Your driving record could raise your life insurance rates

By Beth Orenstein on August 8th, 2012

You apply for car insurance and the provider checks your motor vehicle record before issuing your policy.

Your life insurance company soon may do the same.

A new study has found drivers with more violations and who are involved in more crashes die younger. And it's not the accidents that do them in.

Analysts from LexisNexis and RGA Reinsurance Co. compared more than 7.4 million motor vehicle records from all age groups with the Social Security Master Death File. They identified more than 73,000 driverse who had lost their lives.

More violations, accidents, shorter lifespan

The researchers found drivers with more violations and accidents had shorter lifespans than those who had fewer or none. Drivers who had at least six major violations had an 80 percent higher death rate.

The trends were consistent no matter the age of the drivers.

The study backs the practice of some life insurance companies using motor vehicle records when issuing policies.

Even more life insurance companies may use motor vehicle records as a result.

The advantage to motor vehicle records is that they are available instantly, which means life insurance companies can give applicants answers faster. They can use motor vehicle records and prescription drug records, which also are available instantly, to make decisions on life insurance policy requests.

Life insurance companies are more likely to rely on motor vehicle and prescription drug records for mid-range policies -- $500, 000 or less -- than they are higher priced policies. If you're applying for a $1 million or more in life insurance, you probably still will have to undergo medical testing first.

The LexisNexis study is expected to help more than harm applicants because most people are safe drivers.

Healthy lifestyles could determine eligibility, too

The study determined that drivers with more violations and accidents take more chances than those with clean records. But it did not identify what risks the drivers took that could shorten their lifespans.

Your lifestyle habits could be next. Thanks to store loyalty cards, analysts can see where you do your grocery shopping and whether you buy healthy or junk food. They also can see whether you have a gym membership.

It wouldn't be surprising if life insurance companies develop an algorithm that allows them to use marketing data to determine your eligibility for their policies.

Beth Orenstein
Beth Orenstein is a freelance writer. She works from her home in Northampton, Pa. A graduate of Tufts University with a bachelor's degree in English, she specializes in education, finance, real estate and medical topics.

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