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Drive to cheaper life insurance

By Jay MacDonald ·
Friday, July 27, 2012
Posted: 10 am ET

A new study that finds that bad drivers live shorter lives than good ones may have a bigger impact on your life insurance than your car insurance.

Authors of the new report by LexisNexis and RGA Reinsurance called "The Motor Vehicle Record (MVR) Mortality Study" happened upon this interesting finding by extracting lifestyle data from more than 7.4 million randomly-chosen MVR records from all 50 states.

While insurance companies typically use MVR records to set your car insurance rates, it turns out these boring old records actually provide insights into the lifestyles of motorists that can help life insurance actuaries and underwriters build better policies. Who knew?

For example, the researchers found that motorists with major violations such as excessive speeding or alcohol-related infractions have mortality rates that are 70 percent higher from all causes than those whose records steer clear of these potholes. Those with six or more violations on their MVR bump their mortality rate to 80 percent above those without.

The findings were consistent regardless of age or gender. However, while women are generally less prone than men to have major violations on their record, those who do increase their mortality rate by 100 percent over those who don't. Men, by contrast, only bump their mortality by 61 percent over those without major violations.

How might these lifestyle data extractions affect your life insurance?

"By examining the severity and number of violations on an applicant's MVRs, a life insurer can make more accurate pricing decisions, improve risk posture and improve underwriting efficiency," says Elliott Wallace of LexisNexis. "For consumers, this study offers insight into how lifestyle impacts risk and the considerations they need to make for life insurance."

Loosely translated, if you want affordable life insurance, keep your driving record clean. Life insurers that may never have given a second glance at your motor vehicle record will do so now.

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