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How your driver’s license affects your life insurance

You may already know that your health is a big factor that can affect your life insurance rates.

What you may not realize is that your driving record can also have an effect.

Yes – your driving record.

Consider this, if you regularly go 20 mph over the limit, your chances of dying in a car accident are higher than if you were driving the posted speed. At higher speeds, you have to react faster and have less margin for error, making accidents more likely. The difference between a car accident at 55 mph and one at 65 mph is a 24% increase in the chances that the accident will be fatal.

Risky driving affects your life insurance rate

Life insurance pricing is entirely based on risk. The risk the insurance company takes by insuring your life.

How likely are you to die before you get old? Living a risky lifestyle or having a chronic medical condition increases these chances. You would be considered a higher risk to insure. The higher the risk you are, the higher your life insurance.

» Read more: Financial consequences of DWI and DUI

When a person applies for life insurance, the carrier will request a motor vehicle record (or MVR, for short) that contains information about several different types of vehicle-related incidents. That list includes:

  • DUI,
  • Reckless driving,
  • Speeding,
  • Accidents, as well as information about who was at fault,
  • License suspensions and revocations,
  • Vehicular crime, such as hit-and-run, vehicular manslaughter and vehicular assault,
  • Moving violations,
  • Dangerous vehicles owned, such as motorcycles,
  • Parking fines, failure to yield and other minor violations.

Usually, if you have no major violations in the past five years, you can still be considered for the best rate: Preferred Plus. Assuming everything else on your application is great, like your health, the life insurance company might not even care if you have a speeding ticket or two in the last few years.

However, more than two violations in the last three years can cause your rates to go up, and having more than four can result in you being denied coverage.

If you have a pattern of being reckless behind the wheel, life insurance companies see this as a red flag and deem you too risky to insure.

Example 1

Dom Toretto is a 35-year-old man looking for a 30-year policy with $500,000 in coverage.

He is perfectly healthy and, as far as most people know, living a normal civilian life, so he would normally have received a Preferred Plus rating, which puts his price at about $35 per month.

However, he was issued a violation for driving more than 30 km/h over the speed limit a few months ago. His driving record check discovered this violation, which bumped him down to standard classes. His final price after his approval was $68 per month – almost double his original cost.

Example 2

Luke Hobbs is a 40 year old male DSS agent who is also in top shape. However, he has chased down some daring criminals and has gotten into a few accidents during the chase. An accident last year was not his fault, but he was to blame for a crash three years ago.

Fortunately, these fender benders will not affect his price due to his lack of fault and the time that has passed since the accident he was at fault for.

He applies for a 20-year $1,000,000 policy. He is approved with Preferred Plus and locks in a $50 monthly fee.

What you can do to improve your driving record

When it comes to improving marks on your driving record, time is your friend. Just like improving your credit score, fixing your driving record doesn’t happen overnight.

The first thing to know is that each state regulates driver registration points differently. Traffic violations carry points. The fewer points you have on your record, the better. To learn more about your state’s point removal policy, contact your local DMV.

The second is to start driving better. Do not text and do not drive. Don’t drink and drive. Don’t Snapchat and drive. Do not drive 20 miles over the speed limit.

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