What are life insurance classifications and ratings?

What determines a life insurance health classifications?

It is already an open book that health largely affects life insurance premiums. Hence, once you apply for an insurance policy, you have to get through a series of processes like a phone interview, medical examination, and the underwriting process. At the end of the process, the insurer will assign you a specific classification to determine your rates.

Furthermore, insurers will dig deeper into your lifestyle and health status to know which classification or life insurance table you would  fit in. Also, each insurer has its way or system to determine the weight of each factor and how it will affect your classification. That is why you will see different quotes for the same classification from different insurers.

Insurers, allow the underwriter to make some adjustments and look at some criteria known as “stretch criteria” when deciding for an applicant’s risk. It is an important step to offer some flexibility in giving classifications. This process is to stay competitive against other insurers who might offer better premium rates.

The following are common factors that might affect your classification:

Health Condition

An important part of the process is going through medical examinations and answering questions about current health conditions. Questions might require you to answer prescription medications you are taking or taken, existing medical issues, and treatments. The insurer might also need an attending physician’s statement or APS from your doctor. It is to know more about your health status and history.

Height and Weight Ratio

Insurers will examine your height and weight to find out if you fall in a specific range. It is through the use of BMI or Body Mass Index measurement. Therefore, it will help the insurer know if you are underweight, overweight, or obese based on CDC guidelines. You might get a higher insurance premium rate if you are under or over your healthy weight.

Moreover, insurers are not only interested in your current weight but also in your previous weight history. You might want to lose weight before applying for a policy, as it will help you get an affordable rate.

However, it is only applicable if you lose or gain 10 pounds within a year before your actual application. In this case, you might only acquire 50% of the weight change because insurers want stable and healthy weight changes. It is to ensure that you do not only lose or gain weight to get better rates. Additionally, you need to maintain a healthy weight even after getting approved.

Tobacco

Tobacco is not only bad for your health but may also harm your policy rate. Being a regular smoker is a major factor in getting a higher premium rate.

Also, the occasional use of tobacco, chewing, and juuling might also have a serious impact on your insurance premium. Using vape is also being regulated by insurers, but major life insurance providers do not offer non-smoker rates for vapers this year, 2021.

The following are ways on how tobacco smoking may affect your life insurance health risk classifications:

• Preferred: You will likely fall under this group if you did not smoke like occasional smokers and those who use smokeless tobacco.
• Standard smoker: It is still possible to get into the Standard classification if you choose to quit smoking at least for a year right before you apply for an insurance policy.

Quitting is one way to decrease your life premium rate over time. Therefore, the longer you stop smoking, the higher the possibility of lowering down your monthly premium. Think about the money that you can save as motivation to stop smoking.

Alcohol and Drug Abuse

Occasional drinking of alcoholic beverages will not harm your premium rate, but insurers will look at your drinking habit and possible abuse of drugs.

Some states approve the legal use of marijuana, but most major insurance providers still view cannabis as a risk when deciding for classification. Also, some insurers may classify cannabis users with similar rates to tobacco users. It is regardless of its legality.

However, there is still hope for cannabis users. There are insurers who provide marijuana users with competitive rates.

Family Health Background

You cannot choose your family, so this is something that you need to accept when applying for an insurance policy. Most insurers will ask you to disclose your family health history at the beginning of the application process.

It means that you need to give information about a relative who has been diagnosed, treated, or died from serious illnesses like cancer, diabetes, heart problems, or kidney diseases.

Family health history is a huge factor for almost all insurers in determining classification. In case you have a history of one of these serious illnesses, then it is a red flag for insurers. This information will be used against you, especially if there is a history of death within the family before 60.

Lifestyle

This factor is catch-all as it includes your overall lifestyle, such as your work and hobbies. In case you like risky actives like flying a plane or a professional wrestler, then there is a higher chance of premature death than someone who spends most of their time inside the comfort of their home. Unfortunately, it is a fact that you might end up paying higher premium rates.

A flat rate is being offered for this type of risk, and it may vary from one insurer to another. However, expect to pay at least 2 to 5 dollars a year for every $1,000 spends on coverage. It means that you might need to pay an additional $5,000 a year for a $1,000,000 policy.

Furthermore, driving history is also included in risky behavior. That is why insurers try to pull out a motor vehicle report to know your status. Therefore, if an insurer sees some DUIs or DWIs on your driving record, get ready to pay for a higher monthly premium.

Criminal Record

Misbehavior might not affect your chance of acquiring insurance or getting an affordable policy, but a felony might bring you to substandard classification. You might want to hold your application as long as you can to avoid paying higher premium rates.