Health ratings between two similar people can be very different.
Thomas Jefferson once wrote, something something all men are created equal. Well, when it comes to life insurance, people go through the same underwriting process. But the results may be different, even for two people who seem similar. For example, let’s compare a 35-year-old cisgender man and a 35-year-old cisgender woman. Let’s say both engage in regular exercise, have decent-paying jobs, and actually shower instead of letting the soap and water just kind of slide off.
Now let’s imagine that our hypothetical cis-woman has a lower premium for life insurance than her male counterpart. Actually, we don’t really have to do much imagining here. A term life insurance, 35 year old male typically pays more in premiums than cis women. Why is that the case? Well, let's look at the different ways a life risk classification is determined.
- What is a health class rating in life insurance?
- What determines a health class rating?
- Why do women pay less in premiums?
- How the internet changed the process
What is a class rating in life insurance?
When it comes to our two hypothetical 35-year-olds, they may have different insurance health class ratings. These ratings are levels that insurers use to help determine your monthly costs. When it comes to a life insurance application, insurers look at the information provided regarding your health, lifestyle, etc., and place you in a risk category. The higher up you are in a rating, the less you’re likely to pay in premiums (depending on the insurer, of course).
There are four primary term life insurance health classifications that insurers use—though there could be more depending on which insurer you’re applying with.
This is typically the best rating you can get. Every insurer is different in how they do underwriting, but this life insurance rate class is for typically people who don’t smoke and generally have excellent personal health. That means people who regularly engage in exercise and have a clean medical history. Certain insurers may also look at your family’s medical history to ensure that there aren’t any instances of death due to heart disease or cancer.
This is usually the second-best health class. It’s generally for people who engage in decent amounts of exercise, but it has more leeway in the areas of weight, cholesterol, and blood pressure. Some insurers may overlook your family history for the Preferred class and others may not—it depends.
This life insurance classification is typically for non-smokers with fairly decent personal health, but who don’t quite make the Preferred class. For example, with Standard Plus, you might be able to be 50lbs over the preferred weight limit for your height.
Standard typically means you meet the average mortality risk for someone of your age/health group. So for 35yo cis men in the US, their average life expectancy at birth is around 76 years of age, compared to 35yo cis women whose life expectancy at birth is approx 81. This classification is typically for people over the preferred weight limit for their height who don’t have any other serious health issues.
There are also typically two life insurance for smokers classes, Preferred and Standard Smoker. They’re similar to the Preferred and Standard classes from above, but for people who smoke regularly. “Smoker” here refers to cigarettes, e-cigarettes, vapers, and marijuana users. A smoker in excellent health may still expect to pay 2-3x more in premiums than non-smokers.
What determines a class rating?
Life insurance rate classes are determined based on the information provided by the applicant. That information is prompted during the underwriting process. If you’re curious to learn more about underwriting, we’ve written about the process here. But underwriters use information about your health, hobbies, lifestyle, and family history to determine which life insurance rate class you belong in. They do this in comparison to general statistics to assess your individual “risk.”
Some term life insurance companies don’t require medical exams, but underwriters can still look at your existing medical records to know what class to put you in. They may look at any mental health diagnoses and any family medical history to help determine the level of premiums.
That being said, you can change habits to try and climb up from one class to the next for lower premiums. How this happens is up to the insurer, but some may require you take a medical exam to see if anything has changed.
Why do cis women pay less in premiums?
Why is life insurance for 35-year-old male applicants more expensive than their cis female counterparts? The short answer is that cis women tend to live longer than cis men. The average life expectancy at birth for a cis woman in the US is 81 years, compared to cis men’s 76 years. Added in the fact that cis men typically have more dangerous occupations with fatality rates 10x that of women, adding more risks to the insurers.
How the internet changed the process
Digital underwriting is part of the insurtech (insurance + tech) wave that’s changing how these processes work. We mentioned before that some insurers don’t require medical exams because they can access your digital medical records instead. But insurtech can do a lot more than look at files. Insurtech can accelerate the claims process and can help the medical underwriting process, among other things. And companies are already implementing this technology. Wysh, for example, is a 100% digital term life insurance provider that uses insurtech to determine where applicants best fit. Head on over to the Wysh app and begin building your wyshes today.