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Life Insurance Health Ratings: How They Affect Your Policy Premiums

Learn about the different life insurance health ratings that have an impact on your ability to qualify for coverage and the premiums that you end up paying.

If you’re currently researching life insurance policies or wish to do so in the future, you may be aware of the importance of your health exam or current health when applying as rates are inversely affected by your health.

But, how do insurance companies classify your health?

And, what exactly do “Preferred” and “Standard” health ratings mean?

We’ll break it down and give you some tips for getting the best life insurance health rating you can.

What Are Life Insurance Health Class Ratings?

When you apply for life insurance with any company, they’ll evaluate the risk you present.

The risk is the likelihood of premature death, which would require the company to pay the death benefit earlier in the policy term then they would like.

The reality is:

In order for an insurance company to provide life insurance policies profitably, they’ll need a reasonable assurance you’ll be around long enough to pay the premiums to make that profit possible.

There is of course no way to know absolutely how long any applicant will live, so it’s all based on risks across many policies.

To help them do that accurately, they assign each applicant a health class rating.

The rating will be based on your health as determined by the information you provide in your application, information available through third-party sources, like MIB (a medical database) and the Department of Motor Vehicles, and the results of a medical exam, if one is required.

To avoid the need to create a custom-priced policy, applicants are instead placed in health class ratings based on the health and lifestyle information provided.

Overall, an insurance company may have 15 or more health class ratings.

Which one they place you in will determine the premium you’ll pay for your policy.

How Do Health Ratings Affect My Premium?

Health classifications – which we’ll discuss in the next section – run in descending order.

Simply:

The higher your health rating, the lower your premium will be. Conversely, the lower your health rating, the higher your premium will be.

While there’s some standardization of ratings industrywide, each company is likely to have its own unique requirements for each rating.

For example, while one company may assign you a Standard Plus rating, another may classify you as Preferred with the same health profile. All things being equal, the policy with the second company will be the better choice, since the Preferred rating is likely to result in a lower premium.

Life Insurance Health Classifications

Life insurance companies put applicants into one of several different health classifications.

Each classification has specific requirements that relate to your overall health, your family health history, your weight, and your status as a smoker or non-smoker.

Other factors may apply depending on the insurance company.

The general classifications are as follows:

  • Preferred Plus – Requires excellent personal health, no family history of major illnesses or health conditions before age 60, and proper height/weight ratio.
  • Preferred – Requires very good health, and only minor health conditions.
  • Standard Plus – Requires good health, no family history of major illnesses or health conditions before age 60, and may include overweight (but not obese).
  • Standard – Requires generally good health, though there may be family health issues, and may also accept overweight (but not obese).
  • Substandard – See Life Insurance Table Ratings below.
  • Preferred Tobacco – For applicants who meet the requirements for a preferred classification, but who are also tobacco users.
  • Standard Tobacco – For applicants who qualify under standard classifications, but who are also tobacco users

Life Insurance Table Ratings

If you don’t fit into any of the general classifications above – preferred plus, preferred, standard plus or standard – you’ll be classified as substandard, and your premiums will be based on what are known as table ratings.

Table ratings simply mean:

You have below-average health.

Your premium will be determined based on tables specific to your condition.

In a typical life insurance company, there are 10 tables.

Each will require a premium that’s 25% higher than the standard classification.

The table below shows the premium adjustments for each table rating, which can be expressed either numerically or alphabetically, depending on the insurance company:

Life insurance table ratings

Table Rating Premium Increase Over Standard Classification
1 (or A) 25%
2 (or B) 50%
3 (or C) 75%
4 (or D) 100%
5 (or E) 125%
6 (or F) 150%
7 (or G) 175
8 (or H) 200%
9 (or I) 225%
10 (or J) 250%

As an example, let’s say you are given a table rating of 5 (or E).

If your premium would be $1,000 per year under a standard classification, it will instead be $2,250. That will reflect the $1,000 standard classification premium, plus 125%, or $1,250.

What Influences Life Insurance Health Class Ratings?

Earlier we provided a general summary of the requirements for health class ratings from Preferred Plus to Standard Tobacco, but the parameters are actually much more specific.

Exactly where your health class rating will fall will be determined by the following factors:

  • Your overall health, including previous illnesses or current conditions, as well as any required prescription medications you may be taking.
  • Height/weight ratio, including underweight, normal weight, overweight, and obese.
  • Your family’s health history, including your parents and siblings. Major illnesses and conditions will generally be considered only if they occurred in family members under age 60 or 70.
  • Behaviors, such as use of tobacco, illicit drugs or alcohol abuse.

Other factors, like your occupation or hobbies, may not impact your health rating, but can result in a higher premium added on top of your premium based on your health rating.

For example, roofers, pilots and firefighters are considered high-risk occupations, and may result in a higher premium. High risk hobbies, like skydiving and deep-sea diving, may have the same effect.

The Two Main Approaches to Health Ratings

Life insurance companies take two approaches to determining your health rating, the “Knockout” and “Debit/Credit” approaches.

The “Knockout” approach

It may be worth asking the insurance representative if this approach is used, because it’s the more restrictive of the two.

Basically, it works on the approach that if you have even a single risk factor outside the guidelines for a particular health rating, you’ll be knocked out of that classification.

For example, if you otherwise would qualify for Preferred Plus, but you were a smoker until three years ago, the company may knock you out of that classification. You will instead be considered Preferred, which is still good, but will result in a higher premium than would have otherwise been the case.

It's important to note:

Not all life insurance companies use this approach, so if you are knocked out of a higher classification you may want to consider applying with one that uses the Debit/Credit approach.

The “Debit/Credit” approach

This approach is both more flexible and accommodating. And as luck would have it, it’s becoming the more common of the two approaches.

The Debit/Credit approach assigns points for each health factor.

Rather than determining your health classification based on a single factor, it will instead be determined by the total number of points your health profile provides.

For example, let’s say you have high blood pressure that’s well-controlled with medication and has been for several years. If everything else in your health profile is excellent, you may still be classified as Preferred Plus.

The other advantage with this approach:

It gives the insurance underwriter more flexibility in determining your health classification.

They may even give you the benefit of a better rating but assign a flat fee extra premium for a specific condition that would otherwise knock you out of a higher rating.

How to Improve Your Life Insurance Health Rating

In most cases, the only way to improve your life insurance health rating is by taking steps to improve your health before making an application.

Examples include:

  • If you’re a smoker, join a smoking cessation program and apply two years after quitting.
  • If you’re overweight or obese, delay making application until you lose sufficient weight to drop down to the next weight class.
  • Adopt an overall healthier lifestyle, with a balanced diet and regular exercise. That won’t necessarily get you a better health rating, but it’s likely to have a positive effect on any health conditions you have.
  • If you have a history of alcohol abuse, join a treatment program and stay clean for at least two years.
  • If you have a poor driving record, you may need to avoid moving violations and at-fault accidents for at least three years.
  • Any health conditions, like diabetes, high blood pressure, or high cholesterol, should be well-managed. That may not get you a Preferred Plus or Preferred rating, but it will likely bump you up one or two health rating levels.

In some cases, it may be possible to improve your health rating with an existing policy.

For example, if you took your current policy when you were a smoker, you may be able to get your rating improved by participating in a smoking cessation program approved by the insurance company. They’ll likely impose a time limit – like two or three years – of being smoke-free before your health rating improvement takes place.

The same may be true if you are overweight or obese. By participating in a weight-loss program, you may be able to get your rating improved by losing 20 or 30 pounds.

Bottom Line

Life insurance health ratings are a universal feature in the life insurance industry.

They admittedly work against anyone who has a significant health condition or has one in their family history.

But, you may be able to improve your health rating by making certain lifestyle changes.

And one final piece of advice that may be critical if you do have health conditions is to work with an independent life insurance broker.

They may not offer the lowest premiums available, but since they work with many different insurance companies, they can place your policy with one that takes the most favorable view of whatever condition you have.

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