Many people I speak with ask to explain the difference between High Risk Life Insurance and Preferred Life Insurance. The question also comes up concerning how and why an individual is placed in either one of these two categories. This is exactly what this article is going to be explaining in detail. There is a considerable difference between these two types of classifications and the main difference will result in the rates.
Let’s start out with high risk life insurance quotes and move along from there. Remember that high risk life insurance quotes don’t always have to be costly like you may believe.
What exactly is High Risk Life Insurance?
High risk life insurance is life insurance for applicants that have negatives aspects on their application such as serious health conditions. These conditions can be ranging from Cancer, heart disease, COPD, Emphysema, ALS, Multiple Sclerosis, drug abuse and alcoholism. Also such conditions as Alzheimers, Obesity, Diabetes, extreme Hypertension, Sclerosis of the Liver, HIV or AIDS.
Some of these medical conditions would promote an application to be declined. The worst case scenario would be to have to purchase a Guaranteed Issue policy. The choices in guaranteed issue policies are slim and the face amount is usually limited to $25,000. High risk life insurance can be very expensive and many times unaffordable. High risk life insurance quotes can be very affordable when using the correct company.
What else can cause an individual to become high risk?
You don’t just have to have health problems to become a high risk candidate for life insurance. There are many different factors that can lead to being considered high risk. Over 80% of the people that are deemed high risk have medical conditions that place them there. Dangerous sports and hobbies come in next and then finally hazardous occupations.
Dangerous Sports & Hobbies – being active with dangerous sports or hobbies can place you in a high risk life insurance category real quick. Sports such as Drag Racing, Skydiving, Rock Climbing, Bungie Cord Jumping, Boat Racing, Scuba Diving, Motorcycle Racing and Flying.
Hazardous Occupations – There are many different forms of hazardous occupations that can also place you in a high risk life insurance category. Occupations such as Loggers, Commercial Fisherman, Roofers, Iron Workers, Farmers, Ranchers, Airplane Pilots, Truck Drivers, and Garbage Collectors. Also, Electrical Power Line Repairmen, Helicopter Pilots, Commercial Airplane Pilots and Flight Engineers. These occupations can create higher than average high risk life insurance quotes.
What is Preferred Life insurance all about?
Preferred life insurance is usually the opposite of high risk life insurance. The Preferred life insurance on the market is geared to applicants that are healthy and do not have any serious medical issues to contend with. They would also have to have relatively safe occupations and no dangerous hobbies.
How are High Risk Life Insurance premiums calculated?
High risk life insurance rates are calculated by first observing the exact risk involved on each and every applicant. Once this risk factor is established the life insurance can usually go with two different methods. The first method would be adjusted the health classification otherwise known as the risk classification.
An example of this is where an applicant would be placed in a rate class below preferred. This could be such as a Standard rate class with a table rating such as rate table A, B, C, D, E, F, G, H, I and J. Some companies would use the rate table number system such as rate table 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10. The high risk life insurance quotes when you start going past rate table E & F can get very pricey.
Flat Extra Fees are also used when calculating high risk life insurance premiums.
Another method would be to apply a fee or surcharge known as a “Flat Extra“. This is a specified dollar amount added on to the policy premium to cover the added risk. For an example let’s us a flat extra fee of $3.00 for every $1,000.00 in coverage. Here is how the added fee would break down.
Here are 5 examples of how the high risk life insurance rates will breakdown.
Our example premium has a face amount of $100,000. The base premium is $850.00 per year for 20 years. The flat extra is $3.00. The flat extra of $3.00 is added onto the based premium of $850.00 just like this.
The fee of $3.00 times 100 (for the face amount of $100,000) equals $300.00. Next you add on the base premium of $850.00 for a grand total of $1150.00. Make sure to use our free face amount calculator if you need help determining what your recommended death benefit should be.
What is an example of high risk life insurance quotes and preferred quotes and rates?
In this illustration we can use a 30 year old male in excellent health that would normally have preferred rates. We will then add on lower rate classes for the example. These will be actual rates for a 30 year old male with a preferred rates class for a 20 year Term policy for 30 years. These will be current rates will be for a Banner Life Term policy.
1. – Preferred Rates – $162.99
2. – Standard Rates – $231.15
3. – Rate Table B – $254.99
4. – Rate Table E – $352.48
5. – Rate Table J – $514.97
Needless to say, the best rate class to be in is Preferred.
If you have health conditions, a hazardous occupation or sport, you can still get excellent rates with high risk life insurance. This will always depend on the severity of the high risk condition you are in. We use over 40 of the most competitive life insurance companies to make sure our applicants get the lowest rates possible. Using the most applicable life insurance company for your specific situation is crucial. If you want to get the lowest life insurance rates, you must use the company that will make you the best offer. All life insurance companies underwrite their policies differently.
Take advantage of our websites free quote engine and compare rate from over 40 of the most trusted life insurance companies.
You can compare rate classes on our quote engine by using the drop down menu to compare low cost Term life insurance. You can review immediate life insurance quotes on our quoting system. Compare all the best life insurance rates from the best life insurance companies in your state.
Low cost Term life insurance will always be the lowest priced form of life insurance available. Over 81% of life insurance shoppers compare Term life insurance quotes online. The internet has really made this process of finding the best high risk life insurance quotes easy and quick.
We can help take all the confusion out of purchasing life insurance and ensure you receive the best rates possible.
Shopping for high risk life insurance quotes or preferred life insurance for that matter can seem very confusing. There are a lot of variables to stop and consider and you want to make sure that you’re making the best purchase possible. Contact us today and we will answer all your questions over the phone. There is no cost or obligation for our help.
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