What Does It Mean To Be Rated For Life Insurance?
A rating in insurance is determined from the underwriting process that assigns a risk rating to your policy. This is based on criteria, like medical background or other things they would deem to be an increased risk to the insurance company. An insurance rating adds to the cost of your insurance policy.
Let’s dive a little deeper.
What Are The Reasons You Can Get A Rating?
A rating in insurance often means that you are dealing with or have been dealing with some of the more serious health issues that are riskier for the insurance company to cover. Uncontrolled diabetes, alcohol & drug abuse, cancers, BMI (body mass index), family medical history, frequent international travel or hazardous activities and smoking are some of the most common reasons for life insurance health ratings.
Daredevil types of activities may see you with an extra rating as you may be putting your life at increased risk so therefore you may be a higher priced risk to insure. Having the occasional alcoholic drink with friends won’t do it but if you consume too much alcohol on a regular basis you will see an increased premium at time of policy approval… In the past you would get a higher rating or a decline from smoking cannabis but since it is now legal in Canada and if you use it lightly, it is likely that you will be treated as a smoker with a higher premium.
As far as family health history is concerned, if a parent or sibling has been diagnosed with conditions like diabetes, heart disease, heart attack, stroke or other hereditary conditions that will be indicators of an extra rating in insurance and raise your insurance costs. If a parent or sibling gets diagnosed after your policy is approved then it would not affect your premiums. However if you do not disclose information that you had before approval, this can make your claim disputable. Always be sure to be transparent.
Your health is important and insurance companies consider the status of your health when you apply for insurance. They will want to know any diagnosis and what medications you may be taking as well as your smoking status and body mass index. If you are considered overweight or even under weight this may contribute to an extra rating.
An Experior associate will find you the best rated life insurance policy to meet your unique needs and health challenges. Not everyone can qualify for life insurance so having a rating in insurance is not the worst possible outcome for anyone. In fact, all applicants should accept the offer from the insurance company. This rating means that you do not meet the normal acceptable risk tables. Many comparables can be given, like riding in an airplane has little risk, but jumping out of the plane in full flight and now there are two more levels of risk, with a parachute that works or a parachute that doesn’t. As you can tell, there is reason to charge different ratings.
Does An Insurance Rating Affect Your Premiums?
Yes it does. Ratings help the insurance company compare the risk vulnerability that they are taking on by insuring you. Depending on the level of risk the premium is then calculated accordingly using an insurance rating scale. Smokers for instance have higher risk of developing smoking related illnesses such as lung cancer so they would receive smoker rates for their life insurance policy premium which would be higher than if they didn’t smoke.
FAQ - What Factors Determine Your Life Insurance Premium?
The older you are the higher your rates will tend to be.
Men will typically pay more for life insurance than women.
Nicotine users, vapes and cigarettes will cause higher premiums.
Depending on your diagnosis, pre-existing conditions and family history could impact your premium. Severity, treatment type, and frequency can also be a factor.
A Policy that is for a higher coverage amount will be less per 1000 of coverage and could be more monthly. However there are certain band breaks. So sometimes you can get more for less. When it comes to the length of the policy and costs there can be times where it is less expensive with term policies to commit to a longer term. All of the criteria have a play in the overall costs.
What Are Your Options If You Have Been Rated?
Depending on the reason for your rating there may or may not be anything you can do about it. If you are a smoker, you can try quitting and then letting your insurance company know. After a period of 12 months as a non smoker your rating for your policy may be re-evaluated for a lower premium.
If you are overweight and then lose significant weight (35 lbs or more) you may be reconsidered after 1 year or more, if you maintain the lower weight. Lowering your blood pressure, dropping your cholesterol and sustaining this for a period of time can all lead to a lower premium if your premium was affected for the reason that has improved. Changes to your lifestyle are key and should your health improve then it is worth re-evaluating your insurance rating with your insurance agent.
If you find that your rating is more than you can comfortably afford you can consider lowering the coverage so that you can pay less each month. As well you could speak to one of our associates about a no medical life insurance plan. They do come with higher premiums and can come with a waiting period, but they may be a good option if you find that you are harder to insure.
An Experior Financial Group Associate can assist you in getting the best underwritten life insurance available. Our associates broker to over 26 life insurance companies in Canada so they can really shop the market to get you coverage even with a life insurance rating. We will work to find you the best priced life insurance possible.