Life Insurance Rate Classes Explained: What They Mean and How to Move Up

When you apply for life insurance, you don’t just get approved or denied. You get placed into a rate class. That class determines your premium. And most people have no idea where they land or why.

In this episode, Lisa and Eric break down the rate class system from Preferred Plus all the way through substandard, what moves you up or down the ladder, and the thing most people don’t realize: your rate class is not permanent.

Your rate class is not where you’re stuck. It’s where you’re starting from.

Join us each week as we break down life insurance without the headaches, the lectures, or the awkward sales talk.

We’ve spent decades helping families find affordable coverage, even when life’s not picture-perfect. On meds? Carrying a few extra pounds? Managing a health condition or two? You’re not alone, and you’ve still got options.

Got a question and don’t feel like waiting for the next episode? Call Big Lou at 1-800-314-2977  or visit BigLouLife.com.

Straight talk. Real answers. Big Lou’s got you covered.

For educational purposes only. Coverage and eligibility vary.

Transcript

Eric 0:14

Can I tell you something that's bothered me for a long time about life insurance?

Lisa 0:17

Please.

Eric 0:18

I always assumed it was a yes or no thing. Either you qualify or you don't. I had no idea there were like grades.

Lisa 0:26

Rate classes.

Eric 0:27

Rate classes, which is basically a grading system for how much of a risk you are. And the grade determines what you pay.

Lisa 0:35

That's exactly right.

Eric 0:36

And I also didn't know that the grade can change.

Lisa 0:38

Most people don't, which means most people are either overpaying without realizing it, or undervaluing what a health improvement could do for their premium. Welcome back to the Big Lou podcast. I'm Lisa.

Eric 0:51

And I'm Eric. Apparently a work in progress, premium-wise.

Lisa 0:55

Today we're talking about rate classes, what the different tiers mean, what gets you placed where, and how you can move up. We touched on this back in episode three when we covered the ratings ladder. Today we're going deeper on what improvement actually looks like.

Eric 1:10

Because knowing the system means you can work it. A little.

Lisa 1:13

Within reason, yes.

Eric 1:15

Walk me through the rate class system. Like start at the top.

Lisa 1:18

At the top, you have preferred plus. Sometimes called super preferred or elite, depending on the carrier. This is the best rate available. It goes to applicants who are in excellent health, within ideal height and weight ranges, clean family history, no significant medications, clean driving record. Basically the picture of health at the time of application.

Eric 1:39

So not most people.

Lisa 1:41

Not most people, no. Below that is preferred. Still very good health, but maybe a well-controlled condition or slightly outside the ideal weight range. Then standard plus. Then standard. Each step down means a higher premium.

Eric 1:56

And below standard?

Lisa 1:57

Below standard, you get into substandard ratings, sometimes called table ratings. Carriers use a table system, usually table A through table P or a numerical equivalent. Each table step adds a percentage to the standard rate. So a table B might be 50% above standard. A table D might be double.

Eric 2:17

So you can still get coverage, you're just paying more for it.

Lisa 2:20

Right. A table rating is not a decline. It's the carrier saying, We'll cover you. Here's the adjusted price for your risk profile.

Eric 2:29

What are the things that most commonly push someone down from where they expect it to land?

Lisa 2:34

A few big ones. Weight relative to height is still one of the most common. Blood pressure that isn't well controlled. Diabetes with an A1C that is higher than carriers want to see. A history of certain cardiac events. Tobacco use is a big one. Smokers are often in their own separate rate category entirely, not just a lower standard class.

Eric 2:56

What about things that are in your history but not current? Like a cancer diagnosis five years ago.

Lisa 3:02

History matters, but time and outcome matter more. A cancer that was caught early, treated successfully, and has been in remission for several years looks very different than a recent diagnosis. Underwriters are looking at your trajectory, not just a snapshot.

Eric 3:17

So the story of where you're going is as important as where you've been.

Lisa 3:21

That's a really good way to put it.

Eric 3:22

Okay, so let's talk about moving up. Because you said the rate class is not permanent. How does that actually work?

Lisa 3:28

A few ways. The most common is reapplying after a meaningful health improvement. If someone lost significant weight, got their blood pressure under control, improved their A1C, those changes can qualify them for a better rate class than they received originally.

Eric 3:44

So you apply again as a different version of yourself?

Lisa 3:47

Essentially.

Eric 3:55

Is there a waiting period? Like can you just reapply right away?

Lisa 3:58

It depends on the condition and the carrier. Some improvements need time to demonstrate stability. A weight loss that happened three months ago is different from one that is held for two years. Underwriters want to see that changes are real and sustained.

Eric 4:13

What about quitting smoking?

Lisa 4:14

Quitting tobacco use has a specific timeline most carriers follow. Generally 12 months nicotine-free to qualify for non-smoker rates, though some carriers want two years. After that point, reapplying can result in a significantly lower premium. Here's what I want people to walk away with. Most people assume the rate they got when they first applied is just what life insurance costs for them. It's not. It's what it cost based on where they were at that moment. If your health has improved since then, if your numbers are better, if you made a change that stuck, that's worth revisiting. The carriers Big Lou works with see this kind of improvement every day. A quick review of where you stand now versus where you were rated might surprise you.

Eric 4:58

So it's worth checking, even if you already have a policy.

Lisa 5:00

Especially if you already have a policy, because you might be overpaying for coverage based on a version of yourself that no longer exists.

Eric 5:07

That's slightly philosophical, but also very practical.

Lisa 5:11

That is kind of our thing.

Eric 5:12

A better version of me, cheaper insurance. Future me is going to be insufferable about this.

Big Lou 5:19

If this episode got you thinking, don't wait around. Peace of mind's just a phone call away. At Big Lou, we're just like you. We're on meds too. Not perfect and still covered. You can be too. If you're ready and want the best rate without the runaround, call Big Lou. We'll answer your call and work to fit you into a term life policy that you can afford. For affordable term life, call 1-800-314-2977. That's 1-800-314-2977.