How Life Insurance Rates Are Determined

April 24, 2018


One of the factors that determine your insurance rates, at least in part, is your risk class. The risk class is defined by your insurance’s own guidelines. The other factors that play a key role in determining your insurance rates are the length of the insurance cover as well as the policy amount.

Lower premiums go hand in hand with risk classes that are low-risk.

If you hope to get affordable life insurance, it will be determined by risk factors as well as your life expectancy.

Before determining your insurance rate, underwriters will evaluate your lifestyle and income as well as your medical history and your family’s. They will also take into consideration any occupations or hazardous recreational sports that you might be dealing with.

If you have family members that suffer from illness and are above the age of 60, it should not affect the premiums you make.

Classification of Life Insurance and Rates

You should not be surprised to find out that some insurance companies are more aggressive than others and will put you in a ‘preferred class’, that is to say that you will be paying lower premiums.

For instance, someone who suffers from high blood pressure and is taking medication for it, might find that one insurer puts them in the ‘preferred class’ while another insurer puts them in a ‘standard class’.

No matter your health status when you shop around for insurance quotes you will be pleasantly surprised to get very good insurance rates.

In general, life insurance classes use the classes listed below to classify the insured:

  • Substandard
  • Standard nicotine
  • Standard no nicotine
  • Preferred nicotine
  • Preferred no nicotine
  • Preferred plus no nicotine (sometimes called super preferred or preferred best)

By predicting which of the above mentioned class you are in you will be in a better position to receive an accurate life insurance quote. This is especially the case if you are shopping online.

It might be tempting to select the ‘preferred plus’ category for yourself when trying to get quotes however, do not stop looking for more quotes when you do not receive that rating.

Category Predictions

Only the best life insurance companies will make it a requirement for you to get a medical exam.

Insurance companies will want to know if you use nicotine. You need to note here that nicotine usage does not only mean cigarette smoking, but also nicotine patches, smokeless tobacco, nicotine gum and basically anything else that contains tobacco.

However, occasional cigarette smoking does not play a role. Say for instance, you only smoke 12 times a year.

Even though all insurance companies have their own rules for requirements for Preferred Class, No NIcotine, below are some predictors:

  • You have not smoked in the last five years
  • Your weight is proportionate to your height
  • Your immediate family has no record of internal cancer or cardiovascular disease before the age of 60
  • Your recent financial history shows no record of any recent bankruptcy


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