So your life insurance agent said you classify as a standard risk, what does that mean to you? Following is a quick guide to rate classes. Keep in mind that the qualifications for these classes vary between companies, so it’s important to shop around.

If you want to qualify for Preferred rates, you must be in excellent overall health. In addition you cannot participate in any hazardous activities and there must be no history of drug or alcohol abuse. Preferred-plus criteria is even more stringent. You cannot smoke or use any form of tobacco. According to actuarial tables, these are the people who are likely to live the longest. Each company may have a different name for them but these rates represent the lowest available premiums.

However, you need to understand that when comparing policies, even if you’re in excellent health, there is a good chance you won’t qualify for these best rates. In fact, only 5% – 40% of all applicants get this “preferred plus” rate. Typically, about 60% can qualify for the “preferred” rate. The rest fall into the “standard” category, or worse. The specific criteria for these rates differ widely among the various insurance companies, and it is not uncommon for an individual to be classified as “standard” at one company and “preferred” at another.

More after the jump….