Rating Insurance Companies Consumer Reports - Your life insurance classification determines the premiums you pay for your life insurance. After you apply for a policy, the insurance company will review all of your insurance materials and assign you a risk class based on your health, body type, family health history, hobbies and occupation.
Life insurance companies generally use six health classifications to determine premiums. However, each company assigns these ratings differently, which is why it's so important to compare insurance quotes to find the best price.
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The Preferred Plus rating, also known as Preferred Elite, Super Preferred or Preferred Select, offers the lowest life insurance premiums. The ratio of height and weight of applicants with the Preferred Plus service is within Preferred-Plus in the compilation table of the respective insurance company. Generally, people with a BMI (Body Mass Index) between 18 and 29 fall within this range. (Those with a BMI of less than 18 are not graded based on the build chart, but are graded using a height-to-weight ratio along with other information.) Preferred Plus graders can have two good features. - controlled or resolved minor medical conditions and no immediate family members have died of heart disease or cancer.
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The Preferred class, also known as Non-Smoking/Non-Smoking Preferred, has the second lowest premium. Applicants classified as Preferred have a height/weight ratio within the company's preferred range (typically those with a BMI of 30 or 31 fall within this range). They probably have one or two well-controlled or resolved minor medical conditions and no deaths from heart disease or cancer in their immediate family (some carriers allow one death in your immediate family from these diseases).
The Standard Plus class has the third lowest premium. Applicants classified as Standard Plus have a height-to-weight ratio within the company's Standard Plus (typically those with a BMI of 32 or 33 fall within this range). They may have well-controlled or resolved mild to moderate medical conditions. You can usually qualify for Standard Plus if you have a death in your immediate family from heart disease or cancer.
The standard classification, also known as non-smoking/non-smoking standard, has the fourth lowest rates. Applicants who receive normal awards have a height-to-weight ratio that falls within the company's standard range (most people with a BMI between 34 and 38 fall within this range). They may have well-controlled or resolved moderate medical conditions, chronic medical conditions, mental health conditions such as mild depression or anxiety, or may be years apart from a more serious medical event. People are often classified as normal if more than one immediate family member has died of heart disease or cancer.
There are details in your application that usually lead to a normal rating, even if you have no other health problems. These include having quit smoking a year or two ago, recovering from certain substances, and having a non-violent felony (and parole) record.
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Tabular ratings (Table 1, Table 1, etc.) are assigned to applicants who have more serious medical conditions or whose height-to-weight ratio falls within the company's tabular classification range (most people with a BMI between 41 and 48 fall within this category range). Of the table ratings, table 1 (sometimes table A) has the lowest premium and table 10 (sometimes table J) has the highest.
Fees for tabular ratings are set in relation to the insurer's fees for the Standard risk class. Table rating fees are generally calculated by adding 25% to the standard fee at each table level. (Table 1 is at the top of the table and Table 10 is at the bottom.)
Applicants who currently use tobacco or nicotine products or have used them in the last 12 months are classified as smokers or former smokers. Generally, there are only three categories for tobacco or nicotine users: Preferred Tobacco/Smoker, Standard Tobacco/Smoker Rating, and Tabulated Tobacco/Smoker Rating. Premium costs for such classifications are on average three times higher than their non-tobacco equivalents.
The classification of smokers/smokers is based on the same criteria as the classification of non-smokers/non-smokers preferred and standard, but also takes into account the frequency of nicotine or tobacco use. For tobacco or nicotine users, the table premium for rating is usually calculated based on the normal smoker/smoker ratio and 25% is added to each table level.
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Insurance companies consider a wide range of health and lifestyle factors when underwriting to determine your rating. Each insurance company has its own criteria for determining how much these factors affect your rating. Insurers also allow some flexibility in assigning ratings by reviewing the entire application for a risk assessment. Different approaches to setting up a rating mean you're likely to see different quotes from company to company (which is one reason it's definitely worth shopping around to get multiple life insurance quotes).
Your health plays a big role in the evaluation of your life insurance. The insurance company will look at information from your medical exam (unless you qualify for expedited insurance), your answers to questions about past or current health problems, and your written medical history. In some cases, the insurance company may also request a Physician's Statement (APS) from your doctor to learn more about your medical history.
Each life insurance company has its own chart that places you in a health classification based on your height to weight ratio, similar to measuring body mass index (BMI). Insurers also take into account your weight history, so sudden or short-term weight changes can affect rates, but will have a bigger impact if the changes last a year or more.
Life insurance companies consider smoking so risky that they have created a separate category for smokers, where the rate can be up to three times that of non-smokers. Smoking, chewing tobacco or vaping increases your levels significantly – even if you do it occasionally. If it has been a year or more since you stopped smoking, you will be entitled to a smoke-free premium. Requirements vary from insurer to insurer, but generally insurers want the last cigarette in the last five years before they will consider you for Preferred Plus premiums.
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An occasional drinker doesn't affect your insurance premiums, but a problem drinker does. And you can be sober from alcohol if you are recently in recovery, participating in a program, or have been in rehab. Many major insurance companies offer marijuana users non-smoker ratings based on how often they smoke. Using hard drugs can result in an immediate slump unless you have been in recovery for several years.
When applying for life insurance, you must disclose whether a parent or sibling has been diagnosed with, treated for, or has died of heart disease, cancer, diabetes, kidney disease, or another hereditary disease. This family health history can result in a lower life insurance rating, especially if a parent died of heart disease or cancer.
This is a comprehensive category that assesses how risky your lifestyle is based on details such as your driving history, dangerous hobbies and occupation.
Multiple moving violations result in a lower life insurance risk rating and higher rates, while DWIs in the past five years have resulted in a claim being denied. If you have a dangerous hobby (such as diving), the insurer will want to know more details (such as how deep you dive). If you have a dangerous job (such as fishing or mining), you should share more about your daily tasks.
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If the insurer believes the hobby or occupation is high risk, they may add a lump sum premium to your policy, which can be an additional $2-$5 premium for every $1,000 of coverage. (That's $5,000 a year plus a million dollar life insurance policy.)
Some life insurance companies will offer you an exclusion, which means that if you die as a result of a particular activity, the policy will not pay out, but this is rare.
If you have a criminal record, most insurance companies want you to be off parole for more than a year before bond is issued. When it comes to crime, Standard might be the best price you can get without health issues, although table rating is also likely.
How Life Insurance Ratings Affect Premiums
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Methodology: Sample average monthly rate estimates for 35-year-old female smokers and non-smokers with Preferred Plus, Preferred, Standard Plus, Standard, Preferred Smoker, and Standard Smoker health classifications and purchasing a 30-year $250,000, $500,000, or $1 million term life insurance policy . Life insurance averages are based on policies offered by AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential and Transamerica and vary by insurer, term, amount of coverage, health class and condition. Not all policies are available in all states. The price illustration is valid from 03.10.2022.
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