Life Insurance Rate Classes
The rate you'll pay for your life insurance rate is derived by your health, or the rate class you qualify for. If you qualify for "preferred plus", your rate will be the lowest you can get.
There are several rate classifications and the one you qualify for will be determined by the life insurance company's software and underwriters, based on your health history, driving record, credit, family history, and any dangerous hobbies or jobs you engage in. Criteria varies among insurance companies, so it's not uncommon for an individual to qualify for different rate classes at different insurance companies. Companies even vary names of the rate classes, but in general:
- Preferred Plus or "superman" rates are for applicants who don't use any tobacco, at minimum 3-5 years tobacco-free. You must be in excellent physical health with no history of drug or alcohol use. You must have a good driving record and must not engage in dangerous hobbies. You must also have no family history of heart disease, or cancer (parents or siblings) at least before age 60.
- Preferred rates must also be in excellent physical health, not use tobacco (at least for 1 year minimum), a clean driving record, and you no hazardous activities. With the Preferred rating, the blood pressure, cholesterol, and family history requirements are looser than Preferred plus.
- Standard Plus is a rating between standard and preferred, with very minor health issues, but still in overall good physical condition.
- Standard risks are considered people with minor health impairments, like elevated cholesterol levels or who are slightly overweight
- Smoker rates and for people who are in okay physical shape but as we all know, lung disease is a major killer. You can't dance with the devil in the pale moonlight (as the Joker puts it) and come out unaffected.
- The Substandard rate class includes applicants with a major health problem or several minor health issues. A hefty surcharge will be added to a substandard customer's premiums, depending on the underwriters approval. Many could be denied life insurance all together.
Now that you have a basic understanding of rate classes, which one are you? Remember Underwriting guidelines vary among life insurance carriers. Everyone feels they should get the "As low as" or super man rates "if I only lost a few pounds." Those few pounds may be what puts you into a standard or Standard Plus category, where most of us fall.
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