Insurance companies couldn’t offer financial protection if they didn’t somehow make a profit. They do so by weighing risks and adjusting the policies that they offer according to those risks. Highly skilled professionals perform risk assessment and turn the results into a rating, which the company then uses to offer a certain amount of protection at a certain price.
Obtaining a better rating (and, consequently, a better premium and more robust terms for life insurance) starts with health care and job safety. If your life insurance company is less likely to have to pay out quickly or often, they will be more inclined to accept a greater amount of risk covering you with one of their policies.
What Rate Classes Are Available?
Life insurance companies tend to use a four-tiered system for determining the rating of a potential policy buyer based on provided information:
- Preferred Best – Lowest price policy coverage reserved for healthy individuals with low-risk lifestyles
- Preferred – Low price policy coverage reserved for healthy individuals with moderately risky lifestyles or occasional recorded health problems
- Select – Slightly discounted policy coverage offered to healthy individuals with a moderate health history and medium-risk lifestyle
- Standard – Regularly priced policy coverage offered to individuals with average health who are exposed to an average amount of risk
Life insurance policy rates can also go below standard. Policies like these are often called rated life insurance policies. It’s a bit of a misnomer; most life insurance policies are rated, but only substandard policies, or those with high premiums given to high-risk individuals, are called rated policies.
How Do I Improve My Rating?
You cannot change your medical history, but you can lower your risk in the eyes of insurance adjusters by improving your current health and lowering your daily risk of injury and disease. Try the following as they apply to you:
- Quit smoking or chewing tobacco – Because the evidence of health risk associated with tobacco is so thorough, insurance companies tend to charge as much as an additional 50% for life insurance policies on men and women who smoke or chew.
- Lose unhealthy weight – Clinical obesity is a sign of poor habits that greatly increase the risk of cardiovascular disease and death. Life insurance companies use a combination of data to determine obesity, but a high BMI is one of the most influential factors.
- Fight medical conditions – At least, try fighting those that can be fought. Battle cancer, cardiovascular disease, high cholesterol, and depression with proven medical treatments, exercise, and a healthy diet.
- Drive more carefully – Keeping your driving record clean is indicative of the ability to make mature judgments and a respect for one’s own health. Low-risk individuals tend to be more careful drivers and are better at controlling their emotions on the highway.
- Change careers or retire – Some careers come with a decidedly higher risk of injury or death than others. Life insurance companies consider this risk as well when determining your rating, so it may be worth it to make a final career change or look at retirement.
Be careful of addictions as well, such as alcohol or narcotic abuse, even if such conditions have already been treated successfully. The longer you can stay sober and away from the hospital, the more likely your life insurance company is to give you a break on your premium.
More than anything, it’s important to remember that making immediate positive changes to your lifestyle can quickly affect your rating in the eyes of an insurance company. In many cases, you can receive the benefit of the doubt by filling out extra paperwork and submitting to further investigations that reveal your positive choices.
If you are looking for more information on life insurance click here, or leave a message to find out what your rating would be.