You need life insurance, but you’ve got a somewhat serious illness, or perhaps you participate in a risky hobby like skydiving. Stop. Before you give up completely, you should know that not all life insurance companies hand out “yes” or “no” answers after the application is submitted. Some of them will tell you “maybe – tell me more.” This is one of the most confusing aspects about buying life insurance, and one of the best reasons to use an independent life insurance agency, like ours.
What Is A Flat Extra Premium?
A flat extra premium is an amount of money added to the base premium of your policy for the life of the policy or for a set period of time. So, for example, if you’re buying a life insurance policy that would normally cost you $20 per month, and there’s a flat extra premium of $10 per thousand of insurance, your total premium would be $104 per month on a $100,000 policy or just over $1,200 per year (assuming no discounts for paying premiums annually).
The flat extra compensates the insurance company for the added risk it takes on. Normally, there are only a handful of risk classes the insurer will underwrite you for. First, there’s the “Preferred” or “Select Preferred” rating. Some insurers have another tier above this, called “Ultra Select Preferred,” which is reserved for those with outstanding health.
Then, there’s the rating most people receive – standard. Finally, for smokers, there are typically two other ratings given out – “Preferred Smoker” and “Smoker.” If you don’t fall into any of these categories due to health issues or lifestyle issues, you may be “rated.” Ratings, sometimes referred to as “table ratings,” are a way for the insurer to charge a higher premium so that it can issue a policy under a substandard risk class. In some cases a policy may not be “rated”, but you may end up getting a Standard or Preferred health rating, and an additional “Flat Extra” charge either for a short period like one to three years, or for the life of the policy.
The bottom line is that you get life insurance, and the insurer is compensated fairly for the additional risk, sometimes with a rated policy, and sometimes with a “flat extra”.
Conditions You May be “rated” For
There are certain medical conditions that are almost always rated. These include diabetes, cancer that’s gone into remission, certain heart problems, kidney problems, or other chronic health issues. Generally, you’re not rated for things like high blood pressure, since this is a very common condition and is controlled pretty easily.
Some conditions, like a recovery from cancer or some other serious illness, may require you to pay an extra flat premium for a period of time (chosen by the underwriter), typically maxing out at 10 years, but starting as little as 1 year.
For example, if you’ve just recovered from prostate cancer within the last few years, an insurance company might require you to pay a flat extra premium of $5 per thousand dollars of death benefit coverage for 3 years. After that, the flat extra drops off and you keep paying the normal premium amount associated with the base policy.
Lifestyles and Flat Extra Premiums
Some lifestyles require a flat extra premium. For example, if you’re a race car driver, you do any skydiving, or you’re engaged in any other dangerous activity, your insurer might require that you pay a flat extra premium for the entire time you are engaged in that activity. Pilots (other than commercial airline pilots) are also typically subject to a flat extra amount.
Who To Talk To
Usually, you cannot just walk into an insurance agency, or call an insurer directly, and ask for special ratings or approval. You’ll need to talk to an independent insurance agency (like ours) about how to obtain coverage for your specific situation. We specialize in high risk pre-qualification – the process of submitting your specific situation to multiple life insurance companies, and finding out which company will offer the best rate prior to applying for coverage.
This process is basically a negotiation with the insurer. We try to secure a policy based on the best possible health rating you can get, and if a flat extra is required, the lowest possible flat extra premiums for the additional risk being taken. Since we have very good relationships with insurance underwriters and know which insurers to approach for adverse risk cases we can find the best pricing for life insurance in high risk cases – whether you have a medical condition presently or in your past, or if you participate in a high risk activity like mountain climbing, scuba diving, or skydiving.
Call us at 888-552-6159 to discuss your specific situation, or fill out our form on this page and we can get you a custom quote for life insurance based on your specific needs.