Death is a subject we never want to discuss! But, preparing for uncertainties like death requires wise choices regarding life insurance. Your family and prosperity might depend on it.
Much as insurance firms offer a helping hand at the sorrowful moments, they are still entities driven by profit. So, for them to stay afloat, they employ strategies that create a win-win scenario for both the firm and the beneficiaries.
Depending on your health status and lifestyle, life insurance companies present different classes to fit your needs. Therefore, you should have an understanding of the category you fit in to negotiate the best premium rates.
What is Life Insurance is a coverage that cushions your family in the event of death or sum paid at the lapse of a set period.
When the unfortunate happens, the amount helps the family pick up the pieces and get life moving again. The amount also helps clear pending mortgages or loans that were attached to life insurance.
Why You Need Life Insurance
For these reasons, you require life insurance:
- If you die when your children are minors, it helps them maintain the standard of living you set for them.
- When not heavily invested, it is a sort of inheritance for your children.
- It is security for loans and mortgages.
- The insurance is tax-exempt at the time of redemption.
Life Insurance Health Classes
When choosing life insurance, these 7 classes make your selection an easy task. Before resorting to any class, it is pertinent to consult your insurer to get the best deal.
Time to delve into the different classes.
This class is for someone with no reported cases of medical complications. To qualify for this bracket, no family member should have died of cancer or heart complication conditions.
The rigor for consideration is so high that only 5-10% of applicants qualify.
For eligibility, your blood pressure should not exceed 130/80. Additionally, cholesterol limits for applicants must not exceed 200, while the applicant must be tobacco-free for the past 5 years.
Preferred is the second tier of life insurance health class with unique features. They allow not more than one death in the family, which could be that of a sibling or parent.
With this rating, they allow applicants who quit tobacco use in the last 3 years. However, some firms have exemptions where they allow mild cigar smokers.
This class takes a more liberalized approach to the height-weight ratios as well as the cholesterol limits. They tag the cholesterol limits at 240 while the other considerations for preferred plus remain in place.
In this class, applicants are generally healthy except for minor health issues. Here they cap the cholesterol limits at 260.
On blood pressure readings, the maximum allowable is 145/90. Regarding Cholesterol/HDL eligibility, the ratio should be less than 7.
But with this category, they have tight rules on tobacco use. You shouldn’t have used tobacco in the last 3 years.
This is where a tobacco smoker needs to pay attention to their habits. The provisions for this category favor any smoker. However, different firms have skewed considerations regarding the use of cigars, cigarettes, and tobacco chewing.
In most cases, you shouldn’t have used tobacco in the past 12 months to fit into this category. They never look at family medical history, so high chances for many Americans to fit.
All other limits read high! For instance, the cholesterol limit stands at 280, while the cholesterol/HDL ratio is under 8. They consider a 150/92 blood pressure maximum within the past year.
Applicants for this category could have received or not received treatment within a year. Again they have exceptions to certain cancer cases.
If you are a tobacco smoker, this plan caters to your needs. As you know, smokers are considered high risk, so this class attracts higher premiums than the others.
Applicants in this category must fulfill all the requirements outlined. The insurer checks height-weight ratios, cholesterol limits, and blood pressure readings.
On death, a family member of the applicant should not have died from cancer or heart-related diseases before the age of 65-70.
As the name suggests, this category belongs to the daily smoker. Applicants to this category do not meet any guidelines set out for the preferred smoker. The risk ranks higher on this class, and so expects higher premiums.
Riskiest applicants qualify for the substandard category. These applicants suffer from complicated illnesses, sometimes terminal or chronic. In this case, insurance agents work out special plans for them. Premiums cost high in many instances, hitting an excess of 250% from the lowest class.
Factors that Determine the Life Insurance Health Class
Qualifying for specific classes of life insurance precedes a rigorous examination by the underwriter. You will notice that quotations vary from one insurance company to another, that all depends on the factors that they look at before classifying an applicant.
In the next segment, we explore the varied factors that determine the class of Life Insurance.
Height and Weight
Your height and weight determine your Body Mass Index (BMI). As a general rule, Insurers prefer lower weights. When planning to take life insurance, a bonus tip would be to work on your weight before making an application.
However, not all weight change spells good luck for an applicant. If you lose more than 20 pounds in 3 months, that would be alarming and raise questions from the insurer.
A weight gain is not beneficial either. Weight gain signifies a poor lifestyle, which correlates with bad health.
Knowledge Tip: According to the Center for Disease Control, BMI is equivalent to body weight divided by height in meter squared. BMIs less than 18.5 signify underweight while anything over 30 is obesity. The ideal BMI lies between 18.5 to 24.9. You can use this calculator to find out your BMI.
Family Medical History
Insurers judge applicants based on family medical history. Keep learning about the diseases that run through family genes. Cancer and diabetes are examples of illnesses that run down through generations.
Although applicants never have control over historical medical conditions, it ends up affecting their insurance premiums. Before visiting a life insurance provider, gather critical information on your family medical history to avoid disappointment.
Tip: Take life insurers in your earlier years since as time passes, the chances of family members getting sick increases. As that happens, it will affect the cost of a life insurance policy, so the earlier, the better.
Your work informs your ability to apply for medical insurance. Most employers offer life insurance, and it would not make sense to duplicate the insurance by applying for second insurance. That is unless your income supports it or you have a specific life goal to achieve through the insurance.
For those in self-employment, life insurance is inevitable. As you know, self-employment has lots of uncertainties, so for minimized risk of business loss, life insurance comes in handy.
Life Insurance companies take your driving history seriously. A reckless driver record increases the premiums paid. The widespread occurrence of driver misbehavior can lock you out of the best life insurance classes.
Safe driving with no incidences in the past 5 years qualifies you to the best life insurance plans. But any lousy record within the same period significantly reduces the life insurance class.
The same applies to participation in extreme sports. Things like car racing, aeronautics, and scuba diving attract extra premiums as the risk is higher.
Generally, traveling to safe countries doesn’t affect your life insurance class. However, visits to war-torn, or countries with political and civil conflicts significantly increase the premiums payable.
Drug and Substance Abuse
This is a significant hindrance to quality life insurance plans. Subsequently, users who indulge in alcohol and other drugs reduce their classification.
The general norm for reformed addicts to get considered is between 7-10 years. Otherwise, any recent record of drug abuse leads to a decline or substandard qualification.
Tobacco is also another drug that insurers take a keen interest in during application. Tobacco rates attract higher premiums, the same as cigar use. Detection of sensitive substances like cotinine blows the premiums out of the roof.
For smokeless tobacco, standard smoking rates apply, although a few insurance companies provide exceptions.
Your preference determines your classification for life insurance. Some applicants prefer short term plans while others choose long term covers. An honest discussion with your insurer helps you make the most valuable selection that suits your goals.
Determining the health class depends mainly on your lifestyle as well as the limits set by insurance companies. Most factors touching on your lifestyle calls for personal control, but some of them go beyond you.
What is more important is making comparisons between insurance companies to identify the best classification. Take note of critical considerations like height-weight ratios, nature of work, driving record, and your life goals.