What Are Life Insurance Health Classifications?

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Overview:

Understanding health classifications is very beneficial: After completion of the application process, the carrier will assign a health classification that will determine your premium.

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How Do Life Insurance Health Classifications Influence Your Premiums in 2024?

Are you ready for some good tips on getting the lowest life insurance premiums? This article will reveal the meaning of life insurance health classifications and how they directly impact your rates.

This underwriting matrix is the single most important factor to saving money.

Our agency understands that securing the best rates is important to you. 

That’s why we work with over 40 top-rated insurance companies to help find you the lowest premiums based on your health classification.

Life insurance health classifications play a significant role in determining your rates. The better your classification, the lower your premiums.

We can guide you through the process, helping you understand the factors that influence your classification and providing personalized solutions to improve it.

Take the first step towards securing affordable life insurance coverage. Contact us and let us help you find the best health classification that will produce the lowest premiums for your next life insurance policy.

Keep reading because the best is yet to come!

 

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Health classifications can be illustrated through the examples of Preferred Best, Preferred, Standard Plus, and Standard just to name a few.

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How Do Life Insurance Companies Calculate Health Classifications for Life Insurance Policies?

Your current health history will be the single most important factor by far when determining your health class, otherwise known as a rate class. The other main important factors the underwriters consider would be, do you use tobacco such as smoking cigarettes, do you have a hazardous occupation or do you have a dangerous sport or hobby?

The more information your agent knows, the better he can help you. The objective is to pinpoint the correct life insurance companies that will offer the best rate class which will generate into the lowest premiums after the underwriting process has been completed.

Some companies are very liberal where other companies will be more aggressive with their underwriting guidelines.

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*A life insurance health classification and a rate classification are synonymous. They are referred to both ways and have the same meaning. Think of them as nothing less than risk categories.

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Can a Health Assessment Help Me find the Best Rates?

A simple health assessment can help your agent determine what company to use based on your specific health and lifestyle. Diving blind into a life insurance application will usually create unwanted surprises later. 

The more your agent knows, the better your chances of having a happy ending and enjoying low rates when you begin paying your premiums. Just like the Boy Scout motto from many years ago “Be Prepared“.

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Participating in premier underwriting classes will enable you to secure the most affordable premiums. Therefore, it is vital to select the carrier that issues the most favorable risk ratings to minimize your expenses.

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Why Do Underwriters Use These Health Classifications?

Life insurance companies use health classifications to properly assess the risk properly they are undertaking. All applicants are different in one way or another. Some people are healthy, and some have a few minor health conditions. Some even have some life-threatening severe medical issues which complicate the underwriting process.

This also holds for their height, weight, tobacco use or not. Also, having hazardous occupations or sports that could take their life. These dangerous occupations and sports can also change your health classifications. Since each person’s possible risk can vary, the application has to be broken down into these risk categories.

The rates charged by insurance companies are influenced by statistical data, and they invest heavily in obtaining this information through the employment of professional statisticians.

Examples of Underwriting Classes

We will create two fictitious applicants for this example: Joe, a 30-year-old non-smoker, has no health problems. He has perfect height and weight and has a safe job as an electrical engineer. He plays golf as a sport and would not represent much of a severe risk to life insurance application. Therefore, he may qualify for “Preferred Best” rates.

On the other hand, Bob is a 30-year-old cigarette smoker. He works as a chainsaw operator for a logging company. He skydives as a hobby and drinks over six mixed drinks daily and would be a much greater life insurance risk. The life insurance company would take a much greater gamble than our other example with Joe.

Bob may only qualify for a “Standard” health classification. As you can see, these two people would have a health class reflecting a considerable difference in premiums.

 

What Determines a Specific Health Classification?

The specific rate class you will be placed in will be based on what the companies refer to as rate standards and rate questionnaire information.

Health History –

If an applicant has no pre-existing condition and has no family history of cancer or heart disease. Also, if he does not take any prescription medications and is standard in height and weight.

Life insurance companies give them a thumbs up in this significant area of underwriting criteria. The applicant could very well be on his way to preferred rates.

Tobacco Use – 

Tobacco use, especially cigarettes, will significantly impact life insurance rates. Without any shadow of a doubt, it has been proven that smokers do not usually live as long as non-smokers. Smoking cigarettes can double or triple your rate with no problem at all.

If you are looking for low super preferred rates and smoke cigarettes, it will not happen. Smoking is a very negative detail to have on your application.

Lifestyle – 

Your lifestyle regarding sports, hobbies, and occupation is essential. Suppose you are into sports and hobbies such as scuba diving, skydiving, drag racing, rock climbing, bungee jumping, boat racing, motorcycle racing, and aviation. In that case, you could find higher rates because of these dangerous activities or hazardous occupations.

Height / Weight – 

Your height and weight are critical when applying for life insurance. Many people do not realize this until they apply. Life insurance companies build charts that show the recommended weight for each height category.

If you are slightly overweight, you may go from preferred rates to standard plus, increasing premiums. However, your class could fall into the standard if you are more than just a little overweight. You can even go into the rate table, which we will discuss in this article. Remember that your height and weight are just as important as your health history.

This is because your health will be based on your height and weight when looking at statistics. This is based on how weight affects overall health and lifespan. Many life insurance applicants are overweight or morbidly obese and can be subjected to higher rates or having their application declined.

Family Health History – 

Your family health history refers to your parents and siblings. This is to see if there is a noticeable history of health conditions such as cancer or heart disease. You have no control over this, but life insurance companies take it seriously. They also want to know if close family members passed away before they were 60 years of age.

Also, heart problems or various forms of cancer will raise a red flag. They are looking for a track record of your immediate family. This could indicate that you would have a greater chance of being diagnosed with one of these fatal diseases from inheriting their genes.

Alcohol / Drug Use – 

Life insurance underwriters pay close attention to alcohol consumption and abuse. This can lead to early death if people fail to control their drinking. Many people that drink alcohol slowly start abusing alcohol. You can consume alcoholic beverages without a problem, but they must be within reason, so you are not destroying your health.

On the other hand, drugs your doctor does not prescribe are another story. Alcohol abuse offers many dangers to your health and is taken very seriously when applying for life insurance. Marijuana smoking is usually acceptable when used in moderation. Chemical drugs such as Cocaine, Methamphetamine, and Heroin are out of the question, where you will indeed be declined.

 

What Health Classifications Could I Potentially Be Assigned?

The primary health classifications are:

• Preferred Plus
• Preferred
• Standard Plus
• Standard Classes
• Smoker Rate Classes
• Sub-Standard Rate Classes

Preferred Plus Rates – 

Also known as Super Preferred, this is the best classification you can receive. About 10% of applicants can qualify for Preferred Plus. You have to be in excellent health with the proper height & weight ratio, and your family history is clean and right on the money.

Preferred Rates –

Preferred is an excellent rate class to be offered. Preferred rates will entitle you to low premiums, not quite as low as Preferred Plus but still very competitive. You could have some minor issues like high cholesterol and high blood pressure. But it has to be controlled with medication. Most healthy people fall into this category if they are in good shape.

Standard Plus Rates –

This is still an excellent rate class if you have a few health issues or possibly some height and weight abnormalities. Many people fall into this rate class, especially in their 40s, 50s, or 60s. Their health is starting to have some issues that are perfectly normal in these age groups. You would still have to have a good family health history from your parents.

Standard Rates –

In the Standard class, you could be experiencing some problems with height and weight, your medical tests are no longer squeaky clean, and you might have a small list of medical conditions that are not terrible, but you have to keep your eye on them.

The Standard class is prevalent for people in their 50s and 60s, but the rates are still very affordable. As you get older, your health is naturally going to be affected. But this effect is perfectly natural and unavoidable as your age progresses.

Substandard Rates with Table Ratings

The “substandard rate class” is not a specific rate class like the others above, but it is a scale of table ratings based on your health history graded by letters or numbers that would typically be either the letters A-J or numbers 1-10.

This is generally because you have a more severe health history or you’ve had some recent medical setbacks, such as heart conditions, a diagnosis of diabetes, or other more complicated health problems.

 

A Standard Class Could Have a Table Rating That Adds an Additional 25% for Every Stage

• A = Standard + 25%
• B = Standard + 50%
• C = Standard + 75%
• D = Standard + 100%
• E = Standard + 125%
• F = Standard + 150%
• G = Standard + 175%
• H = Standard + 200%
• I = Standard + 225%
• J = Standard + 250%

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The maximum rate increase is 250% without being declined and this is rare. Such a high rate increase could be too costly, but the main concept is you would still be insured.

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Can Smoker Rate Classifications Increase My Premiums?

Cigarette smokers can often expect to pay 250% or more premium dollars than non-smokers. If you smoke tobacco products, there will be two smoker classes where an insurance company will place you. You will always pay more for using tobacco because of the health risks tobacco has been known to cause.

Preferred Smoker is the best of the two rate classes for smokers. You will qualify for this rate class if you are an occasional smoker or use smokeless tobacco, such as snuff or leaf-type tobacco.

The Standard Smoker class is where you would fit in for regular cigarette smoking and steady cigar smoking. We highly recommend people give up smoking and improve their health. If you purchase a life insurance policy with a smoker’s rate and then you quit smoking, you can re-apply later for a non-smoker rate.

You can always request that your smoking rate be eliminated. Your rate class can be changed to a non-smoker, drastically reducing your life insurance premiums.

Can Vaping Also Affect My Life Insurance Health Classification?

With most companies, vaping will place you into a tobacco rate class. This will drastically increase your rates, just like cigarette smoking. Given all the dangers and risks of vaping, we highly recommend quitting vaping to prevent severe respiratory issues. Lung damage from vaping has been found in concise experiences, making it worse than tobacco use.

As the months go by, vaping is developing a worse reputation than ever. I can easily see life insurance companies cracking down on vaping. This is because so many young people are dying yearly from vaping effects.

 

Examples of Health Classifications and How They Affect Premiums

Our examples below will use a 30-year-old male (non-smoker) with a 20-year life insurance quote. We will use a face amount of $250,000. Also, we can compare one extreme to another, starting with Preferred Plus, Standard, and Standard with the highest table rating. Life insurance flat extra fees can be added for hazardous occupations and sports.

Preferred Plus:

• Protective Life – $153.73
• Lincoln National – $155.00
• American General – $156.50
• Banner Life – $157.49
• United of Omaha – $162.50

Standard Class:

• Lincoln National – $267.00
• Banner Life – $267.49
• American General – $271.50
• Protective Life – 274.15
• Transamerica – $275.00

Standard (Rate Table 10 or J):

• Banner Life – $660.22
• United of Omaha – $842.50
• John Hancock – $929.25
• Protective Life – $959.53
• John Hancock – $980.36

These are the top 5 rates for each of the three rate classes. Notice the extreme difference between our Preferred Plus premium of $153.73 to the Standard rate table 10 of $660.22.This is otherwise known as the letter J, depending on what company you are quoting. Your health class, otherwise known as your rate class, is essential to getting the best rates.

 

How Can I Compare Health Classification Effects on Rates?

Our instant quoting system has a drop-down menu with four health classifications. You will instantly see how rates change when you toggle through the four classes. We constantly shop the market for the company that will offer our applicants the best classification.

Take a minute to run our quote engine to see for yourself so you can see how these classifications dictate your premiums. 

 

Questions & Answers Pertaining to Health Classifications:

You probably have noticed some of the phrases before and did not fully understand them. 

What Are: Health Classifications for Life Insurance?

Answer – Health Classifications for Life Insurance are ratings the life insurance companies give you to indicate how they consider your health. They can also be adjusted for hazardous occupations or dangerous sports.

What Are: Life Insurance Health Categories?

Answer – Life insurance health categories are basically the same as the health classifications, some carriers refer to them as categories instead.

What Are: Health Classifications for Life Insurance Coverage?

Answer – Most people are talking about health classification for life insurance coverage based on how they are used in a life insurance policy to control the degree of risk the insurance carrier is taking.

What Are: Health Classification and Life Insurance Premiums?

Answer – Health classification and life insurance premiums are the comparison to how the classifications either increase or lower the premiums of a policy. Better classes such as Preferred Best will give you the very lowest rates possible where Standard rates will simply cost more.

What Are: Life Insurance Health Classification Guidelines?

Answer – Life insurance health classification guidelines are a requirement to be placed in each of the health classes otherwise known as rate classes.

What Is: Health Classification and Life Insurance Underwriting?

Answer – The carriers have a staff of medical underwriters that work exclusively with reviewing applicants’ information and then at the very end make an educated decision on what class they will be placed in essence to determine the premiums.

What Are: Health Classifications for Term Life Insurance?

Answer – Health classification for term life insurance is the outcome of the underwriting process where an individual is applying for life insurance. The rate classes are determined on an application for term insurance in comparison to Whole life or Universal life where these two policy types are permanent insurance coverage.

What Is a: Life Insurance Health Classification Table?

Answer – Life insurance health classification tables have additional ratings for when underwriters go below a Standard rating with a number or letter system such as the letters A through J or the numbers 1 through 10. The higher the number or letter the premium increases. This is used for people with more serious medical conditions.

What Is: Life Insurance Health Classification Criteria?

Answer – Life insurance health classification criteria are the deciding factors that the underwriters use to make their decisions on where to put the applicant into what rate class. This is basically the same as health classification factors or life insurance health classification standards.

 

Should I Contact an Independent Agent/Broker for Help?

There are two kinds of agents to choose from. The first is an independent agent or broker and the second is a captive agent who usually works for a company such as State Farm. Independent agents do not work for insurance companies like captive agents do. Instead, an independent agent can shop the entire life insurance market to find you the lowest rates.

The captive agent can shop his only market, which is the company he works for. The independent agent has his client’s best interest in mind, whereas the captive agent has his company’s main interest in mind. We work with over 40 of the highest-rated companies in the nation to ensure our clients are placed with the best companies and receive the lowest premiums. 

 

Our Final Thoughts

Now that you are an expert on the subject of life insurance health classifications, you will have a much better idea at how insurers determine your premiums. 

Contact us today and we will happily answer all your questions without any obligation. I hope you find this blog post beneficial.

All the best,
Jack Venturi

*For any questions you might have, our live chat system is at your disposal or call us at 815-390- 7545 and we will provide a quick answer.

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You can also set up a time at your own convenience on weekends or evenings to speak with us. Take Care!

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