Judgment day: What's your life insurance classification?

By Rebecca Theim on June 29th, 2010
Life Insurance

When assessing an applicant for a life insurance policy, life insurance rates for everyone from the most devoted health-and-fitness nut to the cigarette-puffing, beer-guzzling couch potato rise or fall according to an individual's "risk class." Life insurance underwriters use risk classes to determine longevity, and the likelihood that the insurance company may have to pay a claim. A number of factors are used to determine your "risk class" including:

  • Smoker or non-smoker
  • Blood pressure, cholesterol and triglyceride levels
  • Weight and height
  • Income and lifestyle
  • Medical history and overall health
  • Family's medical history
  • Hazardous professions and hobbies

Once this information is reviewed, insurance companies determine an applicant's rate classification, which generally includes:

  • Preferred Plus No Nicotine (also known as "Preferred Best" or "Super Preferred")
  • Preferred No Nicotine
  • Preferred Nicotine
  • Standard No Nicotine
  • Standard Nicotine
  • Substandard

The Preferred and Preferred Plus classifications offer the most attractive rates, while Standard Nicotine and Substandard categories sets an applicant back the most.

However, life insurance applicants shouldn't assume that they must have perfect health to secure reasonably priced life insurance, says Dr. Robert Pokorski, chief medical strategist for The Hartford Life Insurance Companies. "It's important for people to realize that you don't have to be Superman or Superwoman to qualify for very attractive life insurance rates," Pokorski said.

Coronary health among most critical

Heart disease is the leading killer in the United States, taking the lives of more than 630,000 Americans annually, according to the Centers for Disease Control and Prevention (CDC). For that reason, "all insurance companies are interested in understanding a person's risk for coronary disease," Pokorski says. "It's a risk that spans a tremendous spectrum."

Major determinants in a person's likelihood of developing heart disease, Pokorski said, include:

  • Smoking habits
  • Blood pressure and cholesterol levels

Other major factors

Applicants' height and weight may also figure into heart disease risk, Pokorski said. "In the United States, we have a bit of a weight problem, but we want to sell insurance to as many people as we can," he adds. "We have set our criteria as liberally as possible, so people who have weight problems can apply."

Blood pressure is another important risk factor, and insurance companies have different cut-off points depending on people's age, because blood pressure tends to rise naturally as people get older, Pokorski said.

Insurance companies also review an applicant's general health and family history for evidence of hereditary conditions that could affect longevity, Pokorski says.

As you age, many of these factors become less important. "Once you're an older person, these criteria aren't as predictive as it was when you were younger," he adds.

What it takes for you to get the best rates

According to Pokorski, The Hartford's most-preferred classification, Preferred Plus, generally requires that an applicant:

  • Be a non-smoker
  • Have healthy cholesterol and blood pressure levels and not need medication to maintain those levels
  • Have a relatively favorable body mass index (the relationship between heigh and weight), although this "can be overweight by most people's standards"
  • Have no history of early heart disease in the family

Applicants qualifying for the Preferred classification may meet the Preferred Plus requirements except that they may require medication to control cholesterol or blood pressure levels and may have a family history of early heart disease.

Those who fall into the Standard classification category may have higher blood pressure or cholesterol and an unfavorable family medical history, but are non-smokers, Pokorski says.

Another consideration is if an applicant ever smoked, but quit. "If you quit, how long ago is important, because those risks continue for some time," Pokorski says. "They'll be different for someone who quit last week, last year or 10 years ago."

Smokers pay more

Because of the universally ill effects smoking has on health and life span, applicants who smoke almost always pay higher rates than non-smokers, Pokorski says. But insurance companies, including The Hartford, offer Preferred Smoker rates for applicants who smoke less than a pack a day, but have clean bills of health related to other risk factors.

Applicants who fall into the Standard Smoker classification are those who smoke any amount per day (heavy smokers are defined as individuals who smoke more than one pack per day), but do not have any other health problems that put them at increased risk for death, he adds.

Other factors insurance companies consider

When setting life insurance rate classifications, insurance companies also look at more general lifestyle criteria, including whether applicants drink alcohol and if so, how much.

Because automobile accidents are a leading cause of accidental death in the United States, an applicant's driving record is reviewed, including the number of moving violations and/or driving under the influence (DUI) citations in recent years. Someone who qualifies for a top-tier rate generally has no more than one or two moving violations in the past three years and no DUIs or reckless driving convictions in the last five or more years.

If applicants travel to war-torn or terrorist-plagued countries, work in off-shore drilling or mining, or participate in dangerous recreational pursuits such as hang gliding, rock climbing, cave diving or motorized racing, they should expect to pay higher rates.

Although your health does play a significant role in your rating classification, other factors are taken into consideration by life insurance companies as well. Your lifestyle, hobbies, and travel plan can also affect your life insurance rates. You may be in great health, but leading a dangerous lifestyle may bump you into a less desirable rate class.

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