Typical Rating Categories
Life insurance policy underwriting is custom-tailored to your particular circumstances and the underwriter places you into one of the following categories based on your expected mortality.
Ultra Preferred Non-tobacco
Typically for the best risks with no family history and no history of tobacco use.
Select Preferred Non-tobacco
Typically for very healthy individuals with some negative issue such as weight or recent tobacco use or family history.
Preferred Non-tobacco
Typically for generally health individuals who may have quit smoking in the past year or two, or have some other combination of issues.
Standard Non-tobacco
Considered the standard rate for mortality assumptions, this rate is where most individuals are classified. Commonly, there is cholesterol, weight, or other mild issues that the underwriter has identified.
Rated Table A or 1
This is a sub-standard rating which carries a premium of 125% of the Standard Rate. It is used for applicants with mild health impairments.
Rated Table B or 2
This sub-standard rating is 150% of Std.
Rated Table C or 3
This sub-standard rating is 175% of Std.
Rated Table D or 4
This sub-standard rating is 200% of Std.
These rating categories continue up the alphabet and most carriers can go up to 5 or 6 times the standard premium. All insurance companies are required by state insurance commissioners to file their policy and rate structures with the state insurance departments in the states that they want to sell policies in. Therefore, the rate for each rating category is filed in every state and the company's primary flexibility is to place you into one of the categories. Insurance companies can also charge a "flat extra" typically expressed as an extra amount of premium per thousand dollars of death benefit. These flat extra premiums can be added for varying periods of time to compensate for perceived added risk.
Individuals with a history of health problems can often qualify for life insurance, even when they think they cannot. People with active health issues who are under treatment will typically be declined or postponed, but those individuals with successful treatments and good outcomes can usually find coverage.
