What You Need to Know About Life Insurance Underwriting Classifications | The Definitive Guide for 
What are life insurance rate and health classifications? You have probably heard the terminology such as Super Preferred, Preferred Plus, Preferred, Standard Plus, Standard and a few more such terms. These are referred to as life insurance underwriting classes. You may ask yourself, what is this all about and why is this so important?
This is some basic terminology you should understand to better help you get the lowest rates possible. Simply using the most appropriate life insurance companies can make a big difference receiving the best life insurance classifications.
Table of Contents
- What is a life insurance health classification?
- How health classifications are calculated
- Why medical underwriters use these classifications
- What determines a specific health classification?
- Possible classifications you could be assigned
- Smoker rate classifications & how they affect your premiums
- Vaping and your health class affects
- Using our quoting system to visualize health classes in action
- Our final thoughts
Your health classification is mainly going to be determined by your current health history. Paying the lowest premium possible for your life insurance is what it’s all about. This article will show a comparison of 3 rates classes and their premiums. This will show you just how important your assigned health classification will be. It is crucial when shopping for the best life insurance rates.
You will be surprised how much these risk classes have on your premium. You can also activate our life insurance quoting engine and compare life insurance quotes. By doing this, you can change the health classes back and forth with the drop down menu so you can see how much the life insurance rates change.
A life insurance rate classification and a life insurance health classification are one in the same. They are referred to both ways but have the exact same meaning. Think of them as nothing less than risk categories.
Understanding Life Insurance Classifications can Help You Find Lower Rates
If you have a basic knowledge of health classifications, you can help yourself apply with the best life insurance company. Keep in mind that all companies underwrite their applications differently. Some carriers will be more liberal concerning health conditions or hazardous occupations and sports.
This basically means that some companies will offer you a better health class than others. The way to do this is to effectively shop the life insurance market so you can receive the best class possible.
Receiving the best underwriting classes you can possibly achieve, will allow you to secure the lowest premium. Choosing the carrier that will issue you the best class is vital to saving money.
The life insurance companies use health classifications to properly assess the risk 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 serious life threatening medical issues which complicates the underwriting process.
This also holds true for their height and weight and 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 the possible risk that each person can vary, the application have to be broken down into these risk categories.
An Example of Underwriting Classes
We will create two fictitious applicants for this example: Joe is a 30 year old non-smoker, has no health problems. He has perfect height and weight and has a very safe job as a electrical engineer. He only plays golf as his sport and would not represent much of a serious risk for life insurance. He may possibly qualify for “Preferred Best” rates
On the other hand, Bob is a 30 year old cigarette smoker. He works as a chain saw operator for a logging company. He skydives as a hobby and drinks over 6 mixed drinks a day would be a much greater life insurance risk. The life insurance company would be taking a much greater gamble than they would with 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 that would reflect a considerable difference in premiums.
If an applicant has no pre-existing conditions and has no family history of Cancer or heart disease. If he takes no prescription medication and is normal in the height and weight department.
The life insurance company with give them a thumbs up in this very important area of underwriting criteria. The applicant could very well be on his way to preferred rates.
Tobacco use especially with cigarettes will definitely have a major impact on the life insurance rates. It has been proven without any shadow of a doubt that smokers do not usually live as long as non-smokers. Smoking cigarettes can double or triple your rates with no problem at all.
If you are looking for low super preferred rates and you smoke cigarettes, it is not going to happen. Smoking is a very negative detail to have on your application.
The lifestyle you have pertaining to sports, hobbies and your occupation is very important. If you are into such sports and hobbies such as scuba diving, skydiving, drag racing, rock climbing, bungee jumping, boat racing, motorcycle racing and aviation, you could possibly find higher rates because of these dangerous activities or a hazardous occupation.
Height / Weight
Your height and weight is very important when applying for life insurance. Many people do not realize this until they apply. Then there can be an unexpected surprise to say the least. Life insurance companies go by build charts that show the recommended weight for each height category.
Also along with the gender of the individual. For example if you are slightly overweight you may go from preferred rates to standard plus which increase the premiums. If you are more than just a little overweight, your class could fall into standard. You can even go into the rate table which we will also go over in this article. Just keep in mind that your height and weight is just as important as your health history.
This is because your health is going to be based on your height and weight when looking at statistics. This is based on how weight affects a person’s overall health and lifespan. Every year there are many life insurance applicants that are overweight or morbidly obese that quickly become 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. Needless to say you have no control over this but the life insurance companies take it very seriously. Close family members that have passed away before 60 years of age.
Also from heart problems or various forms of Cancer, it will set off a red flag. They are basically looking for a track record in your immediate family. This could indicate that you would have a greater chance of being diagnosed with one of these potentially fatal diseases one day.
Alcohol / Drug Use
The life insurance underwriters pay close attention to alcohol consumption and abuse. This can lead to an early death if people fail to control their drinking. You are definitely allowed to consume alcoholic beverages with no problem at all but they have to be within reason so you are not destroying your health. Drugs on the other hand that are not prescribed by your doctor are another story. Alcohol abuse offers many dangers to your health and are take very serious when you apply for life insurance.
Marijuana smoking is usually acceptable when used in moderation. Chemical drugs such a Cocaine, Methamphetamine, Heroin are out of the question where you will certainly be declined.
There are a few other factors that determine you rate classification but these by far are the most important ones. Anytime one of our applicants has any of these issues we normally run a medical pre-screen to see what life insurance company is going to offer us the lowest rates.
Choosing the most applicable company is crucial when looking for the best term life insurance quotes. Or even permanent life insurance such as Universal life for that matter.
Keep in mind that the main tiers of health rate classes are:
- Preferred Plus
- Standard Plus
- Standard Classes
- Smoker Rate Classes
- Sub-Standard Rate Classes
Preferred Plus Rates
Also known as Super Preferred which is the very best classification you could ever receive. About 10% of applicant 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 is an excellent rate class to be in. This will entitle you to have very low rates not quite as good 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 a very good rate class to be in if you have a few health issues or possibly some height and weight abnormalities. Many people fall into this rate class especially if they are in their 40s, 50s, or 60s. Their health is starting to have some health conditions arise which is perfectly normal in these age groups. You would still have to have a good family health history stemming from your parents.
In the Standard class you would 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.
This as a common class for people in their 50s and 60s but the rates are still very affordable. As you get older your health is naturally going to get tarnished. But this effect is perfectly natural and this is 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 that will be based on your health history graded by letters or numbers which would normally be either the letters A-J or numbers 1-10. This is normally because you have a more serious health history, or you’ve had some recent medical setbacks. Such as a heart attack, heart surgery, a diagnosis of diabetes or other complicated health problems.
A Health Class Listed in “Standard” Will Have an Additional 25% for Every Step on the Table Rates
- 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%
The maximum rate increase possible is 250% without being declined, but this is usually rare. This could get costly but the main concept to consider is you would still be insured.
Cigarette smokers can many times expect to pay 250% or more premium dollars than non-smokers. If you smoke tobacco products, there will be two smoker classes an insurance company will place you in. You will always pay more for using tobacco because of the health risks tobacco has been known to cause.
The Preferred Smoker is the better of the two rate classes for smokers. You would qualify for this rate class if you are an occasional smoker or you use the smokeless tobaccos. Such as snuff or leaf type tobacco.
The Standard Smoker class is where you would fall for regular cigarette smoking and steady cigar smoking also. We highly recommend people give up smoking and improve their health. Keep in mind that if you purchase a life insurance policy with a smokers rate and you quit smoking.
You can always make a request that you smoking rate be dropped. Your rate class can be changed to non-smoker which would drastically reduce your life insurance premiums.
With the majority of the companies, vaping will place you into a tobacco rate class. This will drastically increase your rates just like cigarette smoking. With all of the dangers and risks of vaping, we highly recommend quitting vaping to prevent serious respiratory issues down the road. Lung damage from vaping has been found in very short experiences with vaping making it seem worse than tobacco use.
As the months go by, vaping is developing a worse reputation than ever before. I can easily see the life insurance companies cracking down on the subject of vaping. Many young people are dying every year from the effects of vaping.
Examples of Three Health Classes and How They Will Affect Your Premiums
Our example will use our 30 year old male (non-smoker) with a 20 year term 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.
- Protective Life – $153.73
- Lincoln National – $155.00
- American General – $156.50
- Banner – $157.49
- United of Omaha – $162.50
- 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. This is why I say the health class otherwise known as your rate class is so very important.
Our quote engine has a drop down menu with four health classifications to choose from. You will instantly see how the rates change when you toggle through the four classes. We always shop the market for the company that will offer our applicants the best classification.
This demonstration will show you perfectly how these life insurance rate and health classifications work in real time.
Now you know what life insurance health classes are and how important they are when seeking the best life insurance rates. Life insurance like any other type of insurance product is never a one size fits all product. Take your time and get to understand the many types of life insurance products available to you. Call us today and we will be happy to answer all your questions with no obligation.
All the best,
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