What is Special Risk Life Insurance?
Special risk life insurance is a term used in the life insurance industry to describe an individual that may have risk factors that are unique or special and do not coincide with a typical standard risk profile when going thru the screening or underwriting process with an insurance company.
What determines a special risk?
Typically with special risk life insurance applicants, we are talking about factors such as past or current medical history, past or current medications, hospitalizations, age or tobacco use. Medical history such as diabetes, heart disease, multiple sclerosis, liver disease, post cancers are some of the common conditions characterized as special risk.
Any of these pre-existing conditions may warrant an insurance carrier charging extra premium.
There are other things other than the health of the insured that could determine if an insured is a special risk. These can include occupations like a coal miner or fireman.
Activities such as scuba diving, race car driver or rock climbing may also warrant special risk. A person’s driving history or foreign travel to certain parts of the world could also be considered special risk.
There are many important factors in determining pricing with an insurance company. Examples are: age, medical history, tobacco use and sex of the applicant. Family history is also part of the criteria insurance carriers use in determining final rates.
Are all medical risks special risk?
The short answer for this is no. There has been tremendous strides in the discovery of new medications and treatment options. Many conditions that just a few years ago would have warranted extra premium or that were considered “special risk” can now be insured as a standard risk or possibly even a preferred rating.
An example of this would be blood pressure control and cholesterol control. With medication and good control these conditions are no longer considered a “special risk” and many times can be considered at a standard or even preferred risk.
Do all insurance companies underwrite the same?
Again, the short answer is no. The area of underwriting certain risks is what sets some insurance carriers apart from their competitors. Some insurance carriers are much more proficient in underwriting certain risks.
As an example, you may have one particular insurance company that specializes in offering the lowest rates for individuals with diabetes. You may have another company that specializes in underwriting individuals with heart history, another may do well for people with kidney disease or cancer history.
There are also companies that specialize in offering the most affordable rates on private pilots, scuba divers or race car drivers.
What do table ratings mean with special risk life insurance?
A table rating refers to a classification that an insurance company uses when evaluating a risk. Typically, the table rated classification is used for someone that does not qualify under the preferred or standard risk class assigned by any particular insured. We will discuss this more in detail below.
When a life insurance company reviews an application, they will assign a risk classification based on medical history, occupation, financial history or avocation history.
Nowadays, most insurance companies use the preferred best underwriting class to recognize an individual that is in excellent health. This means an individual satisfies the criteria that the insurance company has established for this risk class. This criteria can be extensive and include: good blood pressure control, normal build, good family history along with normal current lab work and urinalysis.
It is important to remember that each insurance company evaluates medical history, family history, etc. differently. This is why it is important to work with an experienced broker to know which insurance carrier will underwrite your current situation the best.
If an individual does not qualify for a super preferred risk, class they may then qualify for another common risk classes that carriers use such as preferred class , standard plus class or standard class. (Regular) Remember, each insurance company has their own underwriting criteria to qualify for any particular class.
As you may have guessed the lower the risk class the higher the premium that is charged.
Once an insured is fully underwritten, and it is determined that they do not qualify for one of the above mentioned risk classes, an insurance company may assign a table rating.
Some of the more common pre-existing medical conditions that can reflect a table rating include: diabetes, heart disease or heart attack, cancer history, kidney disease, sleep apnea, multiple sclerosis, stroke, sarcoidosis..
When insurance companies assign a table rating that typically assign a letter of the alphabet such as table rating A, table rating B, table rating C, etc.
With most insurance companies a table rating typically represents a 25% premium rate up above the published standard risk class. For example, if an insured with Barrett’s Esophagus applies for coverage and is approved at a class Table A, they would be offered a policy that includes a 25% increase above the published standard risk class.
Another person with a history of atrial fibrillation may be offered a policy with a Table B rate classification. This person would pay 50% above the standard rate class.
Table ratings from insurance companies typically go as high as table J. This would represent a 250% (25% x 10 tables) premium increase above standard. Typically, anything above a Table J rating would be a declination and would not qualify for coverage.
Heart disease can be one of the areas where table ratings can vary greatly. With so many conditions related to the heart and the cardiovascular system, you will sometimes find great differences from one insurance company to the next. This is why each person must be assessed on their own merits.
What may be a standard rating for one person from company A may be a table D from another. This is why it is so important to work with an expert agent. Here are just a few the conditions relating to the heart that underwriters review on a daily basis. You can understand why it’s important to only work with these niche companies.
- Mitral Valve Prolapse
- Marfan Syndrome
- Bundle Branch Block
- Heart Stents
- Abdominal Aneuyrsm
- Cerebral Palsy
Again, it cannot be stated enough, every life insurance company evaluates each individual differently based on health and lifestyle. One company that may rate an individual Table G for hepatitis while another may rate the same individual a Table C.
This can make a substantial difference in the premium dollars that you pay. You must use a broker that knows how to negotiate with the different insurance companies to get the lowest risk classification.
Do I have to apply to several companies to find the best rates?
This is where we can help. We have years of experience and knowledge working in the special risk life insurance marketplace. We are experts at knowing which carriers will offer the lowest rates for term coverage or permanent protection.
Perhaps you are not sure of what health class to enter on our instant quotes due to past or current medical history. It is best to enter regular(standard) for the health class or contact us to discuss your particular situation to find out what health classification you may qualify for.
Don’t know what amount of coverage you need for your special risk life insurance policy. You can check out the online coverage calculator here.
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Listen to Mike’s radio interview discussing special risk life insurance here