Q&A Topics

Thursday, April 7, 2011 9:08:48 AM

I’m considering buying a term life insurance policy and have a couple of concerns. My friends have told me that since I’m a little overweight, my life insurance could end up costing more. Is this true? Also, I've got a couple of traffic violations -- could this have an effect?

The short answers to your questions are yes and yes.

Understanding the underwriting process when a life insurer assesses the risks of selling coverage to you can and will save you money. Underwriting criteria do vary from company to company, so it's important to not omit any information. That way, you'll get the best rate and your insurance company will not contest the policy. Remember that "honesty is the best policy."

During the first two years of a life insurance policy, the policy can be contested by the insurance company and be canceled for any false statements. Policy details are available from the life insurer you're considering.

For the most part, underwriting for term life insurance (which provides death benefits for a certain period, or term) is straightforward; applicants have to fit into certain ranges to qualify for specific rate classes. Underwriters usually do not have the flexibility to make an exception, so if you are 1 pound over the limit on the height/weight chart, you could end up paying 10 percent or more a year.

The good news is that companies have varying charts, so even if you are not a fit with one company, you may be with another. Life insurance companies constantly reshuffle the parameters for various rate structures. A life insurance company can have three to four tiers just for non-smokers, ranging from best available to standard. Studies have shown that only 5 percent to 9 percent of applicants will qualify for a company’s “best available” rate; with some companies, that percentage is even lower.

Here are 10 basic criteria that life insurance companies use in writing policies for term life insurance:

• Tobacco use. Very few companies offer good rates for smokers. However, for occasional cigar smokers, the range of premiums among companies can be significant.

• Family history.

• Height and weight.

• Cholesterol

• Blood pressure.

• Medications. Certain medications will automatically trigger a higher rate.

• Medical conditions. Even with a serious condition such as cancer, heart disease or diabetes, you shouldn’t give up hope. There may be a life insurer company that will work with you.

• Driving record. Yes, a couple of DUI's can put you in the high-risk category, meaning costlier premiums. Even a traffic violation, like speeding, can change your classification and possibly make it more expensive to buy term life insurance.

• Hobbies such as rock climbing and scuba diving.

• Travel.