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How do Life Insurance Ratings Work?

Posted on April 15, 2008 at 7:54 pm 
Filed Under Financial Planning, Insurance Planning, Personal Insurance

A fantastic article at Canadian Business Online was posted entitled “Life Insurance: On The Edge”.

The author Dan Bortolotti tells two stories of individuals who applied for life insurance. One applicant was declined for life insurance because of evidence in his medical stating that he may have diabetes which was news to him, that he later confirmed was the case. The other applicant was told he would be heavily rated for life insurance based on his personal hobby of flying planes. The basic premise of the article is that understanding what life insurance companies look for is essential prior to applying for coverage.

Your Take-Away: According to the article, approximately 60% of applicants are provided with standard rates which should be the premium your Advisor or Broker is quoting you. On the flip side, almost 30% of applicants will actually be considered a preferred client and will pay a smaller premium then a standard policy. What’s scary though is that the remaining 10% of applicants will be outright denied coverage or given a rating based on their health.

The long and short is that if you do end up one of the unlucky few that is declined or rated when applying for life insurance, my recommendation is that you shop the market first, and then take your best offer. After all, the insurance company will look at issues such as your own personal health, your personal hobbies and your family history which means they are making a very educated decision. If you’re rated, it’s probably because you need the life insurance coverage more then the average person.

Until next time, have a Terrific Tuesday.

Chris & Elisseos

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3 Responses to “How do Life Insurance Ratings Work?”

  1. Financial Planning on The Finance World For News and Information Around The World On Finance » Blog Archive » How do Life Insurance Ratings Work? on April 16th, 2008 3:39 am

    […] How do Life Insurance Ratings Work? A fantastic article at Canadian Business Online was posted entitled “Life Insurance: On The Edge”. The author Dan Bartolotti tells two stories of individuals who applied for life insurance. One applicant was declined for life insurance because of evidence in his medical stating that he may have diabetes which was news to him, that he later confirmed was the case. The other applicant was told he would be heavily rated for life insurance based on his personal hobby of flying planes. The basic pr […]

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