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Understanding life insurance rate classes

Jun 8, 2020 3 Minute Read

Shopping for life insurance can mean learning a whole new terminology. Wondering what your insurance company means by a rated life insurance policy? Here’s what you need to know about life insurance rate classes and rated policies.

Understanding life insurance rate classes

Life insurance protects your family financially after you’re gone. If you die while your policy is still active, your loved ones receive a lump sum they can use to pay off bills, take care of debts and funeral expenses, or however else they wish.

When you apply for life insurance, your life insurance company needs to determine the level of risk in covering you and how likely they are to pay out your benefit. To do this, insurers have a rating system, also known as rate classes or classifications, to calculate your eligibility and the price you’ll pay for coverage. Each company has its own unique ratings scale that is based on several factors, like your health, age, driving record, nicotine and alcohol use, and lifestyle choices.

The general rate classes are:

  • Preferred Plus: Also known as Preferred Elite or Preferred Best, this is the best classification you can get. It shows you’re in excellent health, which means you’ll get the lowest life insurance rates.
  • Preferred: A Preferred rating means you’re in good health overall, although you may have minor health issues. You can still count on relatively affordable rates.
  • Select: Received this rating? You may have a few red flags, like being overweight or a history of previous illness, but you’re still a good candidate for life insurance.
  • Standard: This rating means you have a family history of health issues, along with other potential issues. You’ll pay higher rates as a result, but you’re still eligible for coverage.

Some life insurance carriers may also have sub-classes within each rate class. Each class is associated with a different premium rate – the better your rating, the lower your price for life insurance. For example, if a company puts you in its Preferred Best rate class, you’ll pay the lowest rates.
What does a rated life insurance policy mean?

If any red flags come up on your application, like a history of health issues or risky hobbies, you may not qualify for any of the classes above. In cases like those, your insurance company may place you in a rated life insurance policy, also called a table-rated or substandard policy.

In general, anything that increases the risk of premature death can trigger this rating. Qualifying for a rated policy still means you’ll get covered, but you’ll pay more for coverage than people in higher rate classes.

What Should I Do if I’m Approved for a Rated Life Insurance Policy?

Don’t worry, you have options. Every insurance carrier has a different formula for calculating coverage and eligibility. For example, some companies may consider you a smoker if you smoke the occasional cigar, while some may not.

That’s why it pays to compare policies and companies in one spot, so you can find the best possible deal for your situation. eFinancial works with over 20 leading insurance companies to bring you a variety of choices, and our experienced agents will help you compare policies and rates to find the best fit for you. If you’ve been rated at a lower rate or substandard class at one company, we can help you explore the alternatives.

At eFinancial, we’re here to get you covered. Get a quote for term life insurance and compare your options today, or give one of our agents a call to walk you through the process.


At eFinancial, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed and updated regularly to ensure the information is as relevant as possible.