Life insurance is so much more than a mortality check, it’s a way to guarantee the people who depend on your income will be protected. Before shopping for policies, it is helpful to know what insurance companies use when crafting a policy and to determine rates.
Insurance companies use the following classifications levels for their policyholders:
- Preferred plus: People in excellent health with clean family history and perfect height-weight ratio.
- Preferred: People with minor health issues that may be treatable with simple lifestyle choices.
- Standard Plus: People with okay health and family history with few issues.
- Standard: People with some health issues and a less-than-ideal height-weight ratio. This category is heavily influenced by family history and life expectancy.
- Substandard: People with difficult health histories and recent complications including heart attacks or strokes.
When creating your policy, a company looks for health indicators, family history, and your habits, such as smoking. What you may consider healthy may be vastly different from an underwriter considers healthy. For example, Smoking cigarettes can increase your rates. Individuals with no personal health or family history of health complications may lock in a great rate.
Rates also vary between men and women, but all the same, rates climb with age. Since companies base a life insurance policy rate on health, the best time to get life insurance is at a young age when you can afford a simple policy. Most insurers will let a policyholder add on terms to a policy as time goes on because they understand that a person’s needs may change in the future. However, it is never too late to set up a life insurance policy to help loved ones financially after a person’s passing.
As difficult as it may be, having a discussion about life insurance can give a person peace of mind. When you decide to discuss life insurance with a partner, child, or other, make sure the setting is quiet and comfortable. Next, consider the state of mind the other party is in. A discussion about life insurance can easily trigger anxiety or fear that someone is dying. Staying calm when discussing life insurance can have a contagious effect on the other party.