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Here’s What Each Life Insurance Rate Class Means

When you’re shopping for life insurance, your health is a key factor that will essentially determine how much you will pay for coverage. Insurance providers place applicants into different rate classes, or health classes, that help them quantify the level of risk they are taking.

Getting a life insurance quote online can be extremely helpful and convenient, but oftentimes, the rate class is a stumbling point that throws off the accuracy of the quote.

In this article, we’ll outline the different rate classes and provide other helpful information to help you understand how life insurance companies come to their numbers.

Quick Article Guide:

1. First, the Four Main Rate Classes
2. What if I Think I’ll Fall Below “Standard”?
3. How Do Life Insurance Companies Determine An Applicant’s Rate Class?
4. Why Work with an Independent Agent?

First, the Four Main Rate Classes

If you’re searching online or speaking with a life insurance agent, the most common rate classes you will see are:

Preferred Best (#1)

The highest or “best” rate class, Preferred Best is reserved for those who are in exceptionally good health (roughly the top 5-8 percent of the population). Preferred Best applicants are within 25 to 30 pounds of their ideal weight, have no serious health issues, and do not require any significant medication.

Real-Life “Preferred Best” Underwriting Guidelines (Company Undisclosed)

  • Blood Pressure limit, with or without medication: 136/86
  • Total Cholesterol, with or without medications: Above 120, or less than 300.
  • Cholesterol ratio must be 5.0 or less. To calculate this number, divide your total cholesterol number by your HDL number.
  • Family History: Family history is overlooked as long as there is no evidence of hereditary cancer.
  • Tobacco Use: No cigarettes in the last 3 years. One cigar per month is acceptable, but you must test negative for nicotine at the time of the exam.

Preferred (#2)

The next rate class down is Preferred, which is still a very good boat to be in. Preferred applicants are generally healthy, perhaps with some minor issues, such as being slightly overweight. A family history of cancer or heart disease could also bump a healthy applicant from Preferred Best to Preferred.

Most insurers will look past medications for blood pressure, thyroid, and cholesterol, assuming you are controlling the issue adequately. If you have been diagnosed with anxiety or depression but appear to be treating the issue effectively, it is possible for you to secure a Preferred rate.

Real-Life “Preferred” Underwriting Guidelines (Company Undisclosed)

  • Blood Pressure limit, with or without medication: 146/90
  • Total Cholesterol, with or without medications: Above 120, or less than 300.
  • Cholesterol ratio must be 5.5 or less.
  • Family History: No cardiovascular disease in either parent or sibling before age 60.
  • Tobacco Use: No cigarettes in the last 2 years. One cigar per month is acceptable, but you must test negative for nicotine at the time of the exam.

Standard Plus (#3)

Applicants in the Standard Plus category have notable health issues, but the problems aren’t putting them in imminent danger and are being controlled with medication. This includes diabetics, cancer survivors, and people who are up to 50 pounds overweight.

Standard Plus is the lowest rate category available to someone with well-controlled diabetes. With a few companies, Standard Plus is also available to daily cigar smokers, users of e-cigarettes, and users of chewing tobacco. In addition, cancer survivors can often qualify for Standard Plus rates five years after their final treatment.

Real-Life “Standard Plus” Underwriting Guidelines (Company Undisclosed)

  • Blood Pressure limit, with or without medication: 152/92
  • Total Cholesterol, with or without medication: Above 120, or less than 300.
  • Cholesterol ratio must be 7.0 or less.
  • Family History: Usually not considered at this rate class.
  • Tobacco Use: No cigarettes in the last year. Unlimited use of cigars, chewing tobacco, and electronic cigarettes. (This is not standard with all carriers; Contact JRC for a list of the companies that offer this option).

Standard (#4)

Standard rates reflect an average mortality risk compared to your age and health group. These rates are typically available to those more than 60 pounds overweight, with no serious health issues. This is the lowest rate category available to cancer survivors who are 2 or more years past the end of their last treatment. Standard rates are also common for someone with well-controlled diabetes (under 7.0 A1C).

  • Real-Life “Standard” Underwriting Guidelines (Company Undisclosed)
    Blood Pressure limit, with or without medication: 156/94
  • Total Cholesterol, with or without medication: Above 120, or less than 300.
  • Cholesterol must be 8.0 or less.
  • Family History: Not considered at this rate class.
  • Tobacco Use: No cigarettes in the last year. Unlimited use of cigars, chewing tobacco, and electronic cigarettes. (Again, this not standard across the board. JRC can tell you which carriers offer this option.)

One of the “wild card” items you might have noticed across all rate classes is tobacco use. Put simply, if you smoke, the insurance company is going to make you pay for it in your premium.

To highlight this aspect and provide visual reinforcement, we’ve created an infographic showing sample term life insurance rates at different “tobacco” and “non-tobacco” rate classes.

What if I Think I’ll Fall Below “Standard”?

Just because you have a serious health issue, doesn’t mean you can’t qualify for affordable life insurance coverage. In fact, there are many serious conditions that are surprisingly insurable, including obesity, diabetes, heart disease, and even cancer.
If you feel you may fall into a sub-standard category, having an independent life insurance agent shop the market is essential. Some providers offer more lenient rates for high-risk applicants with certain health conditions. Sub-standard risk life insurance rates usually aren’t available through online pricing tools, so it’s best to call us directly.

How Do Life Insurance Companies Determine An Applicant’s Rate Class?

There are actually many more rate classes than the four we’ve outlined. Underwriters use what’s called a “risk scale” of 12-16 categories. For them, it’s all about determining the risk that you will die, and they will have to pay out a claim. Essentially, they are looking at the overall risk of insuring someone for the number of years they’re asking to be insured for. This is why they consider family history in addition to your health. The risk class you are placed in will ultimately determine the cost of your policy.

Note that what you see online can be somewhat misleading, especially if you have serious health issues, because quote engines usually only display the top four risk categories.

Why Work with an Independent Agent?

The world of life insurance rate classes is highly complex. Each insurer has its own underwriting guidelines for each class, and some insurers prefer certain risks over others. For this reason, the best piece of advice we can offer is to call an independent agent like JRC. Big-box companies are generally unforgiving with their rate classes, and their rates are usually higher than smaller companies that spend less on advertising.

Take, for example, State Farm. You pretty much need to be able to outrun Usain Bolt, outswim Michael Phelps, and box out LeBron James to qualify for State Farm’s Preferred Best rate class. That’s obviously an exaggeration, but the point is that very few everyday people are in the type of health that State Farm considers to be Preferred Best.

Most companies will grant you Preferred Best rates if your cholesterol is under 300; State Farm wants you to be under 175. In the medical world, an adult with a blood pressure reading of 120/80 is considered to be in excellent health in that department. Most insurance companies accept 135/85 for Preferred Best rates; State Farm calls for 115/70. And if you have a family history of serious health issues, or a poor driving record, these could also bump you into a lower rate class.

Here are the actual underwriting guidelines for the Preferred Plus rate class from State Farm compared to Banner, an equally respected insurer that simply doesn’t have as big of a name because they don’t advertise as heavily. Both companies have a “Superior” financial rating from AM Best, and both companies’ life insurance clients are protected by the Central Guarantee Fund. Banner started as Legal and General in 1836. State Farm was founded in 1922—nearly a century later!

Next, let’s take a look at rates. Here are sample rates from State Farm, Banner, and Protective Life, for males and females ages 45-60 in good health. The rates are for a 20-year term life policy with a $500,000 death benefit. You might be inclined to think that cheaper rates signify inferior coverage, but remember that life insurance is heavily regulated. In these tables, the policies themselves are identical, and none of these companies have ever failed to pay a valid claim.

These are just three providers out of many. When you work with JRC, you are represented across more than 40 top-rated carriers! Let us help you qualify for a policy that protects your loved ones. You can contact us at 855-247-9555, or get a free quote online using the button below. If you are unsure about any of the information required for an online quote, don’t hesitate to call us. We’re here to help!

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