The old saying “You get what you pay for” is not easily applied in the quest for the best life plan. Although one can certainly overpay, it is essential to understand the first and maybe greatest reality of buying life insurance.
“You get what you qualify for”.
That’s right. Although getting a quote is a proper starting point you cannot simply buy the coverage; you must apply first. We are going to lay out the various ratings for health, what they mean to your monthly premium payment and insider information to help you get the best rate.
Health ratings are categorical. Final Expense has only three categories, Level, Modified and Graded. They may be named slightly different from company to company but most use these to title the categories. They are also by nicotine and non-nicotine use. All guaranteed issue final expense plans are Graded and special conditions for the payment of claims.
Since Final Expense life insurance requires no medical exam, an insured who may qualify for other than guaranteed coverage will be rated based on answers to questions concerning health predominantly, but also concerning financial and driving records. These last questions are common to all applications and applicants may be downgraded based negative history in those categories.
Term Life Insurance and all other forms of Permanent Life Insurance have significantly more categories to choose from. Initially we look at the relationship with the types of applications. They are:
• Non-Med – These are applications that do not require a medical exam, commonly referred to in the industry as a “paramed”. With a paramed, a licensed health professional (RN, Nurse Practitioner) conducts an exam that varies in complexity based on a number of factors, mainly your age.
These plans are increasing in popularity as the application is quicker and more convenient. There are fewer health categories at the top and bottom of the ratings scale. However, for many it can be a viable option as premiums are closing the gap with fully underwritten (paramed required) plans, particularly with Standard (Regular) rated persons.
• Fully Underwritten – These require medical exams that range in complexity mainly based on age. They tend to have the widest range of premium categories and in cases where you may be declined in a non-med application, these types may offer options. For those who are in the best of health (no negative heath history, good build for height and weight, no nicotine, no negative family health history and other considerations) this is still the best option as it will result in the best available rate given a positive test result.
A knowledgeable agent is indispensable in this regard as you may quickly discover based on questioning which option may best serve you.
What are the common health classes and the
• Preferred Plus (aka Super Preferred) – This risk class is the best health class obtainable for life insurance coverage. The health classification of Preferred Plus would apply if you have absolutely no negative health history including prescribed medications for health, are within guidelines for height and weight (build or Body Mass Index) and also have no family history resulting in death from certain conditions at certain ages.
As few as five percent of applicants qualify for Preferred Plus depending on the company. These rates are not available for nicotine users.
• Preferred – Preferred is only a slight step down in class. Commonly, you are in very good health and may have one or two minor health ailments. They may also be treated with medication to say control cholesterol or blood pressure. In addition, you are within guidelines for build that are only slightly relaxed from Preferred Plus and have no negative family history similarly to Preferred Plus.
This is the highest classification for nicotine users with rates higher than non-nicotine users obviously.
• Standard Plus – Better than Standard this would be awarded if have slightly elevated lab results in Fully Underwritten applications, have certain medication history, meet build guidelines for the category which, are slightly more relaxed from Preferred. You must also fall within the family health history guidelines that are company specific.
Nicotine users will have higher rates.
• Standard – This is a very common rating and is often referred to as “Standard” by the insurers, especially in case of older applicants. Depending on the company and other factors this rate can be given if you have had certain health issues, even serious ones as long as they have been under control or cured for an acceptable period of time. Guidelines for build (height and weight) in this category are the most relaxed and not meeting these generally results in a decline. Untimely death of an immediate family member from certain conditions would place you in this category most likely as well.
Nicotine users will have higher rates.
• Substandard – Also referred to in the industry as “Table Rated” this is very much a moving target has they have much influence not only by specific company guidelines, but also to the particular judgement of the underwriter assigned to the case. A variable “cocktail” of conditions, medications, previous surgeries or hospitalizations, history of drug/alcohol abuse, driving history, occupation, foreign travel and paramed lab test results would contribute to a final decision on rate.
Table ratings are either numbered from 1-8 or 1-10 or broken out in corresponding letters A-H or A-J. Higher the number the higher the rate. Some companies may include initial table ratings as Standard with the rate for Standard applying. Otherwise each number or letter generally equals a 25% increase in your rate. Also, certain flat fees may apply for say foreign travel to certain countries.
Find your niche. Insurance companies have preferences.
Whether you are a bellwether of good health, or have strong concerns regarding your health history, it is of great importance to apply with the insurer most likely to issue your policy and at the lowest rate. Contrary to popular belief, for those who have health concerns the “shotgun” approach to applying by submitting to numerous companies simply does not work.
The reasoning behind this is that companies and the underwriting staff are all in know and the records that are used (MIB medical, DMV, Credit) are universal sources that all companies rely on. Paramed exam results are usually valid for six months. Knowing where to place the application is the single most important part of the process. That means being objective and candid about your health and working with a knowledgeable independent agent.
Especially in high risk (Substandard) cases, assembling and presenting an effective argument to an underwriter, much like an attorney is key to the most positive outcome for you. Having an effective advocate to guide you at no risk or cost to you is what we do.