Factors that Affect Your Rate or Health Class
When you apply for life insurance, the carrier considers a host of factors
to determine how much your premium will be. Once these factors have been evaluated,
you are assigned a rate or health class. Carriers vary in terms of how they
rate different factors, but all use sophisticated techniques, specialists
and statistics to help them determine the level of risk you represent. The
basic question: How likely are you to die during the term you are covered?
It’s easy to understand that age and medical conditions figure in.
The younger you are and the better your health, the less likely you are to
die. But when it comes to assigning your actual rate class, what are the carriers
looking at?
Here are some of the specific factors.
Blood Pressure
Your blood pressure rating is an important risk factor to insurance companies.
If you have high blood pressure, your heart is working harder than normal,
putting you at risk for a variety of medical problems that are sometimes fatal.
Among the problems are heart attack, stroke, heart failure and kidney failure.
The symptoms of high blood pressure rarely show, which earned it the nickname
“the silent killer.”
Blood pressure tends to rise and fall throughout the day, and it’s
not unusual for it to rise when you are nervous. But if your readings are
consistently high, you might have pre-high blood pressure, or stage one or
stage two high blood pressure. When your blood pressure is measured, the high
number is called systolic and the lower number is called diastolic. For example,
if it reads 120 over 80 (this reading and lower is generally considered healthy)
the systolic number is 120 and the diastolic is 80.
Sometimes pre- or high blood pressure is caused by a temporary situation,
including stress, fatigue or a physical condition such as pregnancy.
Cholesterol Level/Ratio
Insurance companies consider your cholesterol level or ratio to be important
when determining risk. If you have high cholesterol, you are at increased
risk for stroke, coronary heart disease (which can lead to a heart attack)
and other adverse medical conditions.
It’s normal — and necessary — to have cholesterol in your
blood. Cholesterol plays a role in hormones, building cell membranes and other
body functions. Your body produces some cholesterol, while the remainder comes
from animal products, including eggs, shellfish, meat, dairy products and
from foods containing trans-fat.
Cholesterol problems can occur when there is too much in your blood. It can’t
dissolve and can clog the arteries, so it must be transported from the blood
into the cells by low-density lipoproteins (LDL cholesterol) or high-density
lipoproteins (HDL cholesterol). You’ve probably heard LDL referred to
as “bad” cholesterol, because too much of it can narrow your arteries,
among other things. It’s counterpart, HDL, is nicknamed “good”
cholesterol because, among other benefits, it transports cholesterol away
from the arteries.
In general, you are thought to be at a lower risk for heart attack and other
medical problems if your cholesterol is at a healthful level.
The symptoms for high cholesterol typically don’t show; you must get
a blood test to reveal your cholesterol level or ratio. If you suspect that
you might have high cholesterol, it is important that you find out from your
doctor.
Family Medical History
Your family’s medical history can influence what rate or health class
an insurance carrier will assign you.
Risk factors fall into two categories: modifiable and non-modifiable. A modifiable
risk factor is something that might be controlled by diet, exercise or medication.
A non-modifiable risk factor can include your family’s medical history.
For example, if there is a history of breast cancer or early heart disease
(heart disease that occurs before turning 60), this is a fact that you can’t
modify — it’s history. Being aware of these risk factors can,
however, help you to make dietary and lifestyle choices that promote greater
health.
Insurance carriers often balance the likelihood of your history by taking
into consideration when the medical problem occurred and who was affected.
For example, if your great-great uncle was the only one on your family tree
to have a stroke, it might not have the same impact as an immediate family
member having a stroke.
Obviously, your family’s medical history is not an ironclad map to
what your future holds, but is used as a guideline by insurance carriers to
assess risk.
Hazardous Activities
Do you bungee jump? Scuba dive? Skydive? These and other hazardous activities
can place you in a higher rate or health class, because they increase your
likelihood for injury or death. Some occupations bring a higher risk, like
flying helicopters or driving racecars.
In general, if you have an occupation with an element of risk or participate
in thrill-seeking hobbies, you might not qualify for a preferred rate and
will be placed in a higher rate class — even if you are healthy. It’s
easy to understand why; a cliff diver is more likely to die than a person
who takes scrapbook classes. The insurance carriers must assess how risky
your lifestyle is.
It’s important to be honest on your application. If you engage in these
kinds of activities or your work involves a risky element, make sure you disclose
this information. If you don’t and you die as a result of the activity,
the insurance company might not pay the claim if it can determine that your
lifestyle included this risk prior to obtaining insurance.
Mental Health/Depression
Insurance companies often consider mental health when assigning a rate or
health class. As part of their risk assessment, they might determine that
a person who has been diagnosed as depressed or is taking antidepressants
is at a higher risk for suicide. Most policies have a waiting period —
up to two years — for suicide, and are not required to pay claims that
are the result of suicide until then.
Some insurance companies will allow for “reactive depression,”
which can be a temporary situation due to a traumatic event. They are typically
more interested in whether or not the depression is a long-term condition.
Driving Record
Higher life insurance rates because of your driving habits? It’s possible,
if you have a tarnished driving record. Insurance companies want to know if
you are at risk when you hit the road. In general, some companies believe
that if you are cited with more than one moving violation in five years, your
driving habits are risky and could lead to an accident. Simply put, safe drivers
are considered less risky.
Travel
Insurance companies sometimes consider whether or not you travel to dangerous
locations. For example, if you frequently visit countries where there are
ongoing terrorist attacks, war zones or the threat of contracting a deadly
illness is higher than other places, the companies might determine that your
lifestyle holds greater risk than people who don’t visit these places.
Credit History
It might seem odd to answer questions about your credit history when applying
for life insurance, but to an insurance company, your credit history can indicate
risk. For starters, a shaky credit history or bankruptcy might show an increased
likelihood to forfeit paying the premiums. Insurance companies go to great
expense to perform the underwriting process, so they are interested in knowing
if you are likely to keep your policy and pay your premiums on time.
Getting the Right Policy at the Right Rate
Insurance carriers consider a host of factors to determine your rate class
(e.g., medical history, family history, tobacco usage, even recreational interests).
If you believe you’ve made significant improvements to your health or
lifestyle since you first applied for your insurance coverage, contact the
company you purchased your policy through to see if your policy premium can
be adjusted or reissued. For example, if you’ve quit smoking and have
remained tobacco free for a sustained period of time (usually a year or more),
you might be able to qualify for a life insurance rate class for non-smokers
and therefore be able to get a policy with a lower rate.
Note: This information is not intended to be used as an underwriting
guide for any life insurance company. The intent of this article is to provide
general information only. Each life insurance company has its own individual
underwriting guidelines that vary by company.
