Understanding Life Insurance Rating Classes
Life insurance rating classes are the different levels of insurance policies determined by your health conditions. Term life insurance rates are based on the rating class assigned. Examples of life insurance rating classes include Preferred Plus, Preferred, Standard Plus, Standard, and Substandard. Nonsmokers can pay as low as $25/month, while smokers could pay $98/month for Preferred Plus life insurance. Use our free comparison tool below to find quotes for your life insurance rating class.
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UPDATED: Oct 21, 2020
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- A rating class is a risk category assigned by life insurance companies during the life insurance underwriting guidelines.
- Life insurance rates are driven by the rating class assigned.
- Standard ratings classes will be something like Preferred Plus, Preferred, Standard Plus, Standard, and Substandard.
- The insurance company will determine the most appropriate rating class through underwriting.
Life insurance rating classes are different levels of life insurance policies. Your health condition determines the class rating insurance policy. The better your health condition, the less money you’ll pay life insurance.
When you start the journey to purchase a life insurance policy, you were very likely faced with the dilemma of which rating class to apply for, such as select preferred life insurance or substandard life insurance.
What do these mean, and where do you fit? Understanding term life insurance rating classes and what they mean to the life insurance company and, more importantly, your wallet is an essential part of feeling secure with your new policy.
If you want to search for insurance outside of life insurance rating classes, enter your ZIP code above.
What is a class rating insurance?
What is a class rating in life insurance? A rating class is a risk category assigned by life insurance companies during the life insurance underwriting guidelines.
According to the National Association of Insurance Commissioners (NAIC), life insurance is a financial cushion for family or close friends if a policyholder passes away unexpectedly or unexpectedly.
When you apply for a policy, the company will evaluate your application and place you into one of the several different risk categories depending on your circumstances, such as current health, medical history, and family history.
Your rating class is based on your mortality risk or risk of being susceptible to death.
Life insurance company actuaries determine the risks that will put you into a specific rating class.
Life insurance companies have several ways to determine rates, often called life insurance health classifications, life insurance risk class, or life insurance health classes.
Information used to determine a rating class includes current health, medical history, family history, and participation in dangerous activities.
There are many mathematical equations and statistics behind the mortality tables used to determine mortality risk.
And while you may have a family member who lived to be 100 while smoking, drinking, and eating bacon cheeseburgers for breakfast, actuaries consider this to be an anomaly.
Continue reading to learn more about life insurance rate classes (also known as life insurance underwriting classes).
What are the various rating classes?
Life insurance companies assign the following life insurance risk categories for rating classes and new policies.
- Preferred Plus (also known as Preferred Best, Super Preferred, Premier & Elite)
- Standard Plus (also known as Select)
- Sub-Standard (also known as Tables A-H)
Many people think the Preferred Plus life insurance rating class is considered the average rating class and feels somewhat offended if this is not the rating class they are assigned.
Watch this video to get a look into life insurance classifications.
Try a different company if you’re looking for a Preferred Plus underwriting class or rated insurance policy.
Super Preferred life insurance is the best Preferred life insurance health ratings, which available to nonsmokers.
Life insurance companies will tell you which insurance rate class you can obtain.
Standard vs. Preferred Life Insurance
In reality, the Standard rating class is given to people who have an average mortality risk. If you have an above-average mortality risk, you may be approved at the Standard Plus, Preferred, or even Preferred Plus rating classes.
As you may have guessed, your term life insurance policy’s price will go up as your mortality risk goes up.
Preferred Plus will be the least expensive, and Sub-Standard classes will be the most costly. If a rating class cannot be approved based on your mortality risk, the life insurance company will decline to issue it.
What rating class will I get?
It doesn’t matter which rating class you apply for; the company will approve you at the best rating class. It can be frustrating when you use it for Preferred Plus and are approved at Standard.
Life insurance preferred rating is assigned if you have good health, have an ideal weight to height ratio, and have a good health history.
On the flip side, you would feel pretty good if you apply for Standard and are approved at Preferred Plus—one of the best class insurance policies. Don’t worry too much about what rating class.
The approved rating class that the life insurance company gives at the end of the application process matters.
While you may not control some aspects of your mortality risk (family history), you can control the life insurance company you choose to apply.
An experienced agent can help you select the best company for your specific circumstances because it is possible to get life insurance with a medical condition.
Have you ever been given a term life insurance rating class you did not expect? Let us know about it!
Our representatives field many different customer questions 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 summary of the basics should suffice.
Let’s examine the class structures and how much they would cost per month and per year.
|Life Insurance Ratings Classes||Average Monthly LIfe Insurance Rates||Average Annual Life Insurance Rates|
|Preferred Plus / Preferred Tobacco||$97.67||$1,139.41|
|Standard Plus / Standard Tobacco||$129.72||$1,512.99|
|Standard Tobacco, Table 2||$191.56||$2,234.06|
|Standard Tobacco, Table 3||$222.03||$2,589.32|
|Standard Tobacco, Table 4||$253.52||$2,956.44|
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Smokers will pay hundreds more for life insurance because they’re more at risk of terminal illnesses. Each classification rate depends on the severity of a policyholder’s condition.
According to the Centers for Disease Control (CDC), more than 480,000 people die per year from conditions that come from smoking.
Most life insurance companies use a basic hierarchy system; however, each company uses its unique terminology, making it somewhat confusing for consumers. A standard 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. Preferred life insurance rates are lower than Preferred, which are lower than Standard Plus, and so on.
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How Insurance Companies Determine Rating Class
Our online quoting systems include functionality that helps 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 that regardless of what rating class is quoted initially or written on the application, the insurance company will 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 only qualify for Standard based on underwriting, the insurance company will give you the Standard rating class.
However, if you are eligible for Preferred Plus (better than applied for), you will get the Preferred Plus rate.
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Frequently Asked Questions: Life Insurance Rating Classes
Let’s recap what you’ve learned in this guide by answering a few frequently asked questions. These questions appear on search engines across the internet.
Also, we’ll provide the information we may have missed in the sections above.
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#1. What are the various classes of life insurance risk?
The various classes are Preferred Plus, Preferred, Standard Plus, Standard, and Substandard.
#2. What does it mean to be rated for life insurance?
Rated is the status of your life insurance based on your health or risk category.
#3. How do I find my preferred life insurance rate?
Once you get your policy, check your life insurance billing statement and see how much your balance is for the month.
#4. What is the best age to buy life insurance?
The best time to get a life insurance policy is in your 20s.
#5. Who needs life insurance the most?
Anyone who earns the most money in the household should get a life insurance policy. Stay-at-home retirees, people with children, and individuals who have possible terminal conditions will need life insurance the most, also.
#6. What does preferred plus mean in life insurance?
It means the policyholder is likely a healthy and younger person. The rates are cheaper.
#7. What is Class D life insurance?
Class D life insurance is your life insurance rate plus 100 percent of your approved class rating.
#8. Who is the best-preferred life insurance company?
Prudential and State Farm are the best companies overall for life insurance.