“You rate!” is usually a compliment – but not when it comes to life insurance rates. As I’ll explain in a moment, YOU may think you’re pretty healthy, and unlikely to die anytime soon. But if an insurance company decides otherwise and offers you a “rated” policy, it’s probably going to cost you. 

If you disagree with an insurance company’s risk assessment on you, you can try pleading your case by providing more information. But if that doesn’t do the trick, your agent may tell you it’s just the way it is. If you’re agent is a “captive” agent, representing only one insurance company, here’s what they may not be telling you: They won’t be able to help you shop around for more favorable coverage from myriad other potential providers. 

Unfortunately, if this happens to you, you may end up not only paying a substantially higher premium than originally quoted, you may also pay more than you need to. 

How Life Insurance Risk Ratings Apply To You

Typically, to receive a life insurance quote, you must first complete a medical questionnaire, which the insurance company uses to categorize you into one of four rate classes: 

  1. Preferred Best 
  2. Preferred
  3. Standard Plus or Select
  4. Standard 

As I recently learned when applying for more life insurance myself, you can also end up being “rated,” or classified as a substandard risk. 

At first, I had assumed I’d qualify for a preferred risk rating. I eat well, exercise regularly, and had just received a clean bill of health after completing a thorough physical and preventative heart health screening. One test had found a slight abnormality, but in a follow-up visit, my doctor told me it was of no concern. 

Imagine my surprise when I received the insurance company’s offer, informing me I’d been rated. My premium would be much more expensive – to the tune of $1,000s more – than had I been assigned any of the four regular rate classes. 

This made no sense to me. Substandard policies are for people who are especially unhealthy, have a chronic illness, or are in a high-risk occupation. 

The Worth of an Independent Agent

In my case, I was working with an independent insurance agent. Good thing! After we discussed what had happened, I called my doctor to reaffirm that my test results were quite common, and were not considered high-risk at all. I presented this information to my agent, along with the detailed results from my preventative screening. He went back to the original insurance company to plead my case … to no avail. 

So, next, my independent agent got to work, looking at other insurance companies’ offerings. I had to complete a second application, but this limited extra effort paid off in the end. The second company offered me a “Preferred Best” rating. Not only was I able to secure the additional coverage I needed, I was able to replace my current coverage with a newer, longer-term policy for less than what I’d been paying. 

Strategic Wealth Management Lessons Learned … and Applied 

I couldn’t help but think about the parallels between my life insurance experience and our perspective at Cogent Strategic Wealth. We too emphasize the importance of remaining independent from any one product provider – so we can offer our clients the best advice and solutions for them, not for some company to whom we’re beholden. 

I also found myself channeling the patience we prescribe for investing and wealth management in general. It took longer than I’d anticipated to secure the coverage I needed, but by letting my agent work on my behalf and keeping a steady eye on my end goals, we were able to secure the best coverage at the best cost. 

As an Independent Advisor, How Can Cogent Help You?

For the last 10 years, Cogent Strategic Wealth has helped busy, thriving professionals just like you make sense of your financial plans and manage the many complex details that contribute to achieving your greatest goals. This includes building a team of professionals, including independent insurance agents who are as committed as we are to finding the right coverage for your needs, from whatever highly rated insurance company can best provide it. 

If you want to know more about how independent advice can help you realize your financial goals (while dodging some of the traps and hassles along the way), I hope you’ll sit down with our team today for a Cogent Conversation. We’ll listen to what success looks like for you, build a plan tailored to you, and help you execute that plan every step of the way. 

Don’t manage your financial future all on your own. Book your Cogent Conversation today!