Your Life Insurance Rate Class.
Your life insurance rate class is the most influential factor involving the price of a policy you have or plan to buy. If you have any questions or concerns about how much you pay for life insurance, then you must read this page. In fact, the reason too many people pay too much for their respective life insurance premiums is because they do not understand what a rate class is – nor how a rate class is determined. This lesson is your antidote to the bait-and- switch tactics that showcase a cheap policy, followed by sticker shock when people discover they do not qualify for such a low rate.

4 Rate Classes and What They Could Look Like.
Every Life Insurance Company Has Different Underwriting Guidelines for Each Rate Class. Below Are Some Examples Regarding This Point.
Preferred Plus.
Preferred Plus is the best life insurance rate class. By way of example, an applicant who has his or her blood pressure under control during the last two years, with average readings no greater than 136/86, and cholesterol levels of 120-300 (with or without treatment) . . . that person may qualify for a Preferred Plus life insurance policy. Along with an HDL ratio that does not exceed 4.5 (with or without treatment), and a driving record that does not contain more than 2 moving violations in the last 3 years, an applicant may, again, qualify for a Preferred Plus Rate. That person’s driving record must not include a DWI, DUI, citations for reckless driving, and revocation or suspension of his or her driver’s license in the last 5 years.
Preferred.
Preferred is the second best life insurance rate class. In the case of someone with average blood pressure readings no greater than 146/90 during the last two years, and cholesterol levels of 120-300 (with or without treatment), that person may qualify for a Preferred life insurance policy. Along with an HDL ratio that does not exceed 5.5 (with or without treatment), and a driving record that does not contain more than 2 moving violations in the last 3 years, this applicant may qualify for a Preferred policy. That person’s driving record must not include a DWI, DUI, citations for reckless driving, and revocation or suspension of his or her driver’s license in the last 5 years.
Standard Plus.
Standard Plus is the third best life insurance rate class. For an applicant whose average blood pressure readings are no greater than 152/92 during the last two years, in addition to cholesterol levels of 120-300 (with or without treatment), that person may qualify for a Standard Plus life insurance policy. Along with an HDL ratio that does not exceed 6.5 (with or without treatment), and a driving record that does not contain more than 3 moving violations in the last 3 years, this individual may qualify for a Standard Plus policy. That person’s driving record must not include a DWI, DUI, citations for reckless driving, and revocation or suspension of his or her driver’s license in the last 3 years.
Standard.
Standard is the fourth best life insurance rate class. For an applicant whose average blood pressure readings are no greater than 156/94 during the last two years, in addition to cholesterol levels of 120-300 (with or without treatment), that person may qualify for a Standard life insurance policy. Along with an HDL ratio that does not exceed 8.0 (with or without treatment), and a driving record that does not contain more than 4 moving violations in the last 3 years, this individual may qualify for a Standard rate policy. That person’s driving record must not include a DWI, DUI, citations for reckless driving, and revocation or suspension of his or her driver’s license in the last 2 years.
Your Rate Class Is the Most Important Factor for the Cost of Your Life Insurance Premiums.
Multiple rate classes make it difficult to quickly or easily calculate the cost of life insurance premiums. Since there are four rate classes – Preferred Best, Preferred, Standard Plus and Standard – and two rate classes for smokers (Preferred Smoker and Standard Smoker), these variables can produce very different outcomes regarding the price of life insurance.
For example: Besides the Standard rate classes, there are Substandard rates that make it even more challenging to approximate the price of life insurance. These Substandard rates are for men and women with preexisting medical conditions who want to buy life insurance, but may have to pay a surcharge because their particular ailments make them a higher risk to insure.
If you have a preexisting condition, you can still find out if you qualify to buy life insurance; you can learn about the underwriting guidelines, as well as the best and worst case scenarios associated with a rate class, by reading the material on our page about High Risk factors.
Each rate class offers a different price for the same life insurance policy. If you are not familiar with what a rate class is, you should have an independent life insurance professional – someone with extensive experience – explain this subject to you before you even apply to buy life insurance. After all, your rate class is the single greatest factor that will determine how much you pay for life insurance. You can learn more about rate class here.
How Rate Classes Impact What You Pay for Life Insurance.
To illustrate how important rate classes are, with regard to the price of life insurance, consider this example: Look at how significantly prices differ, from one rate class to another, for a 37-year-old male. Our exclusive Quote Engine reveals the prices for all four term life insurance rate classes.
Bear in mind, too, that as you age your rate class becomes more important. Look at the 100% increase in price, if you qualify for a Standard rate versus a Preferred Plus life insurance rate class. Hence the urgency of buying life insurance while you are young and/or healthy: Prices increase rapidly, underwriting guidelines become more restrictive and eligibility requirements become more stringent.
How Rate Classes and the Price of Insurance Increase as You Age.
As you age your health can change quickly, which makes it even more difficult to get better than standard rates. Here are some sample quotes for a male in his twenties, thirties, forties and fifties.
Male at Age 20.
20 year old male with a $250,000 death benefit for 20 years.
Male at Age 30.
30 year old male with a $250,000 death benefit for 20 years.
Male at Age 40.
40 year old male with a $250,000 death benefit for 20 years.
Male at Age 50.
50 year old male with a $250,000 death benefit for 20 years.
What Happens If I Do Not Qualify for a Standard Rate Class?
If a life insurance company declines your application for a Standard rate policy, they may offer you: A Table Rating or a Flat Extra Rating.
Table Rating
A Table Rating is a consideration for applicants with health problems, which also means there will be a higher cost for the premiums associated with a particular life insurance policy. This extra charge to Standard life insurance rates will vary based on the seriousness of a person’s medical condition. Following a review of your application, as well as the results of a physical exam and a reading of your medical records, you will receive a health classification. If the underwriter concludes that your health does not meet the requirements for a Standard rate class, you may receive a Table Rating.
Flat Extra
A Flat Extra rating involves a life insurance risk that a conventional rating system does not cover. An applicant with a certain type of cancer may only qualify for a Flat Extra rating from a life insurance company, for example. During the underwriting process, if an insurer believes there is a potentially high risk of recurrence (for the person with cancer) within the first six years of receiving a policy, a Flat Extra rating is a way for a life insurance company to hedge that risk. Flat extra’s are typically an extra charge on top of a standard rate for the first several years of a policy. After the flat extra period is over the premiums drop down to the standard rate for the remainder of the policy.
Table rates add 25%, per table, above the standard rate.
Below is an example of a standard rate with a premium of $100. This hypothetical shows how a table rating would add extra costs to the final price and rate a life insurance company offers.
To repeat: Getting an online quote is easy. Knowing if you qualify for a featured rate is difficult, however. Rate classes complicate things, making the attempt to buy life insurance more challenging. These factors are the reason why it is so important to work with –and seek the guidance of – an independent life insurance professional. We can help you because we have the insight you need, the expertise you deserve and the convenience you desire. Together, we can achieve an excellent outcome.
“86% of people say they have not bought life insurance because it’s too expensive, yet they over estimate the price by 2x.”
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