Types of Life Insurance Policies

The most common types of life insurance policies are temporary term, permanent life, whole life and universal life. The premium depends on the status assigned by the insurance company, based on the health and lifestyle of the person who is insured.

Categories

Each person who gets a life insurance policy is assigned to a category. There are four different categories: preferred best, preferred, standard, and tobacco user. An average-weight person with no major medical conditions, but who does not exercise, would be a standard risk. Someone who exercises daily, does not smoke and has no medical conditions might be a preferred best risk. Regardless of weight or exercise, a smoker is always classified as a tobacco risk.

Status Changes

Status changes take place after a major event in the policyholder's life. These can be positive or negative, and they directly affect the cost of the policy. Some examples of status changes are starting or stopping smoking, turning 50, or changing to a more dangerous occupation.

Changing Status

Most insurance companies have a "change-status" form that must be completed if you wish to change your life insurance status. Typically, these must be co-signed by your physician if the status change is medically related.

Keep In Mind

Usually you can change your life insurance coverage only once a year, during an annual enrollment/coverage change period. Check with your insurance agent for more information.

Source:

Medical Information Bureau

Insurance Information Institute