Insurance rate classes divide the population into different levels of risk based on actuarial tables. This tells an insurance company how much they can expect to have to pay out for people like you, and thus what they need to charge you to give themselves the profit margin they seek.
Insurance rate classes apply to all types of insurance, not just life insurance. For example, an 18 year old driver who has already gotten several tickets, who has been convicted of alcohol and drug-related offenses, and who drives a hip make of car favored by those with a “life in the fast lane” lifestyle will be in a different insurance class for auto insurance than will a 50 year old solid citizen who has driven her whole life and never had a ticket or an accident of any kind. The teenager will be in an insurance class that is charged substantially more than that of the 50 year old.
Certainly there’s no guarantee that the teenager will be in a wreck shortly and the 50 year old won’t. It’s all a matter of playing the numbers and letting the long run and the massive number of insured customers smooth out all the unpredictable outcomes of specific cases. Various factors are correlated with the likelihood of having to pay a claim and the size of a claim, from age to various incidents in a person’s past, and these are all taken into account in assigning a person to a certain insurance class.
But consider life insurance. The insurance company needs to be able to predict as best they can how likely you are to die in the next year, the next two years, the next three years, etc. They want the customers who will be paying premiums for another 80 years before they die, not the ones who will die next month. (Or at least they want to charge them vastly different rates.)
So a life insurance company might have “Preferred Plus,” “Preferred,” “Standard” and “Substandard” classes. Preferred Plus will be the toughest to qualify for, Preferred kind of tough, and Standard not too tough, with Substandard being the class that everyone gets thrown into who isn’t able to qualify for one of the other three.
So consider what it might take to be Preferred Plus and therefore have to pay the least for the same insurance coverage:
* A height/weight chart to ensure you’re not heavy enough to be obese.
* Blood pressure maximums.
* Cholesterol maximums.
* Haven’t smoked in x number of years.
* Lack of accidents or tickets indicating unsafe driving.
* No family history of certain diseases like cancer, diabetes, etc.
* Have never been diagnosed oneself with these or a much longer list of diseases.
Again, you might have all that and still get run over by a truck tomorrow, and the guy who likes to tug on Superman’s cape, spit into the wind, and pull the mask off the Lone Ranger might live another fifty years. But the insurance companies will do fine in the long run by playing the odds.