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Thousands of people every year apply for individual life insurance policies. Many find that their quoted life insurance rates were just a pipe dream. Proper planning has to take place in order to be able to secure the best life insurance rates. The goal is to have these estimated premiums become the final premiums when all is said and done.
Who is at fault when an applicants expected premium inflates like a hot air balloon? Most of the time the applicant does not fully inform their agent about their health conditions. Also, some applicants intentionally conceal medical conditions and believe the insurance company will never find out.
Your agents job is to help you receive the very best life insurance rates possible.
Many times there is negative information on an applicants medical records that a doctor never informed the applicant about. This can be a total surprise to the applicant who never had knowledge of a specific pre-existing health condition. In any case, make sure your agent knows about any medical concerns and also any dangerous sports or hobbies you may have. As I mentioned, some applicants believe that if the agent does not have any knowledge of their health concerns. This will give them a better change to get lower rates. Nothing could be farther from the truth to say the least. As they say, “it all comes out in the wash”.
The more your agent knows about your health history, the more he can help you secure the best rates.
There is a lot more that just your health history and medical conditions that can increase your rates. If you have a hazardous occupation or a dangerous sport you can be subjected to higher premiums. The higher premiums will be the end result of the added risk being taken by the carrier. Being overweight or obese can also cause a major concern with your premiums increasing. You must inform your agent if you have any of these causes that can cause a rate increase. If your agent does not know because you are deliberately hiding these facts. The insurance company will find out and your rates with go up like the Goodyear blimp. Your application can also be flat out declined also.
What can your agent do about helping you find the best life insurance rates and save you more money?
Your agent can shop the market and converse with the most applicable life insurance companies. These are the
companies that will offer you the lowest life insurance rates. Your agent will be able to run a medical pre-screen on the information you provide him. This will pinpoint what company will be your best choice. If you don’t inform you agent and he walks into your application blind. You will end up very likely paying a higher premium than you should be.
Make sure to work with an independent agent that represents a large number of companies. Having a large choice of life insurance companies is to your advantage. Getting the best policy at the lowest rates will depend on the performance of your agent and yourself.
How do the life insurance companies charge addition premium dollars for high risk life insurance applicants?
There are three ways an insurance company can add additional premium to a policy to cover the added risk they are taking.
- Using Table Ratings (most common)
- Adding “Flat Extra” Fees
- Combination of Table Ratings & “Flat Extra” Fees
Let’s start out with the most common type of premium increase and create a illustration of how life insurance companies use table ratings. We will use a “Standard Rating” for an individual that would have a very simple $100.00 per month premium. We will use their number system of 1 through 10 which would be the same as the letter system of A through J. Some life insurance companies use the number system and others use the letters. The end result is the same.
This table rating chart will show you what kind of an impact a specific table rating has on the final premium.
| Initial Premium | Rating | Rate Increase (%) | Final Premium |
| $100.00 | 1 or A | 25.00% | $125.00 |
| $100.00 | 2 or B | 50.00% | $150.00 |
| $100.00 | 3 or C | 75.00% | $175.00 |
| $100.00 | 4 or D | 100.00% | $200.00 |
| $100.00 | 5 or E | 125.00% | $225.00 |
| $100.00 | 6 or F | 150.00% | $250.00 |
| $100.00 | 7 or G | 175.00% | $275.00 |
| $100.00 | 8 or H | 200.00% | $300.00 |
| $100.00 | 9 or I | 225.00% | $325.00 |
| $100.00 | 10 or J | 250.00% | $350.00 |
You can see how the rate increase begins with a 25% increase and escalates all the way up to 250%. The table rating system is the most common way to charge additional premium for high risk applicants.
The “Flat Extra” method is usually a system that is used on a more limited basis which is based on a flat dollar amount which is added to each $1,000.00 worth of coverage.
Here is another simple illustration but for a Flat Extra fee.
A given life insurance underwriter has decided that a flat extra fee of $1.00 per thousand is appropriate for where the applicant is applying for a policy with a face amount of $500,000. The original base premium, with no flat extra fee, will be an even $1,000 per year.
A $1.00 Flat Extra Fee is multiplied by 500 (based on the face amount of 500) = $500 Flat Extra Fee.
Add this new $500.00 fee to the base premium of $1,000 and you have a grand total premium of $1,500.00.
A professional approach must be taken when applying for life insurance. Using the most applicable company is a must.
Anytime you apply for low cost life insurance, many variables have to be taken into consideration. Your health history, driving record, height & weight, occupation, hobbies, sports among other have to be considered. All life insurance companies underwrite their applications differently than another.
All companies have their favorite types markets where they will be more competitive than other companies. One company may be very liberal with smokers where another company is not. The same goes for companies that work well with people with health concerns where another company will be more conservative.
Don’t hesitate to call us with any questions and make sure to use our free quote engine.
Everyone that shops for life insurance is going to have a long list of questions they would like to have answered. Many of these people don’t ask and leave all these questions become a mystery. The more you know about life insurance the better off you will be. Contact an independent agent and get answers to those questions so you can become an educated consumer. We have well over 20 years experience helping people find the best life insurance products at the lowest possible premiums.
We can help make purchasing life insurance a simple process and ensure you always receive the best rates.
Shopping for Term life insurance can seem confusing to the average consumer but not to an experienced life insurance agent. There are a lot of variables to consider and you want to make sure you purchase the best plan for your money. Give us a call today and we will answer all your questions over the phone, we’re here to help you.
We can be reached by telephone, toll-free, by calling 800-897-5699 7 days a week.
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