How do ratings on a life insurance policy affect your premiums?
When somebody qualifies for an insurance policy they receive a rating. You may have heard of ratings such as preferred plus, preferred or standard. This rating depends on many factors but for the most part it is determined by the health and risk of the individual. If the individual has some pre-existing medical conditions this can lower their rating on their policy. This would raise the premium that they would pay per month on their policy. The insurance company is taking a greater risk on the insured so therefor the insured would have to pay more premium.
Most insurance companies have the following ratings:
Preferred Plus (or some may call it a preferred best)
Preferred or Preferred Tobacco
Standard Plus
Standard or Standard Tobacco
Ratings 1 - 10. Some companies do A - J.
Postpone to offer (usually so you can correct something)
Decline to offer
As you move down in the rating scale, your premium increases. So a preferred plus rated client will have a less expensive premium than a standard rated client. A standard rated client would have a less expensive premium than a Table 4 rated client.
What conditions affect my rating?
There are a lot of different variables that can affect a person’s rating. The biggest of all of them however is the insured’s actual health history. What medical conditions they currently have and what conditions they have had in the past. Yes, even though you have had some conditions in the past, this still could affect your rating. For example, a person who had cancer a few years ago and no longer has cancer is going to be rated differently than a person who has never had cancer. Even though the person has conquered and beaten cancer, their mortality has changed. Obviously the further back that you had the condition, the better.
There are other variables that insurance companies look at when rating your policy. Remember, they look at your overall risk. They look at your overall lifestyle to see if you have a greater risk on mortality. Examples of these other variables would be your driving record, you hobbies (bungee cord jumper, hang-glider, stunt-pilot etc.) or your family history.
Where do I go from here?
The first thing you need to do is speak with an agent. I know that sounds scary and it makes you feel obligated. This is not true! It is very important that you work with an agent when purchasing or investigating a life insurance or mortgage protection insurance policy. This will not cost you any more money and the agent can help you navigate through the multiple companies and which companies offer better premiums for your situation. You can read more about why it is important to have an agent here. An agent at Aultium Insurance Services knows these different companies and can help you to get the best rating and the best premium.
What NOT to do from here?
One of the biggest mistakes that I see people make when purchasing a life insurance policy is try to change their health completely before applying for life insurance. Sure, it is possible to drop a few pounds or do fix something minor. But don’t wait and try to become a preferred plus individual before applying. We have seen, first hand, people who wait and wait to get insurance so they can improve their health. This is very common with people who use nicotine products. They try and try to quit and never apply for a policy. Over time their health actually gets worse and now they are older. Their premiums are higher than they were in the first place. Now they are paying higher premiums for the same policy. Or even worse, they pass away unexpectedly having no life insurance at all. Did you know that if you qualify for a lower rating right now, some insurance companies will allow you to retest later to improve your rating? And if your health is worse, they will not lower your rating!! This could be possible for those who use nicotine products as well and then stop!!
All of these things are important to consider when choosing an insurance company. An agent at Aultium Insurance Services can help you decide when is the correct time time to apply for insurance and with what company. Please click on the link below for a short 10 minute consultation with an agent to know more about when the right time is for you!!