sip — because it’s an addiction,” he says.
For recovering alcoholics with less than five years of sobriety, most insurance companies will treat the application as “high risk” and typically decline it, says Mike Kilbourn, president of Kilbourn Associates, an insurance adviser in Naples, Fla. Some insurers may cover them with a higher premium, Kilbourn says.
“The trick to getting life insurance as a recovering alcoholic is knowing which life insurance company to apply to and avoiding some of the larger companies that are unwilling to write what they consider to be a ‘high risk’ due to a client’s past alcohol abuse,” he says.
If the applicant has stopped drinking and has a significant period of recovery, it doesn’t matter how long they were an alcoholic, Kilbourn says.
Some insurance policies, such as a final expense policy, are available at older ages and may not consider alcoholism, says Christian Sees, a partner at Integrus Financial, an insurance business.
Sees pointed out as an example an insurance company that offers a final expense policy through whole life insurance within the age range of 45 to 75 where applicants can’t be turned down for health reasons, including alcoholism. Coverage is limited to around $20,000.
A rate example he gave is a woman, 60, paying $114 per month for a $20,000 policy. A man of the same age would pay $148 per month.
As noted earlier, the best thing an alcoholic can do to qualify for life insurance is to quit drinking. Not drinking for seven or more years after going through rehab can help qualify for a standard policy, which won’t offer a major discount for being in excellent health, but at least will provide coverage that won’t be as high as a “high risk” rate.
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