Our representatives field many different questions from customers each day, but one common theme tends to be the rating or risk classes that life insurance companies use to classify applicants. While a detailed review of rating class structures and their role in underwriting is probably not well suited for this blog, a brief summary of the basics should suffice.
Most life insurance companies use a basic hierarchy system; however, each company uses its own unique nomenclature, making it somewhat confusing for consumers. A common structure looks something like this:
- Preferred Plus (aka Super Preferred, Preferred Best, etc.)
- Standard Plus
- Substandard or Rated classes (usually called Table rated)
Naturally, premiums are driven off these rating classes. So Preferred Plus premium rates are lower than Preferred, which are lower than Standard Plus, and so on.
Our online quoting systems include functionality that helps to classify users within one of these classes to present a more accurate initial quote. By talking with applicants and reviewing applications, our representatives strive to submit all applications at the most appropriate rating classes, based on the information available. This is commonly referred to as field underwriting.
The important thing to remember is regardless of what rating class is quoted initially or written on the application, the insurance company is going to determine the most appropriate rating class through underwriting and then issue the policy at that class.
This works both ways. For example, if you submit an application at a Preferred rating class and you only qualify for Standard based on underwriting, the insurance company will give you the Standard rating class. However, if you qualify for Preferred Plus (better than applied for), you will get the Preferred Plus rate.