life insurance

How life insurance companies view you: Underwriting categories

When you’re applying for a life insurance policy, your premiums will be set in part by your “risk class,” which is defined by an insurer’s “underwriting guidelines.” (Your age and the length of policy term you want are other pricing factors.) These classes are determined by your current health and your family health history. “Family” here means your immediate family of mother, father and siblings. For example, an illness suffered by your aunt won’t impact your life insurance premiums.

Also, illnesses suffered by family members after age 60 shouldn’t affect your premiums.

Some life insurers are more “aggressive” in determining your risk class, and may put you in a more preferred class (meaning lower premiums) than another company would. For example, someone with a history of high blood pressure who’s on medication for it might land in a “preferred class” with one life insurer and a “standard class” with another. Shopping around multiple companies will really pay off, no matter what your health status.

Generally life insurance companies use these classes:

Super Preferred No Nicotine (sometimes called Preferred Plus)
Preferred No Nicotine

Preferred Nicotine
Standard No Nicotine
Standard Nicotine
Substandard

Who am I?

Predicting which class you probably fall into is important for receiving accurate life insurance quotes, especially when you’re shopping online. It may be tempting to select the “super preferred” class for yourself in order to see the lowest rates, but don’t set yourself up for disappointment if you don’t receive that rating. While every life insurance company has its own checklist for requirements for the above classes, here are some predictors:

Super Preferred No Nicotine

It’s possible to be in good health and still not qualify for Super Preferred. This category carries very stringent health qualifications and is reserved for folks who are expected to live the longest.

Here is the ideal candidate for the Super Preferred No Nicotine class:

• You are the ideal weight for your height, with a Body Mass Index of roughly 25 or less.
  
• You have an excellent health history with no serious or chronic illnesses or ailments.
  
• Your immediate family has no history of cardiovascular disease or internal cancer before the age of 60.
  
• You’ve never smoked, or if you have you’ve quit for at least five years.
  
• You don't participate in high-risk recreational or occupational activities such as hang gliding, rock climbing, motorized racing, off-shore drilling, mining, etc.
  
• Your recent financial standing is excellent with no bankruptcy in the last few years.
  
• You have a healthy LDL cholesterol level (about 220 or less) and LDL/HDL ratio (about 5.0 or less).
  
• You have good average blood pressure readings of about 140/85 or less.
  
• You have a very clean driving record with no more than one or two moving violations in the last three years and no DUIs or reckless-driving convictions in the last 5+ years.
  
• You’ve never required treatment for drug or alcohol abuse.

If you can’t meet the above requirements, don’t worry. Most folks can’t, and there are still plenty of good life insurance rates out there.

While life insurers each produce their own lists of “allowable” conditions, one typical life insurer that we looked at allows these conditions in the other classes:

Preferred No Nicotine

Elevated blood pressure of about 145/90 or less

LDL Cholesterol of 260 and LDL/HDL ratio of 5.5

Select No Nicotine

Elevated blood pressure of about 150/92 or less

LDL Cholesterol of 270 and LDL/HDL ratio of 6.5

Standard

Asthma

Depression

Elevated blood pressure of about 150/95 or less

LDL Cholesterol of 300 and LDL/HDL ratio of 7.9

Knowing that these factors affect your rates will reduce surprises in your life insurance shopping experience. Also, a good insurance agent will know which companies have better pricing for certain medical conditions, such as high blood pressure. If you still fall into a lower category than you anticipated, you can buy a policy and then ask the life insurance company to re-examine your rate if your health has improved for a few years.