What are life insurance underwriting classes?

Before we begin today, a quick refresher. Life insurance provides financial protection for your loved ones in the event of your death. A life insurance policy usually pays a guaranteed amount of money (a death benefit) that can assist your family at a time they would need it most.

You probably knew all that already, but we wanted to recap before addressing the question that this article is going to answer. Basically, when you apply for life insurance, you’re put into what’s called an underwriting class. Those classes are determined, in part, by your health, your occupation, your hobbies and your family’s history of illness. That said, they can seem a bit mysterious from the outside, so we wanted to shine a little light on what they are, how they work, and how they can affect you (and vice versa).

Phew. We’re glad that’s out of the way. Now, let’s commence with the light-shining, shall we?

It starts with medical underwriting

To determine a fair price for your policy, your insurance company will want to know about the current state of your health in a process known as medical underwriting. This means you’ll be asked questions about your age, weight, height, medical history, your lifestyle choices, and any other variables that might influence your future health. These questions are ultimately used to inform the underwriting process where the insurance company assesses the risk of providing you with coverage.

If your insurer determines that you are a low-risk prospect, your premiums will likely be lower than a high-risk prospect of the same age. For people with riskier health profiles, insurers may charge a higher monthly premium, exclude certain kinds of coverage, limit the amount of coverage offered, or even refuse to offer coverage at all.

Every insurer has its own underwriting process. The process of medical underwriting for a Haven Term policy, issued by our parent company MassMutual, looks like the following:

Submit an application

An application will be used as a starting point for your overall health. Once an application is submitted online, the information is analyzed in real-time and compared with third-party data sources. Often, you can get an instant decision on eligibility and, if approved, start your coverage that day.

Third-party data sources

Every insurance provider utilizes the same third-party data sources when conducting medical underwriting. This includes the Medical Information Bureau (MIB), prescription history, motor vehicle records and identity verification. These sources do a combination of verifying the information you reported and help the insurance company prevent fraud.Medical exam

In many cases, a medical exam is needed for medically underwritten coverage. Often, this can be done at your home, work or a facility — it’s up to your preference. This exam can include measurements for height, weight, and blood pressure; a life insurance blood test, and a urinalysis/drug test. At Haven Life, if a medical exam is needed once the application is submitted, we will help you schedule it. Pro tip: Consider booking a morning appointment since fasting before the exam is recommended. For more tips on preparing for the medical exam, refer to this helpful guide.

Attending physician statement

Depending on the results of your paramedical exam, your insurer may order an Attending Physician Statement in order to seek clarification about your medical condition. The Attending Physician Statement is a summary of your health condition, written from your doctor’s point of view. This can be useful for a number of reasons. Consider, for example, if you have high blood pressure only because you are taking a certain medication that causes hypertension as a side effect. You will want your insurance provider to know this.

Placing you in a life insurance underwriting class

This is the last step in the medical underwriting process. Your underwriting class will determine your underwriting rate class, what policy you are offered and at what price.

What is an underwriting class?

An underwriting class is a way of segmenting people into risk groups. People in a preferred rate class pay a lower premium than people in a standard class for the same amount of coverage, assuming non-health factors (e.g., age, gender, etc.) are the same. Why do insurance companies/underwriters use rate classes? Doing so allows insurers to have a more granular understanding of expected mortality for pricing and valuations, and thus to determine the appropriate premium amount based on risk and set the premium accordingly.

What are the different rate classes, specific to Haven Term?

Haven Term, the term insurance policy available through Haven Life, offers Standard and Preferred underwriting classes for both non-tobacco and tobacco users. There are additional classes called Table Ratings that may apply for people with more complex medical histories, which usually results in higher premium rates.

How long have insurers used the underwriting class system?

We’re so glad you asked! (And by “you” we mean “we,” but we digress.) Life insurers have historically been at the forefront of a lot of thinking around mortality because the business model relies on understanding those trends. Life insurers introduced tobacco rates in the 1980s because that was identified as one of the biggest stand-alone drivers of significant extra mortality. Then, blood testing was introduced in the late 1980s, in part due to the HIV epidemic. The availability of additional blood panels led to more comprehensive and nuanced underwriting classes.

Do all insurers use the same classes?

No! Most, if not all, use the same concepts of Standard and Preferred, non-tobacco and tobacco, and Table Ratings. But some insurers have more than two preferred classes, or they define current tobacco use differently. And every insurer uses slightly different underwriting guidelines to determine who falls into each class. Companies may have slightly different views on the severity of a certain medical condition, so they may be looser or tighter in how they assess the risk.

Thus, you might not even get the same class from one insurer to the next. So if you have a complicated medical history, it might be helpful to do a bit of comparison shopping and research before making a decision.

Life insurance for people with a life

You budget online. You invest online. Why not apply for your life insurance online?

What factors determine your class?

There are quite a few things that can impact your underwriting class and therefore your life insurance premium. So, you know what? This calls for a bulleted list!

Medical history
Prescription history
Family history
Life insurance medical exam lab results (in some cases).
Tobacco use
Alcohol use
Drug use
Driving history
Foreign travel
Participation in extreme hobbies like skydiving (turns out skydiving is pretty dangerous)

Sometimes, even when you think you’re the picture of perfect health – you never smoke, you eat right, you work out regularly (your abs have abs), you can end up in a non-preferred underwriting class. This could occur due to something in your Rx history or labs that you may not have been aware of. Even slightly elevated levels of blood pressure can have an impact, for example. Every case is different, but a good customer service team (which Haven Life has) will usually be able to provide you with additional information and insight into the factors that impacted your underwriting class.

Can you improve your underwriting class?

As a matter of fact, you can. In some cases, you have to wait for a period of time before you can be reconsidered for a better class. The ways to possibly improve an insurance rate are the same obvious things you can do to improve your health overall: Quit smoking, lose weight, keep your blood pressure and cholesterol under control, and visit your doctor on a regular basis. Things that are probably a good idea even if you’re not trying to influence your underwriting class.

Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children. This article is sponsored by Haven Life Insurance Agency. Opinions are his own.

What are life insurance underwriting classes, and why do they matter?