In several postings on this blog, one of the words we constantly use is ratings. What does it mean to be rated?
The majority of people who apply for life insurance and get approved are rated as standard risks. This simply means that the applicant is considered to have a normal mortality rate and therefore they are charged a premium that assumes they will live a normal life span.
When a candidate is “rated” on a policy, this means that for one reason or another, the insurer believes that they have a higher than normal chance of dying much sooner than a counterpart who is unrated or rated standard. This could be a result of dangerous activity, health or a hazardous occupation. The good news about ratings however is that they can be removed.
A sky diving instructor would be highly rated for having a [intlink id=”92″ type=”post”]hazardous occupation[/intlink], but if he or she quits teaching skydiving and starts to work as a cashier at a retail store they could apply to remove the rating. They no longer would be considered a sub-standard risk as the chance of dying an early death is less likely at the counter of a retail store. The result would be a decrease in premium costs.
An important thing to keep in mind is that while a rating can be removed, a rating cannot be applied to a policy after it has been bound and delivered. An applicant who works in a retail store at the time of policy issue, who then begins a career some time later as a sky diving instructor would not have a rating placed on his or her policy due to the change in profession. They would continue to pay the [intlink id=”9″ type=”post”]cheaper premiums[/intlink] even though they now work in a more dangerous job and are more likely to live a shorter life span.
Do you need life insurance or want to know if you would be rated on a life insurance application? Get in touch with me and I will guide you through the process of choosing the right product for your needs.