When a person applies for a Life Insurance policy, their insurance company examines the results of their physical examination, their family health history, and lifestyle to determine if they fit into one of their standard categories or classifications.
For example, different types of categories are:
· Preferred Select: This classification usually refers to the very healthy. In order to qualify for this level, you need to have a normal weight and height as well as no family factors that could lead to an early death. This category enjoys the lowest premiums and may also be called Preferred Elite or Preferred Plus.
· Standard Plus: These applicants are still in great health but a medical or lifestyle factor prevents them from qualifying for a Preferred Select. Being overweight, having high blood pressure or cholesterol issues could be the culprit.
· Standard: This is for everyone who is average when it comes to heath. They have a normal life expectancy and could have weight issues or a parent that died early.
· Preferred Smoker: If you are a smoker who would normally fall into the preferred select category, this is where you will fall. Smokers will always pay more for life insurance so be prepared for a higher premium.
· Standard Smoker: A smoker who would fall into the standard category if they didn't smoke will be placed in this category.
When the Life Insurance applicant does not fit into one of the standard rating categories due to a health issue, risky occupation, or an adventurous lifestyle (think skydivers, rock climbers etc.), they may end up with a table rating. Such records are categorized and stored in Premium Rate tables.
For information on how the risk factors affects the Insurance Underwriting of a Life Insurance applicant, see Insurance Underwriting Tables for Risk Analysis.