With life insurance, many factors play a role in how much your premiums (the price you’re paying for the coverage) will be. Life insurance companies use ratings to help determine these factors and your premium. During the underwriting process, your insurance company will look into things like your medical history, lifestyle, current medical condition, and possibly more.
Not all insurance companies follow the same rating criteria and the risks may have different valuations depending on the underwriting guidelines used by a particular company.
Life Insurance Risk Categories
After this information has been gathered and processed, the underwriter will place you in a ratings category. These categories can be based on factors such as your:
- Age
- Occupation
- Family health history
- Overall health status
- Other items deemed necessary
Category rating names can differ between companies, but some general classifications can include:
- Preferred select
- Preferred
- Non-tobacco
- Preferred tobacco
- Standard tobacco
What Do These Risk Categories Mean?
Note that not all insurance companies follow the same rating criteria and the risks may have different valuations depending on the underwriting guidelines used by a particular company. However, you can be sure if you are a smoker, or a habitual user of products containing nicotine, your risk class and premium may be affected when you apply.
Let’s look at what each rating mean in general.
Preferred Select
- Applicant is in excellent health
- Applicant has average height-to-weight ratio
- Favorable family health history
P
referred
- Applicant has good health, but certain factors may indicate a slightly higher risk
Non-Tobacco
- Applicant has average health
- Applicant does not smoke or,
- Applicant smokes occasionally or participates in minimal tobacco use
Preferred Tobacco
- Applicant would have a preferred rating if he or she didn't use tobacco products
Standard Tobacco
- Applicant is a tobacco user who does not meet the preferred rating guidelines, but is in otherwise relatively good health.
- Could have risk factor such as high blood pressure or medical history is unfavorable
Many factors can determine your insurance premium – coverage amount, length of coverage, as well as risk ratings. As you can see, tobacco users may be offered higher premiums due to their risk factor. Insurance can be complex, so we always recommend you speak with a licensed insurance agent to help you navigate the buying process.