Younger and Thinner is the Name of the Game
Perfect health? Good cholesterol and blood pressure? Not on any medication? No family history of heart attack and stroke before the age of 65? No history of alcohol or drug abuse (including tobacco)? Play it safe? If you said yes to all of these questions, well frankly I hate you. However, Insurance companies “love” you. In fact they would consider you a “Preferred risk.” Almost sounds like a contradiction, right? Rather, you are rewarded that classification by insurance companies because you fall into the best possible level of all the categories that insurance companies look for. So what do you win? Typically the best possible rates an insurance company can offer. Congratulations. I still hate you.
For the rest of you, there are two other classification you may fall into: standard risk or substandard risk. Standard risk is an average risk, and you typically fit the insurer’s guidelines for policy insurance without special restrictions or additional rating (premium). You probably will live an average lifespan too.
For those of you who aren’t perfect or average, the third classification – substandard or rated risk – is for you. This designates people as below the insurer’s standard or average. You may be in poor health, have a dangerous occupation, or habits that could be dangerous. While 2 out of 3 of these characteristics may pump some adrenaline into you, you may be declined coverage outright or accepted for coverage but with an adjustment made to your premium or policy. Your premium would be higher than average or you may have less coverage than normal. Being an alligator wrestler doesn’t sound as appealing now does it?
Premium rates charged by insurance companies are calculated assuming an annual premium is paid. The interest that is earned on its investments would help in lowering the premium. Next time I’ll discuss premium, loading & reserves. But for now, I have a hungry gator to run away from.
Ready to find out which company and plan is right for you? Check out our Life Insurance page for a list of recommended providers.