Choosing A Life Insurance Company

Life Insurance Company Ratings: Select, Preferred or Standard?

The results of your underwriting process (age, lifestyle, family health history, etc.) determine what class a life insurance company puts you in and also determines your premium rates.

Select, Preferred or Standard, How Does Your Insurance Company Rate?

When you apply for a life insurance policy, the life insurance company begins what is known as the underwriting process. During this time, they review the the medical, non-medical and financial risk factors from your life insurance application and medical exam results. Some life insurance companies might even decide to conduct a phone interview to gain more insight into your family health history or to ask you additional questions.

Once this information has been processed, the life insurance company underwriter will determine what category you fall in based on your age, lifestyle, family health history, and overall health status. While the names for specific life insurance company rating categories may differ between companies, the basic classifications are select, preferred, and standard. In addition, people who smoke will have their own category rating of either standard smoker or preferred smoker.

What's the difference in the basic categories?

It's important to note that not all insurance companies follow the same rating criteria. Therefore, you could be rated as select by one company and preferred by another, simply because of that company's individual underwriting guidelines.

A select rating is typically offered if you are in excellent health, fall into a normal height to weight ratio, and have a favorable family health history. For example, that no immediate family members have died from cancer or heart disease at an early age. There may also be other criteria involved, but these are the basics for qualifying for a select rating. Some life insurance companies even have ratings such as super select.

A preferred rating is also associated with optimum health, however certain factors may indicate that you pose a slightly higher risk than someone who would qualify for a select rating. This can be attributed to a number of different factors, and depends on how the insurance company differentiates between a select and preferred rating.

A standard rating doesn't necessarily mean that you are in poor health. In fact, it typically means that you meet the life insurance company's standard rating for someone of average health and with your specific family health history, weight, age, etc. Just as someone who might not qualify for a select rating due to certain indicators, getting a standard risk rating just means that there are factors relating to your particular situation that make you ineligible for a select or preferred rating. These can be factors such as a less than ideal height to weight ratio, past tobacco use, or even your driving history or occupation.

There are many factors that establish your life insurance premiums. They include the types of insurance, the amount, length of coverage, as well as your risk rating. The ratings above are all based on nonsmoker rates. Therefore, if you smoke, your premium rates will be based on all the risks associated with being a smoker.

The most important thing to remember is to be sure to question the insurance company if you ever feel that you have been incorrectly rated. For more information on understanding life insurance risk ratings, visit Life Happens.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

Life Insurance Company

When you apply for a life insurance policy, a process called underwriting begins. This process allows the life insurance company time to review your application and information from your medical exam. These findings will place you in a basic rating class that will determine your premiums. This article will help you better understand the basic risk ratings that life insurance companies use. For more information, visit the Protective learning center.

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