UNDERSTANDING THE TERMINOLOGY
Preferred rated/Level policy: This is an application that goes through an underwriting process. The advantage of this submission is that the rate you pay may be significantly less than a regular or sub-standard policy. If the underwriter deems your health status to be within their guidelines, an offer will be made that will be favorable. However, if medical information is negative the underwriter can come back with a higher rate offer or a decline if medically adverse.
Standard issue policies: This application also goes through underwriting. Once underwriting completes the process of an application, the offer will reflect an average person's health status. If their medical information was above average, they would be offered the preferred rate.
Guarantee Issue: Guaranteed to be issued without a medical exam. Applicants who qualify for this coverage usually cannot secure a standard or preferred rate due to a sub-standard health status. The premium an applicant will pay will reflect the higher risk to the insurer.
Simplified issue: This is for the client who has significant health problems. Typically, you will see a reduced benefit for the first two years, graduating to the full benefit after one, two, or three years. Most people can qualify for this program.
Non-Smoker-Non-Nicotine user rates: Life insurance companies hire actuaries to determine the mortality risks of occupations, health habits, heredity and health conditions when computing the cost of life insurance. A significant price saving as much as 50% can be given to clients who do not use nicotine in a 12-month period preceding a life insurance submission. There is some leeway for cigar users with some companies where a non-smoker rate can be given.
Safe money investment: These are investments that pay interest with no risk of losing principal. Fixed or Indexed Annuities are a common vehicle used to grow money without downside risk.