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Choosing a life insurance company

Life insurance health and risk ratings explained

The results of your underwriting process ultimately determine your rate class and premium.

What are life insurance rate classes?

When you apply for a life insurance policy, there are several factors that determine what rating you will be given. This article will help you better understand the basic risk ratings that life insurance companies use to categorize policyholders. When you begin the underwriting process, the company will review medical, non-medical and financial risk factors from your life insurance application and medical exam results, if required. You could be asked to take a blood test, and some life insurance companies conduct phone interviews 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 risk category you fall in based on characteristics such as your age, occupation, family health history and overall health status. These findings will place you in a rating class that will determine your premiums. While the names for specific life insurance company rating categories may differ between companies, the classifications are: preferred select, preferred, non-tobacco, preferred tobacco and standard tobacco.

What is the difference in the risk class categories?

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

Know that if you are a smoker, or a habitual user of products containing nicotine, your health class and final rate quote will likely be affected when you apply. For some insurance carriers, smoking includes e-cigarettes in addition to regular cigarettes or use of chewing tobacco.

Preferred select rating

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

Preferred rating

A preferred rating is also associated with optimum health. However, this rating implies there could be certain factors that may indicate you pose a slightly higher risk than someone who would qualify for a preferred 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, depending on the insurer.

Non-tobacco rating

A non-tobacco rating is typically associated with the average applicant, which includes nonsmokers and can include those who smoke occasionally or participate in minimal tobacco use. For example, if you smoke the occasional cigar, you might receive a non-tobacco rating, depending on the insurer.

Preferred tobacco rating

A preferred tobacco rating usually means that you would have an optimal rating if you didn't use tobacco products. Even if you don't have a family history of heart disease or lung cancer, for example, you will still receive the tobacco designation because you are a smoker.

Standard tobacco rating

A standard tobacco rating typically signifies that you are a tobacco user who does not meet the preferred rating guidelines, but are in otherwise relatively good health. You might have a big risk factor like high blood pressure but still have a favorable family medical history.

There are many factors that determine your life insurance premiums. They include the types of insurance, the amount, length of coverage, as well as your risk rating. As shown above, if you use tobacco products, your premium rates will consider all the risks associated with being a smoker.

The most important thing to remember is to be sure to inquire with the insurance carrier about the different risk classes.

How do insurers determine risk class category?

There are several tools insurance carriers use to help determine an applicant’s risk class.

  • Medical examThe underwriting process for most life insurance policies includes a medical exam, which might collect height, weight, blood pressure as well as a blood and urine samples. This information will be used to assess your risk class.
  • Life insurance applicationYour application provides critical information about your history, lifestyle and situation that also contribute to determining your risk class.
  • Family medical historyApart from your medical exam, the insurance carrier will likely provide a questionnaire requesting information about your family medical history. This is important information determining your risk and policy rate.

No medical exam life insurance is available. However, these policies may be more expensive than policies that require medical exams. They may also limit coverage.

What questions will insurance carriers ask for insurance risk ratings? 

The number and types of questions posed by carriers during the insurance underwriting process may seem extensive, but the information may be used to help determine your risk class. Consider some questions that may impact your risk class.

  • What is your current age?
  • Whether not you are a smoker?
  • What was your parents’ or grandparents’ cause of death?
  • Do you participate in any sports, hobbies or high-risk activities?
  • What is your driving record like?
  • Do you currently or have you previously taken any medicines?

With this summary of how the underwriting process and risk class assessment work, you can approach the life insurance application process more informed. 

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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 or its subsidiaries.

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