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  • Writer's picturejimmy ting

Everything you need to know about Life Insurance Quotes

Today is the best day to apply for life insurance. That’s not an opinion. That’s a fact.

Here, we’ll explain: You’re younger today than you will be tomorrow. And there’s never a better time to buy life insurance coverage than when you are young and healthy. That’s because insurers tend to charge you a lower monthly premium, on the theory that you will be paying those premiums years, even decades, into the future. You get a low rate, the insurers get a low-risk customer, and everybody wins. Sounds simple, and it kind of is. But before you race to get a bunch of quotes for coverage, there’s something you should know.

Not all life insurance quotes are created equal.

A quote is an estimate on how much you’ll pay for coverage, aka your final rate or premium. But a premium, that’s determined by a rate class and…okay, it looks like we might be losing you. Let’s back up.

Each insurer uses what are called life insurance rate classes — basically, groups of policyholders who carry a similar amount of risk. And while you’d think being young and healthy would automatically put you in the best rate class, it turns out best rate class criteria varies considerably from insurer to insurer. Some might have stricter rules around, say, marijuana usage. Some might have different definitions of healthy — some might use body mass index, for example, while others rely on a different set of statistics.

So just because you’re a card-carrying member of Ultra Preferred Super Elite Extra Special Status at Carrier A, that doesn’t mean you’ll be considered the same at Carrier B. Each insurer uses different actuarial formulas and algorithms to assess a potential customer, and that info is proprietary intel they don’t want to disclose. A trade secret, if you will.

What are life insurance rate classes and how do they work?

You are one of a kind (unless you’re a triplet or something). But there are limits to how familiar your insurer can get with your unique qualities. An insurer will get a broad picture of your health — including your age, your hobbies, your medical history, and any issues that might come up during a life insurance medical exam — and then place you in a group with other individuals with a similar level of risk. Those groups are called rate classes, because they are used to set your rate (also known as your monthly premium payment) for your life insurance policy. Think of rate classes as existing on a spectrum, from high-risk to low-risk. The higher your risk, the higher your premium payment will be. The lower your risk, the lower your premium.

Again, every insurer does this differently. (That’s what keeps actuaries in business.) Just because you are in a great (low-risk) rate class for one insurer, doesn’t mean you’ll be in the best rate class at another one.

How to use rate classes to better compare life insurance quotes

If you have a pretty good sense of your overall health and how much coverage you need, your life insurance shopping journey can proceed to getting a few quotes for an estimate of price. But what about rate class for your life insurance policy? Short of applying for life insurance four different times, how can you get an idea of what rate class you might fit into and how strict the carrier’s underwriting guidelines are? Ultimately, this answer will determine how likely it is that your quote will match your final price.

As with so much in life, at least in grades K through 12, it starts with doing your homework. Before you apply for life insurance coverage, pick up the phone (or click “compose email”) and ask the agency you’re thinking about applying through how many people get their best rate. They might not want to tell you, or they might not be able to tell you, but file this under “doesn’t hurt to ask.” If

Now that you’re an official “savvy life insurance shopper” (there should really be a badge for that), get a quote, ask some questions and find yourself coverage with confidence.

For more information about Life Insurance call JCT Insurance Agency at (626)354-2000 or email

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