Flat Extra Fees for Life Insurance + Video

Flat Extra Fees for Life Insurance: What Are They & How Do They Work in 2024 + YouTube Video

Flat extra fees for life insurance: what are they, and what do they do? Just about all of us who have purchased life insurance at one time or another fully understand the concept of having a premium to pay each year.

Flat extra fees are most commonly used when a life insurance applicant is involved in a hazardous sport or hobby.

Many people don’t realize that your health history, height & weight, tobacco use, and other specific information about you can impact rates.

Medical underwriters reviewing your life insurance application usually calculate adjustments to your life insurance rates. Therefore, the fluctuations in your final rates are traditionally impacted by choosing the health rate classification that best fits your profile.

One of the ways your final rates can be adjusted is by using flat extra fees, which we will discuss in this article. Unfortunately, the term “flat extra fees” is something few people have heard of, much less understand.

 

What Are Life Insurance Flat Extra Fees?

Flat extra fees are an additional charge to a life insurance policy to compensate the carrier for an increased risk.

Life insurance flat extra charges are based on a dollar amount added to each $1,000.00 of life insurance coverage, known as the policy face amount or death benefit.

The dollar amount would commonly be, for example, $1.50, $2.50, $3.00, $5.00, etc. The exact amount of the flat extra would be determined by the risk involved.

Some people refer to these added costs as a life insurance flat extra premium, but they are just an extra charge and not really a premium.

Often times we can use a company that does not utilize flat extra fees on life insurance, but this will depend on the type of high risk involved.

The next time someone asks you what a life insurance flat extra fee is, you will be able to explain the process to them.

 

When Are Flat Extra Fees Commonly Used?

The most common use of flat extra fees will be for an applicant that is applying for life insurance and they are active in a hazardous sport or hobby. They are also used for applicants with very hazardous occupations also.

Some examples of hazardous sports would include:

1. BASE Jumping
2. Scuba Diving
3. Skydiving
4. Bull Riding
5. Aviation
6. Motorsports Racing
7. Ice Climbing
8. Hang Gliding

There are more sports that are deemed hazardous by life insurance carriers but this is just a sample of the more dangerous ones.

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The video below will provide insight into how flat extra fees and health class adjustments apply to a policy involving hazardous sports.

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How to Apply for Life Insurance With a Hazardous Sport: YouTube Video

 

What Are Life Insurance Health Classifications?

Health classifications used in determining life insurance premiums carry significant weight in a policy’s premiums.

Health classifications are calculated for all life insurance policies and are mainly based on an applicant’s health history.

As a standard procedure with life insurance companies, the underwriting department must review your overall health when you apply.

Medical underwriters compile detailed information to determine your health classification at the end of the application process.

You can learn more about health classifications by reading our blog post on this subject.

 

The Difference Between Flat Extra Fees and Health Classifications

The big difference is that these two forms of premium adjustments are related to a certain extent. The flat extra fees are usually used for high-risk occupations, hobbies, and sports.

Rate class adjustments are used when calculating the risk of an applicant’s health history. The bottom line is they are used for different purposes. Sometimes a health classification may be adjusted for hazardous occupations and sports along with a flat extra fee.

If a person applies for life insurance and has a heart condition, for example, the carrier will adjust his health classification accordingly. Selecting the appropriate insurance carrier for your application is crucial to securing the most favorable health classification and consequently, the lowest rates.

If another person is applying for life insurance and has an occupation as a professional race car driver, the carrier will be using a life insurance flat extra fee to adjust the premium accordingly to cover the risk of the auto racing.

 

How Is a Health Classification Identified and Distinguished?

Here are the four primary health classifications you can be placed in:

1. Preferred Plus 
2. Preferred
3. Standard Plus
4. Standard

A description of these four classes would be as follows:

Preferred Plus Rates:

Depending on the insurance company, this class can also be referred to as Super Preferred. This would be the best class you could be placed in, providing you with the lowest possible rate. You have to be in excellent health, height & weight and live without dangerous sports or occupations.

Your family history must also be free of early cancer or heart disease deaths. About 10% of all applicants qualify for the preferred best rates.

Preferred Rates:

If you are healthy and fail to qualify for the preferred best rates. You stand an excellent chance of qualifying for preferred rates. This can be ideal even if you have prevalent health conditions such as high blood pressure or high cholesterol if they are adequately controlled with medication.

Landing in the preferred rate class would be an ideal situation to be classified in, even though the rates are just a little higher than the preferred best.

Standard Plus Rates:

Some popular companies, such as Banner Life, do not offer standard plus rates, but most do. If you are in good health and fall outside the requirements to meet the preferred rate classes. Standard plus rates will still be very affordable.

Your family health history has to be good, and you can have a few medical conditions checked with prescription drugs. Being overweight is allowed within reason, depending on the carrier you apply with.

Standard Rates:

Standard rates would be expected for applicants in decent health but may be slightly overweight and have a few medical concerns that don’t appear to be very life-threatening. For example, if you have a less than ideal height-to-weight ratio, an average life expectancy, or your medical history has a few flags.

Your family health history would also have to be free of any of your parents passing away before age 60 from heart-related or cancer as a cause of death.

 

What Is a Table Rating and How Are They Defined?

Table ratings apply to applicants with more serious health conditions.

Applicants with more serious medical conditions may fall into a Substandard Rate Class. In addition, a substandard rate class can also be incorporated with additional rate classes called Table Ratings.

Remember that a tobacco rate is one of the most expensive categories for tobacco users.

Tobacco rates can be approximately 250% higher than non-smoker rates. This would be especially important for cigarette smokers, the highest risk group of tobacco users.

The table ratings are broken down by either letter of the alphabet from A to J or by the number system, which starts with numbers 1 to 10. With each table rating, the premium increases by 25%.

Life Insurance Rate Table Comparison

How to Get the Best Health Classification

Receiving a preferred life insurance health classification is the golden nugget to getting the lowest rates and premiums. Here are my main tips to increase your probability of obtaining this favorable health class rating: 

Do Not Procrastinate:

Apply for life insurance as soon as possible. The longer you wait to apply, the higher your premiums will be. Life insurance quoting rates increase by approximately 5% yearly and over 10% per year as you get older in your 60s. If you need life insurance, apply as soon as possible to lock in your rates.

On top of that, the older you get, the more health conditions you will develop, and the premium could drastically rise to the point where your premiums may not be affordable, or you could even be declined. 

Improve Your Overall Health:

Watching what you eat and getting more exercise can significantly impact your health. The healthier you become, the better the health class you can qualify for. Even if your parents’ health history is below average, your health is what insurers zero in on the most.

Smoking & Drinking:

Using tobacco products will land you in the smoker’s rate classification, and your rates will go up. If you get carried away and also consume a lot of alcohol, you are putting yourself and your insurance rates in harm’s way. Life insurance for alcoholics or heavy drinkers could be costly, if not even possible.

Watch Your Weight:

Becoming overweight or obese is one of the best ways to ruin your chances of getting affordable life insurance rates. Life insurance companies know that being overweight is directly linked to many life-threatening medical conditions, the biggest being heart disease. Remember that heart disease is the number one killer in the United States.

 

Can I Buy Life Insurance Without a Flat Extra Fee?

Yes, you can apply with a life insurance company that would be least likely to add an extra fee, but sometimes it cannot be helped if they are in a high risk occupation or sport.

We would never want to see anyone apply for life insurance and receive a flat extra fee. All they will do is increase your premium and we want to keep your premiums as low as possible.

We know which companies are least likely to use flat extra fees and submit applications to them to help our clients save money.

This strategy will work many times but depending on your occupation or sport, it may be impossible. The more hazards you are exposed to, the more likely a flat extra fee could be applied. Flat extra charges are usually minimal and don’t affect premiums very much in many cases.

 

Pre-Assess Your Application Before Applying

If you want to eliminate any surprises during the application process, this is the way to do it. One of the most innovative things you can do is have your agent pre-screen your application before applying.

Not only can you pre-screen medical conditions, but you can also pre-screen your high-risk occupation, hobby, or sport if you have one.

This will eliminate surprises later on during the application process. Know what is going to happen before you apply and not after. We run medical pre-screens on just about every client to ensure we have an excellent smooth application process and receive low rates.

 

Can Flat Extra Fees Be Eliminated Later?

Flat extra fees can be removed at a later date with some of the companies. However, this could only happen if the high-risk exposure for which the flat extra was first initiated has been eliminated.

An example of this would be no longer working in a dangerous occupation or no longer participating in a dangerous sport or hobby. Some companies would allow you to be considered for removal of the charge, but they would not just take your word over the phone.

You will have to complete another application and then re-submit it. The bottom line is it can normally be done.

 

Our Final Thoughts

Needless to say, life insurance, flat extra fees, health classifications, and other insurance-related terminology can be confusing. Insurance agents such as ourselves can answer all your questions at no cost or obligation.

Feel free to contact us seven days a week for all the help you need. If you want to apply for life insurance, we use over 40 of the most trusted life insurance companies.

You can also quickly and easily apply over the phone in about 15 minutes. I hope this blog post has answered many of your questions.

If you ever decide to apply and want to eliminate taking a physical exam. You can also apply for no medical exam life insurance and be approved within 24-48 hours.

All the best,
Jack Venturi

Should you have any questions or need further assistance, please don’t hesitate to call us at 815-390-7545 for a prompt response.