Underwriting Rate Classifications
Underwriting rate classifications is where an insurance company places you so that they know what to charge you as your premium. Everyone resides in a specific rate class. In order to place you within a rate class, an insurance company has to evaluate a lot of factors. They will look at what you do for a living, your health, and your lifestyle.
Once your rate class is determined, it will then determine what rate class you are in. Basically, you are placed in a classification that assesses your risk of dying. The premium is then one that matches that risk.
To assess this risk, there are a number of underwriting factors that come into play and those factors are what places a person into their particular classification. The system is a fair one and all life insurance companies use systems that are similar to one another. It is these classifications that can cause two 30 year old individuals to pay different premiums on the same term and coverage amount.
One 30 year old may have a small heart problem, while the other is completely healthy. This heart problem is going to result in a higher risk category. They will pay more.
Underwriting Factors
The most common underwriting factors used to assess your rate classification and determine your coverage amount are your height, weight, your personal health history, and the health history of your family. If you have a family health history that is riddled with heart disease, cancer, and other diseases, then this will have an influence upon your premium.
Also having an influence upon your premium is your hobbies, driving record, how risky your occupation is, if you travel internationally, and where you live. Cholesterol and blood pressure may also be underwriting factors. It must also be noted if cholesterol and blood pressure are being controlled with medications.
These underwriting factors are why you may have to have a health exam to determine the state of your health. The insurance company is contracted with a medical service that will most likely come to your home, take blood, your weight, and your height. This individual will go over medical history with you as well.
All of the information that is gathered is sent to the insurance company. Blood samples are sent to a lab and that information is then sent to the insurance company in order to complete the task of classification. Once a rate is established and you agree, underwriting takes place. Once the underwriting is complete an you place your signature on the required forms, you are then insured.
Rate Classes
There are three possible rate classes in most cases. Some insurance companies do have more than one rate class, which is entirely up to them to do because they do have their reasons behind adding these additional rate classes. The rate classes may also be called different names between different companies.
No matter the names of the rate classifications, they are to represent certain groups. For instance, one class is the highest rated because it consists of healthy individuals. The next class consists of those who are in relatively good health, but may need a little help with medications or their conditions are not that bad. The third class consists of those who are of substandard health. They are going to have to pay the highest premium.
When placed within specific underwriting rate classifications, you can find out from the insurance company why you were placed there. In some cases, you may be able to make changes to your lifestyle that will later result in a lower premium, which is why you want to ask the reasons behind the category you have been placed in.
