How to avoid life insurance surcharges

About the author: The author ,Randy Taylor has advised consumers and  financial planners, stock brokers, and insurance agents on life insurance planning for 32 years  He has also been a state and national speaker in regards to life insurance.  Ca. License #0643596

What is an insurance “rating”, and what does it mean in dollars and cents to be “rated up”


There are several rate classes with preferred plus and preferred being available to those that are not taking 
routine medications, no history of adverse driving records, and have no family history of immediate family deaths before age 60. 
The next class up is known as standard and is available to those in average good health
that might have a minor health condition that is well controlled by medication.
Surcharges known as “table ratings”, work as follows: The minimum rating is usually a 50% surcharge
added to the standard rate to cover the insurance company for the increased risk. After the first table rating; there  are incremental charges of an additional 25% for each table or rung on a ladder until a decline which is around 7 increases.

The bottom line: How can an applicant avoid the minimum 50% surcharge?

The first thing to commit to memory is that all insurance companies are not created equal in terms of 
how strict they are when  looking at your health. A single company agent is less likely to be able to help you versus working with an objective broker that can match your health history up with the  company and product that is best for you.  The second thing to consider is that you should get a second opinion if you have a health condition and are rated up.
Give me the bottom line. When might I get an average good health rate if working with an
objective broker?
These common conditions can often be overlooked if there are no other health or lifestyle concerns.
High cholesterol history: If controlled with medication for over 1 year and now in the normal range, no rating.
High blood pressure: If controlled with medication for over 1 year and now in the normal range, no rating.
Occasional Cigar or chewing tobacco use:   Out of 1274 companies approx. in California, only a handful will allow cigar use without  charging tobacco user rates. A broker can often get a standard non smoker rate.
Height vs. weight issues:  Some aggressive companies will allow up to 6′ 0 and 250 lbs. normal rates
while others will charge the full 50% rating.
Private pilots:  The rating for private recreational pilots can be as high as $2.50 per thousand , If the client is in perfect health he is also often not given the good health rate; but instead a standard rate, 30%+  higher  plus the $2.50 per thousand of insurance surcharge.
However: a male over 50 with 100 hours of solo experience may qualify with No surcharge at all if you have a knowledgeable broker!

Diabetes: Once again, average good health rates, with No rating is available if controlled  with medication so that the A1C ratio is within guidelines. If the onset of the condition is after age 40; some companies, will allow the lower rate of average good health, saving 50% or more.
Note that each company has their own separate underwriting guidelines but some companies have certain niches, like cigar users for example; whereby they are less strict that other carriers.
As with all financial decisions, you should consult with your insurance broker,financial advisor, attorney, and/or tax advisor before making decisions.
Copyright: Creative Commons 2/28/2015
Author: Randy Taylor, Lic. #0643596
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Life insurance and I.R.A. Account Specialist
Serving clients and brokers since 1983




Life insurance, How to avoid the minimum 50% health surcharge
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