The cost of a life insurance policy is determined by one’s life expectancy and any voluntary – or involuntary – risks that may shorten that life expectancy. When applying for life insurance you’ll likely be expected to submit the following information to get the best possible rates.
- Detailed medical history of yourself and your immediate family members.
- A medical exam with blood and urine samples, electrocardiogram (EKG), chest X-ray, and oral fluid samples to screen for drug and tobacco use.
- Completed questionnaire regarding your current health and lifestyle choices. This may include questions about the type you have, personal habits (e.g., smoking, drinking, drug use) and any hazardous avocations or hobbies (e.g., hang-gliding).
All of this information will be used to determine your liability to the insurance company and how much they’re willing to cover.
What Are Underwriters Looking For?
Underwriting is the practice of assessing the amount of risk a policyholder brings to the table when they apply for insurance. Underwriters take in a number of factors into consideration when determining premium rates for a potential policyholder. This includes height, weight, date of birth, current health, medical and family history, occupation, hobbies, lifestyle habits and driving record.
Once the underwriting process is complete, the price is then subject to your predicted life expectancy, the face amount and the number of years the policy will be in force says Tony Franks, a financial planner for MetLife.
Underwriters will also evaluate your medical history to determine which premium category you will fall into. For example, Genworth Financial issues policies in the following categories:
- Preferred best, no nicotine use
- Preferred no nicotine use
- Select no nicotine use
- Standard plus no nicotine use
- Preferred nicotine use
- Standard plus nicotine use
- Standard nicotine use
Keep in mind that rate categories vary by company.
For example: Preferred best, no nicotine use (This is the best rate available)
Nicotine use: Criteria for this rate would include no use of nicotine or nicotine products in at least 5 years. Cigar use is acceptable if you have smoked 12 cigars or less per year and test negative for nicotine.
There are other factors that may affect your life insurance rates, such as:
Other Factors That May Affect Your Life Insurance Rates
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How Insurance Companies Rate Substandard Risks
Insurance companies use credit history to determine your insurance score. A good credit score enhances your insurance score and in return, you will receive a better rate class.
This determines diseases, disorders or activities that will affect life expectancy.
This fact checks for cardiovascular disease or cancer (basal cell carcinoma is an exception) in parents or siblings before age 60.
In order to get a low rate, cholesterol should be at 240 maximum. Your CHOL/HDL ratio must not exceed 5.0.
Do you have current or history of high blood pressure?
You should have no DWI, DUI, reckless driving, revoked license or suspension of license in the last five years.
For low rates, there should be no history of alcoholism or substance abuse.
To get covered, you will get a flat extra rate or exclusion rider if you are a pilot.
Hazardous Occupation or Avocation:
There is coverage available with a flat extra rate.