You know the rates I’m talking about. You see them on TV, in magazines and on the internet. Rates so low that they make even the most seasoned, die hard, disliker of life insurance consider running right out and getting some. They’ve been called Superman rates. Life insurance agents who don’t sell for those companies claim that those rates are the bait in bait and switch.
The actual rate class, depending on the company, might be called preferred plus, preferred best, select preferred, or my favorite………….SUPER PREFERRED!!!!! Whatever they call it, needless to say, you have to be healthy to be approved at that rate. And that doesn’t necessarily mean healthy in your way of defining healthy, but rather healthy as defined by the company’s underwriting guidelines.
I’ll get into some of those guidelines in a minute, but I want to dispel with one of the myths about the best rates available. A rumor, started no doubt by someone who didn’t qualify for the best rates (I used to, but don’t anymore), is that companies will look for some way to keep you out of that rate class. They might even make something up just to disqualify you and make you pay more. Nothing could be further from the truth. Hundreds of my clients, the oldest being 81, were approved at the best rates available. None of them admitted to being Superman (or woman), but they did all have one thing in common. Every part of their exam, from their height and weight, their blood pressure, their cholesterol, blood sugar, liver functions, protein levels, family history, and on and on, were all within the guidelines.
Companies set these guidelines based to the best of their ability based on the study of the mortality experience for people who are and aren’t within the guidelines. The further out of the guidelines you are, the higher the rate you will pay. Is it fair? I think it is although I have certainly questioned my fair share of underwriting decisions. But, the line has to be drawn somewhere and if the underwriting criteria and associated rates are going to have any integrity, they have to be followed somewhat diligently.
I’ll just touch on a few real life guidelines and a few cases where people were so close they could see super preferred, but they didn’t get it. Many of you who have life insurance policies more than two years old might say that the companies aren’t this fussy. They weren’t two years ago. They are now. I will explain why that happened in a future post.
Now keep in mind that there is generally about 20%-30% difference between the best rates and the second best rates a company offers. So, when you don’t qualify with Superman, it hurts a bit.
One company guideline allows a total cholesterol of 220 and a cholesterol ratio (total cholesterol/hdl) of 5.0. I have had clients not allowed the best rate with a total cholesterol of 222 and another with a cholesterol ratio of 5.1. The beauty of working with an independent agent is that they can, if the company digs in their heels about those kind of results, move the business to a more flexible company or one with guidelines that fit the situation.
Bottom line. The rates are available. Working with an independent agent will give you the best possible chance of acquiring those rates. If you don’t get the best rates, like me, don’t let your ego get in the way of doing the right thing and buying life insurance.
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.