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Money Management Newsletter: Insurance
Understanding the different Life Insurance
This simple set of tables provides
an insight to how a Life Insurance product is priced.
Most assessments are based on certain determining factors.
These are tobacco use, health status, family medical history, personal
medical history, physical build and lifestyle. The first chart illustrates
six fairly standard classifications and the equivalent percentage or policies
issued for each. Class 1 type individuals would be quoted lower premiums
per dollar of coverage as against the higher numbered classes. The higher
the class number... The higher the risk.
|Classification and percentage key
| Class 1 Non-smoker
for two years, very good health and lifestyle
||= 20% of non-smokers
|Class 2 Non-smoker one year, good
health and lifestyle
||= 50% of non-smokers
|Class 3 Non-smoker one year, fair
health and lifestyle
||= 30% of non-smokers
|Class 4 Cigar smoker, otherwise
good health and lifestyle *
||= 15% of smokers
|Class 5 Smoker, otherwise good health
||= 35% of smokers
|Class 6 Smoker, fair health and
||= 50% of smokers
* not all insurers offer "Cigar-only smoker"
differentiation in class structures.
The in-or-out risk classification method makes it easier
for you to determine what class you may be assessed under. The next table
illustrates how your risk classification will be affected as more information
A tale of two friends
Jack ran into trouble in his mid-40s, and Michael introduced
him to his passion for running. Together with medication, diet, not smoking
and running with Michael, Jack lost 80 pounds, corrected his blood pressure
and cholesterol, and is now healthy.
Michael has always been healthy, but he treated himself
to a vintage rag-top for his 50th birthday and has been known to get caught
speeding on his summer commutes to work.
for 9 years (Class 1)
for lifetime (Class 1)
205 lbs. (Class 2)
185 lbs. (Class 1)
|Current blood pressure
artery disease discovered in his late 30s, now recovered and takes
blood pressure medication, took cholesterol medication for 5 years
of medical conditions or current conditions (Class 1)
family history of heart disease (Class 3)
Mother - stroke at age 77
Uncle - heart attack in early 60s
(Michael remains Class 1 because the criteria consider only the
history of the parents and siblings, and only before age 65.)
violations in the past 2 years (Class 2)
a insurance professional prior to changing any insurance policy. If buying
insurance by mail on the phone or over the Internet, check if the insurance
company is allowed to provide coverage. Each Provincial Government in
Canada has a Insurance commission that you can call to verify if the insurance
company can legally sell you coverage.
Copyright Fiscal Agents Insurance Ltd
2003. For more information (905) 844-7700
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, Fiscal Agents Money Management Newsletter
25 Lakeshore Road, Oakville, On L6K 1C6.