Understanding Life Insurance Rate Classifications

By Author: Eric Stein
Total Articles: 4762
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When applying for a life insurance policy in North America, you will be asked about the rate class that you want to apply for. What is a life insurance rate though? A life insurance rate is simply the monthly cost of your insurance policy premiums.

Underwriting

There are a number of different rate classes when it comes to life insurance †or most other insurances for that matter. You want to qualify for the best possible class so that your premiums will stay low. The hard part is that there isn’t much you can do about which rate class you fit into †you can usually only hope for the nest.

Your life insurance rate will be determined by the underwriting process. A number of factors will be used such as your supporting medical and health documents, your physical exam results, and many others things such as you age, gender, and lifestyle habits. For example, a 70-year-old race car driver will likely pay more than a 22 year old student based on the risk involved.

The life insurance underwriter will look at all this information and make sure it is correct. Make sure ...
... that you never lie when you’re being asked these questions. Not telling them that you may smoke tobacco from time to time could mean that your policy will be void upon death. This means that your family could end up getting nothing †even if you’ve paid your premiums for many years. Tell them the truth and you will avoid these kind of worst case scenarios. The insurance underwriter will take all of this information and calculate your life expectancy. If you’ve expected to life for a long time then you will have a much better rate class.

Rate Classes

People that purchase life insurance should understand the different qualifications that come along with the different rate classes so that they can apply for the right one. Knowing this will avoid disappointment later on when you realize you’ve paid a lot more for a policy then you thought it would cost. Smokers, for example, should expect to pay significantly most because they are at a much greater risk to die early.

There are a few different rate plans out there such as Preferred-Plus term insurance which means that you do not smoke any tobacco, you have never had a history of alcohol or drug abuse, and that you don’t engage in dangerous activities.

Standard Life Insurance Rate is for people with minor health issues like high cholesterol or for someone that is moderately overweight. This risk factors wont increase your premiums significantly but they will be raised slightly.

Another type of rate plan is Substandard Life Insurance rate which means you have major health problems. For a policy like this you could end up spending a lot in monthly premiums.

Even though you may be in perfect health you may still not be able to rate at Preferred-Plus because the underwriter will take a number of factors into conclusion such as age and high-risk activities. The best thing you can do is talk to your underwriter and get a better sense of what your policy is going to cover and what it is going to cost.
About Author:
Gord Richardson is a freelance writer at the best term life insurance website LifeCover.ca. To learn more about the difference between whole and term life insurance contact them today.