Why Lack of Financial Literacy is Crippling Consumers, Part 4 Essential ... CardRatings.com
If you're healthy, you'll likely receive good life insurance quotes for your age and sail through the buying process.
But life insurance shoppers with a less-than-ideal medical history should have a good understanding of "underwriting."
Simply put, underwriting is the process by which life insurance companies decides how much to charge you. Underwriters use sophisticated tables to determine your life insurance policy price. They factor in age, life expectancy, height, weight, and health conditions, among other factors that aren't health-related, such as dangerous occupations and bankruptcies.
If you've been told that your life insurance policy will be priced using one of the terms below, here's what it means.
Flat rating (also called temporary flat extra): This means you'll have to pay a specified amount above the base premium for a certain period of time, which will be defined in the policy. People who are asked to pay flat extras usually have a short-term health risk that will disappear. For example, maybe you've just had surgery, so the insurer wants you to pay for the extra risk during your recovery. Once the flat rating period is over, your bill drops down to the base premium.
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