Understanding your life insurance quote
Plus: Most Haven Life customers are in our best rate class, meaning they pay our most affordable monthly premium. Here’s why, and why it might not be the case with other carriers.
Today is the best day to apply for life insurance. That’s not an opinion. That’s a fact.
Here, we’ll explain: You’re younger today than you will be tomorrow. And there’s never a better time to buy term life insurance coverage than when you are young and healthy.
That’s when insurers tend to charge you a lower monthly premium, on the theory that you will be paying those premiums years, even decades, into the future. You get a low rate when you’re young and healthy, the insurers get a low-risk customer, and everybody wins.
Sounds simple, and it kind of is. But before you race to get a bunch of quotes for coverage, there’s something you should know.
Not all life insurance quotes are created equal.
A quote is an estimate on how much you’ll pay for coverage, aka your final rate or premium. But a premium, that’s determined by a rate class and…okay, it looks like we might be losing you. Let’s back up.
Each insurer uses what are called life insurance rate classes — basically, groups of policyholders who carry a similar amount of risk. And while you’d think being young and in excellent health would automatically put you in the best rate class, it turns out best rate class criteria varies considerably from insurer to insurer.
Some might have stricter rules around, say, marijuana usage. Some might have different definitions of health issues — some might use blood pressure or body mass index, for example, while others rely on a different set of statistics.
So just because you’re a card-carrying member of Ultra Preferred Super Elite Extra Special Status at Carrier A, that doesn’t mean you’ll be considered the same at Carrier B. Each insurer uses different actuarial formulas and algorithms to assess a potential customer, and that info is proprietary intel they don’t want to disclose. A trade secret, if you will.
But in the spirit of transparency, let’s break down how this works at Haven Life so you can use this information to help buy the best coverage, at the best price, for you.
In this article:
What are life insurance rate classes and how do they work?
You are one of a kind (unless you’re a triplet or something). But there are limits to how familiar your insurer can get with your unique qualities.
During your life insurance application process, an insurer will get a broad picture of your health — including your age, your hobbies, your medical history, and any issues that might come up during a life insurance medical exam — and then place you in a group with other individuals with a similar level of risk.
Those groups are called rate classes, because they are used to set your rate (also known as your monthly premium payment) for your life insurance policy. Think of rate classes as existing on a spectrum, from high-risk to low-risk. The higher your risk, the higher your premium payment will be. The lower your risk, the lower your premium.
Again, every insurer does this differently. (That’s what keeps actuaries in business.) Just because you are in a great (low-risk) rate class for one insurer, doesn’t mean you’ll be in the preferred rate class at another one.
For example, the Haven Term policy uses a total of five rate classes. The best of those is called Ultra Preferred Non-Tobacco. If you are young and healthy, there’s a good chance you would fit into this rate class and pay our lowest price for coverage.
How to use rate classes to better compare life insurance quotes
Maybe we should start with: What is life insurance, anyway? (If you’ve read this far without knowing that, thanks for sticking with us.)
Essentially, life insurance is a type of insurance that provides a lump sum death benefit to your loved ones if you die during the policy. There are many types of life insurance, but the two main ones are term life insurance and permanent life insurance (including whole life insurance).
Term life insurance covers a set number of years (the term). It’s typically more affordable, because it’s designed to cover the years when you’re young and in good health, and more likely to have someone (like kids) who depend on you to pay for things. Permanent life insurance is, well, permanent — it lasts until you die, and typically has higher premiums as a result. (It also can accrue cash value, which is when things start to get complicated, but that’s another reason why it costs more.)
So when you’re comparing quotes, keep in mind that a permanent life insurance policy will almost certainly cost more than a term life insurance policy, even if the amount of coverage is the same.
If you have a pretty good sense of your overall health conditions and how much coverage you need, your life insurance shopping journey can proceed to getting a few quotes for an estimate of your life insurance premium.
But what about rate class for your life insurance policy? Short of applying for life insurance four different times, how can you get an idea of what rate class you might fit into and how strict the carrier’s underwriting guidelines are? Ultimately, this answer will determine how likely it is that your quote will match your final price.
As with so much in life, at least in grades K through 12, it starts with doing your homework. Before you apply for life insurance coverage, pick up the phone (or click “compose email”) and ask the agency you’re thinking about applying through how many people get their best rate. They might not want to tell you, or they might not be able to tell you, but file this under “doesn’t hurt to ask.”
Now that you’re an official “savvy life insurance shopper” (there should really be a badge for that), get a quote, ask some questions and find yourself coverage with confidence.
About Louis Wilson
Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.
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Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
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Our disclosures
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus
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Cheapest we could find, simple application, didn’t require a health screening since I’d had a recent physical. Quick answers from customer service both times I had questions for them.
Easy process, painless, pretty quick turnaround. great rates!
Easy online application and the decision on my coverage came within 24 hours.
Oh my gosh. I am finally writing a review after a week of daily begging from Haven Life. Pretty good experience overall but it is life insurance. So a bit of a pain and not very transparent as to what is affecting rates. I got a good policy approved in under a month which is great. My rate was surprisingly high. I have several mild health issues but taken together they probably provide cover to rate my higher risk. I am pretty sure I could have gotten (and may still) a better rate if I had gone the traditional route. But that is even more invasive and time consuming. I am giving a 3 because of rate and lack of reasons for rate and because – it is life insurance – which in my experience is never very pleasant.
it takes some time for approval. It took almost 30 days from the date lab work was drawn before I got approval.
