A life insurance health class, or rate class, is a risk category an insurance company assigns you based on your overall health, personal lifestyle habits, and health/medical records.
Your health class plays a large part in determining the premium (overall cost) of your life insurance policy.
Health Classifications:
Life insurance companies take into consideration your lifestyle and health information to determine the risk insuring you would present to them – How likely they are to pay out a death claim on you in the future.
In order to determine premiums based on different degrees of risk, the insurance carriers have established Health (Risk) classes. There are no industry standards, but the health classes are typically Preferred Plus, Preferred, Standard Plus and Standard for Non-Tobacco Users.
Below these classes are Sub-Standard (Rated) classes. In addition, there are separate health classes for Tobacco Users.
What are Life Insurance Classifications?
Life insurance classifications reflect how risky you are to insure for a life insurance policy.
Insurers factor in your personal hobbies, overall health, and family health history to determine your classification.
The classifications are Preferred Plus, Preferred, Standard Plus, Standard, and Substandard.
People classified as Preferred Plus get the lowest rates on life insurance coverage.
What is a Life Insurance Rate Class?
The rate class of a life insurance policy can also be called the risk class, or health rating.
It is the class that you are put in based on your health and other risk factors (family history, dangerous hobbies, health conditions, weight, and many other variable).
What is Preferred Risk Life Insurance?
A preferred risk is a policyholder who is considered significantly less likely to file a claim.
As it applies to life insurance, a preferred risk is someone who has a very long life expectancy.
Therefore, insurance companies prefer it over a standard or higher risk because the preferred risk applicant represents a better chance to make more profit.
What are the Different Health Classifications for Life Insurance?
The four basic life insurance health classifications are:
People with more complex medical histories may fall into a broader category for health classifications called Substandard or Table ratings.
Providers also have health classifications specifically for Smokers, which come with much higher life insurance rates.
Preferred Plus
Sometimes referred to as Super Preferred, Preferred Select, or Preferred Elite, this is the best life insurance classification you can get, and it comes with the lowest premiums available. You’re in excellent health, you have an ideal height-to-weight ratio, and the health history of your family is excellent.
Preferred
Outside of a few minor factors, like high blood pressure or high cholesterol, you’re in very good health. You won’t get Preferred Plus rates, but your insurance premiums will still be very competitive.
Standard Plus
You’re in good health, but you might have a few outliers to keep an eye on or your height-to-weight ratio doesn’t fall into the life insurance company’s range for Preferred classifications. Your family health history is good.
Standard
You have a less than ideal height-to-weight ratio, an average life expectancy, or your medical history has a few issues. A common difference between Standard and Standard Plus is that your family health history plays a role, and your family members probably had medical issues before age sixty. You will be charged higher premiums in this class, but you’re still able to get insured for life insurance.
Table Ratings
This isn’t a specific rating classification like the others; instead, based on your health history, you’re placed in the Substandard category, which is graded by either numbers or letters (Usually 1-10, or A-J). This rating reflects a complicated health history or recent serious health issues, such as a stroke or heart attack.
Your premium will usually be the Standard price plus 25% for every level down the table ratings:
You could pay an extra 250% on your life insurance premiums at a Table J or Table 10 health classification, which isn’t ideal. But, you can still get insured for life insurance, and provide for your dependents upon your death.
How are Life Insurance Classifications Determined?
Insurance companies look at a wide range of health and lifestyle factors during underwriting to set your health classification for rating purposes, including:
The insurance carrier may request an attending physician’s statement (APS) from your personal doctor to learn more about the history of your health.
Tobacco Use
Smoking, use of chewing tobacco, or vaping will significantly increase your life insurance rates; smokers pay up to 3-5 times more for the same amount of life insurance compared to non-smokers.
Height and Weight
Each life insurance company has its own Build Table that places you in a health classification based on Height-to-Weight ratios, similar to a BMI (Body Mass Index) measurement. While each insurance company’s table is different, you’re more likely to receive higher rates if, according to the CDC guidelines, you are considered obese, overweight, or underweight.
Life Insurance companies also consider the history of your weight. Losing weight can help you save money on your life insurance premiums, but you won’t benefit much from sudden weight loss or short-term weight loss.
How Smoking Affects Your Health Class:
If you quit smoking you will reduce the cost of your life insurance over time; however, ex-smokers will still see an initial hike in their premiums for coverage. The longer you go without smoking, the more opportunity there is to get lower pricing when you apply for coverage.
Drug and Alcohol Abuse
Having an alcoholic beverage occasionally won’t increase your premiums, but insurers will have concerns if you have a history of drug and/or alcohol abuse.
In addition, several life insurers offer non-smoker classifications to people who use cannabis, depending on how often and how much you smoke.
Family Health History
During your initial health evaluation, you may be asked if anyone in your family has been diagnosed with, treated for, or died as a result of the following:
Family health history is particularly important when it comes to conditions that can be inherited.
If your family has a history of certain serious illnesses, it will count against you for rating purposes, especially if a close family member died before the age of sixty.
Lifestyle
This is an all-encompassing category that evaluates how risky your overall lifestyle is based on some of the following variables:
If you have multiple moving violations, it will increase your life insurance rates, while DWIs within the last 5 years may result in a declined application for coverage.
If you’re a sky diver or a race car driver, your chance of premature death is much higher than the average applicant for life insurance. You will either have an exclusion in your policy — meaning if your death is caused by a specific activity, your policy won’t pay out a death benefit — or have a flat extra charge added to your insurance premiums.
A flat extra costs about $2 to $5 for every $1,000 of coverage you have. That’s an extra $2,000 to $5,000 per year on a $1 million life insurance policy.
Criminal History
A misdemeanor isn’t going to hurt your chances of getting life insurance; it probably won’t even affect the classification you receive. But if you have a felony on your record, you’ll want to wait for as long as you can to apply for life insurance to avoid high premiums.
Each insurer has its own criteria for determining how much each of the factors above affects your classification for rating purposes. Insurers also allow some flexibility in assigning classifications based on other factors, called Stretch Criteria. The different approaches to setting classifications mean you’ll probably see different premium quotes from company to company.
How to Get a Better Classification on Life Insurance
Your classification is the final determinant of how much you’ll end up paying for life insurance to protect your loved ones.
Here’s how you can increase your chances of a favorable rate classification:
Even if you have a chronic illness, it’s not impossible to find a budget-friendly life insurance policy; for conditions like diabetes, insurers may work with you if you can show that you’re managing the condition through the use of proper medication and other recommendations from your personal physician.
Since every insurance carrier weighs risk and assigns a health class using different criteria, comparing rates from multiple providers will help you find the best policy for your needs and your budget.
What is an Impaired Risk for Life Insurance?
In life insurance, a person who has an unfavorable medical condition, or is exposed to an above-average occupational hazard, which makes him/her a Sub-standard risk – a risk that is below average.
Guaranteed Insurability Option for Life Insurance
An option offered under some policies, whereby additional insurance coverage may be purchased at various times in the future without a new medical exam, or other evidence of insurability.
What is Life Insurance?
Insurance in which the risk insured against is the death of a specific person (known as the Insured), upon whose death within a stated term (for term insurance), or whenever death occurs (for permanent insurance), the insurance company agrees to pay a stated sum or income to the beneficiary of the insurance policy.
What is a Death Benefit?
In life insurance, the face amount, as stated in the insurance policy, to be paid upon proof of death of the insured person.
Ways to Determine Your Life Insurance Health Class for Comparing Life Insurance Quotes Online
Here are five ways to determine your life insurance health class when requesting your free quotes for coverage:
Your Current Age
The older you are, the higher the health class you will be placed in. This is because the older you are, the more likely you are to have developed some sort of health condition, and the shorter your life expectancy.
Life insurance companies want to be sure that they are covering those who are not most at risk, and so the older you are, the higher the premiums will be to get insured.
Height, Weight, and Body Mass Index (BMI)
Your weight, height, and body mass index (BMI) are all factors that life insurers use to determine your life insurance health class. This is because these factors can help to indicate your overall health and your potential risk for developing serious health conditions in the future.
Current Health Condition
Even if you’re in good health, your life insurance health class could be determined by conditions you might not even think about. Things like diabetes, depression, and sleep apnea can all have an impact on your premiums.
Your Lifestyle Habits
The healthier you live, the better your life insurance health class will be. That means eating a balanced diet, exercising regularly, and abstaining from cigarettes and excessive alcohol consumption. Even if you don’t live a healthy lifestyle, you can make small changes like cutting out sugary drinks or exercising a few times a week.
Your Family Medical History
One of the most important factors in determining your health class is your family medical history. Insurers will look at any major health conditions that have run in your family and could potentially affect you in the future. Some conditions, like cancer or heart disease, can be relatively easy to predict, while others, like autoimmune disorders, can be more difficult to assess. If you have any major health problems in your family, make sure to disclose them to your life insurer. This will help them to accurately assess your health risk and give you the best possible rate on your life insurance policy.
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