Life insurance health ratings refer to the classification of an individual’s health as it pertains to their eligibility for a life insurance policy and the premium rates they will be offered. Or to state it a different way, your life insurance health rating is what ultimately determines what your life insurance will cost. The better your rating, the lower your rates.
When considering what rate class you can qualify for, it’s important to understand that insurers will use a variety of factors, including medical history, age, and lifestyle habits, to determine an applicant’s health rating. And that these “factors” can vary from one insurance company to another.
You see, each company may have its own guidelines as to what makes one applicant a “preferred” applicant vs. what makes them a “standard” applicant.
Some insurance companies may choose to consider additional “lifestyle choices” in determining what one’s heath rating should be that other insurance companies don’t factor in. Examples of such may include types of tobacco use, travel destinations, employment choices, recreational marijuana use, etc…
For this reason, we wanted to create a guide which discusses some of the factors that will come into play when applying for a traditional term or whole life insurance policy and how those factors can determine what health class you qualify for, and thus what price you will pay.
Questions that will be covered in this article will include:
- What is a life insurance “health rating”?
- How do life insurance companies determine an applicant’s health class?
- Do all life insurance companies use the same criteria when determining one’s health class?
- How does a life insurance company determine one’s health class if they don’t require one to take a medical exam?
- Is there any way someone can improve their life insurance health class?
- What are some steps one can take to ensure they apply with the right life insurance company for them?
So, let’s dive right in!
What is a life insurance health rating?
As mentioned above, a life insurance health rating (of health class) is a classification that a life insurance company assigns to an applicant based on their overall health. Health ratings are used to determine the premium that an applicant will pay for a life insurance policy. The better an applicant’s health rating, the lower their premium is likely to be.
There are several categories of risk that you can fall under. As mentioned above, there are multiple factors insurance companies take into account when determining your risk.
The different health rating categories you can qualify for include:
- Preferred Best or Preferred Plus
- Standard Plus
- Substandard or Table Rated
There are also tobacco health ratings, such as
- Preferred Tobacco
- Standard Tobacco
- Substandard Tobacco
Substandard rankings usually range from A to P or 1 to 16 depending on how an individual life insurance carrier prefers to classify their applicants with each descending number or letter adding an approximate cost of 25% above and beyond the cost of a standard rate.
Why Does my Life Insurance Health Rating Matter?
Life insurance companies use your health rating to determine what health category you are in. Premiums are going to be lower for applicants who qualify for the best health rating, versus applicants who are considered standard (or lower).
To qualify for the best life insurance rates, you will want to try and get the best health rating possible. The insurance companies know that the healthier you are today, the longer you will live on average. And the longer you live, the less risk the insurance company takes on. And the less risk an insurance company takes insuring you, the lower your premium will be.
How do life insurance companies determine an applicant’s health class?
Life insurance companies use a variety of factors to determine an applicant’s health class, including their medical history, family medical history, lifestyle, and occupation. They may also request a medical examination to gather additional information about the applicant’s health.
The specific factors that a life insurance company considers can vary, but some common ones include:
- Medical history: The applicant’s medical records and any previous diagnoses or treatments can provide insight into their current and future health.
- Family medical history: The applicant’s family medical history can provide clues about the applicant’s potential for developing certain health conditions.
- Lifestyle: Factors such as an applicant’s diet, exercise habits, and substance use can impact their health.
- Occupation: Some occupations may be more hazardous or stressful than others, which can impact the applicant’s health.
- Driving record: Does the applicant have a history of speeding, DUIs, or DWIs?
- Prior felony or misdemeanor convictions: certain felonies and misdemeanors are looked at differently than others.
- Travel history or future travel plans: i.e. are you planning a trip to the Greek Islands or maybe to Afghanistan?
Based on this information, the life insurance company will assign the applicant to a health class. As shown above, health classes range from preferred plus (the best rating) to standard, and each class has its own set of premiums. Applicants who are in better health typically qualify for lower premiums.
Do all life insurance companies use the same criteria when determining one’s health class?
No, not all life insurance companies use the same criteria when determining an applicant’s health class. While most life insurance companies consider similar factors, such as medical history, family medical history, lifestyle, and occupation, the specific criteria and weighting of these factors can vary from company to company.
Some insurance companies may also view certain “risk factors” differently than another. For example, some insurance companies may be very hesitant about insurance someone who has been diagnosed with diabetes regardless of how well it is being controlled, while others may view the very same applicant as a Standard or Normal risk.
Other areas where we see significant differences between carries would include the treatment of:
- Certain weight class,
- Tobacco use,
- Marijuana use,
- Anxiety and depression.
How does a life insurance company determine one’s health class if they don’t require one to take a medical exam?
If a life insurance company does not require a medical examination, they will rely on the information provided on the application questionnaire and any other available records to determine the applicant’s health class.
This may include reviewing the applicant’s:
- Prescription data base records,
- DMV report,
- Criminal background check,
- Medical records (if requested),
As well as a standard Medical Information Bureau (MIB) report.
Medical Information Bureau (MIB):
The Medical Information Bureau (MIB) is a non-profit organization that maintains a database of medical and lifestyle information for life and health insurance companies. The MIB’s database contains records of medical conditions, treatments, and other health-related information that has been reported by member insurance companies.
When you apply for life or health insurance, the insurance company will typically check the MIB’s database as part of the underwriting process. The company will look for any information that may be relevant to your application, such as a history of medical conditions or treatments.
If the MIB has a record of a medical condition or treatment that you have not disclosed on your application, the insurance company may request additional information or clarification.
Is there any way someone can improve their life insurance health class?
There are a few ways that someone may be able to improve their life insurance health class, although the specific steps will depend on the factors that are affecting their health rating. Some potential options could include:
- Improving overall health: Making healthy lifestyle changes, such as exercising regularly, eating a healthy diet, and quitting smoking, can help improve an individual’s health and potentially their life insurance health class.
- Receiving treatment: If an individual has a medical condition that is affecting their health class, receiving treatment from a healthcare provider may help improve their health and potentially their health class.
- Updating their medical records: If an individual has received treatment for a medical condition and their health has improved, they may be able to provide updated medical records to the life insurance company to show their improved health.
- Delaying or postponing your application until such a time when your health rating might improve. For example, if you currently have 3 speeding tickets on your driving record, with one only weeks away from being expunged, you might want to consider waiting until that violation is no longer on your record before applying for coverage. Particularly if you already have a life insurance policy in place. For those without coverage, if might be better to simply apply for coverage, so that you can become insured, and then simply reapply when you can qualify for a better rate later on.
What are some steps one can take to ensure they apply with the right life insurance company for them?
If you are young and healthy, chances are you will qualify for the best life insurance health class available. But for the rest of us, what are some things we can do to get the best life insurance rates available?
Apply with the Right Company
It cannot be understated that the key to getting the best life insurance health ratings, and in turn, the best life insurance rates, is to apply with the right company from the start.
Some companies cater to certain health issues, lifestyle choices, and occupations.
Therefore, if you have a health issue, a dangerous hobby or a risky occupation, apply with the most accommodating insurance company out there.
Ace the Paramedical Exam
By knowing what life insurance medical exams test for and following our tips to passing the life insurance medical exam, you can put yourself in a great position to get the best life insurance rates.
Some things to consider leading up to your life insurance medical exam include:
- Fast for 12 hours prior to the exam
- Eat healthy foods that tend to help your blood work one week in advance
- Raw carrots
- High fiber foods
- Low Sodium Intake
- Avoid supplements
- Avoid Alcohol 24 hours prior
- Avoid excess sugar intake
- Avoid strenuous exercise 24 hours prior
- Wear light clothing
- Stand up tall when being measured for height
- Relax and lay off the coffee until after the exam
- (You don’t want your blood pressure to be elevated)
Stop the Risky Behavior
There are some pretty easy fixes to getting a better health rate class. For example, if you are a smoker, then quitting the habit can save you a ton of money.
Also, if you currently engage in a risky hobby, such as skydiving, be willing to give it up so that you are not hit with an increased premium due to your dangerous avocation.
Now, as you can see, there are a lot of variables that come into play when determining one’s health rating and/or rate than an individual will earn when applying for a traditional term or whole life insurance policy.
This is why, in our opinion, it’s so important to choose to work with an insurance broker who will have access to dozens of different insurance companies for you to choose from.
Because not only is it important for you to have options, its also important for your agent to have the flexibility to find the right insurance company for your unique situation.