Understanding Preferred vs. Standard Rates

Posted on August 5, 2009 and updated December 4, 2018 in INSURANCE Q&A HUB, Life Insurance Canada News 3 min read
 
preferred vs standard life insurance rates
 Qualifying for preferred rates
can save you money.

 

Canadian life insurance companies have been offering preferred rates for well over ten years now, but there is still quite a bit of confusion among consumers. This is mainly because there are many variables that come into play when determining whether or not the insured qualifies for a preferred rate.

The following are many of the variables analyzed by insurance carriers:

  1. Smoking/Tobacco Use

  2. Height and Weight

  3. Cholesterol

  4. Blood Pressure

  5. Driving Record

  6. Family Health History

  7. Substance Abuse

  8. Hazardous Sports and Occupations

  9. Travel

The difference between preferred and standard rates can be very significant, especially for term policies. A 40-year-old, male non-smoker would pay $53.06/month with RBC Insurance for standard rates on a $500,000 Term 20 policy. Equitable Life’s Term 20 plan would cost $47.46/month if the same applicant qualified for preferred rates.

Preferred Plus rates are the lowest rates offered by Canadian carriers. In the scenario above, the applicant would pay $41.40 per month with Canada Life at their Preferred Plus Rates.

Preferred rates have a much smaller variable on permanent policies. Permanent policies are plans where the premiums are guaranteed never to increase and offers the insured lifetime protection. Most insurance companies don’t even offer preferred rates on permanent plans. But, when they do, the margin is much smaller.

A 40-year-old, male non-smoker looking for $500,000 of permanent Term 100 coverage would pay $349.20/month at preferred rates with Industrial Alliance, whereas standard rates would cost him $354.15/month.

Please feel free to visit our Instant Quote Page to get a free instant term life insurance quote, or call us at 1-866-899-4849 for more details.

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Lloyd
Lloyd

Can someone with HIV still qualify for life insurance. He has it over 12 years?

LSM Insurance
LSM Insurance

Thanks lloyd. Unfortunately traditional life insurance will be out. Certain Simplified Issue and Guranteed Issue plans would be available but they would have more limited face amounts and a deferred death benefit.

PRyan
PRyan

Can a smoker still qualify for preferred rates on a life insurance policy

LSM Insurance
LSM Insurance

Yes some companies do offer preferred rates to smokers – BMO Insurance being one of them.

Tyronne
Tyronne

Does Empire Life have a preferred rate option on its Term 20 policy? Ty

LSM Insurance
LSM Insurance

Thanks for the note Tyronne. Empire Life does not offer preferred rates on its life insurance policies?

Ron M
Ron M

Which companies offer preferred rates on disability insurance?

LSM Insurance
LSM Insurance

Disability insurance policies using occupation class to help determine the premiums. Preferred rates per say are not available. Although some companies offer association and multi-policy discounts.

Chase
Chase

How much life insurance do I need to apply for if I want preferred rates is there a mnimum amount

LSM Insurance
LSM Insurance

With most companies the minimum face amount is $250,000 for Preferred rates. The face amount requirement can be lower for Permanent policies

Harry
Harry

Can someone get preferred rates if they work as Police Officer.

LSM Insurance
LSM Insurance

Each company has separate underwriting criteria but yes you should be able to get Preferred rates as a Police Officer. Assuming you are in excellent health with very good family health history

Stacey
Stacey

Who has the best rates for smokers. I am still very healthy, 49 year old workout but I smoke 1/2 a pack a day. Healthier than most non smokers

LSM Insurance
LSM Insurance

The best rates will depend on the type of plan and the amount of coverage. Some companies do offer preferred smoker rates.

LSM Insurance
LSM Insurance

Most applicants who have High Blood Pressure can get standard rates but getting preferred rates while taking medication for a health issue is difficult.

You may want to have a broker send in a preliminary inquiry with several carriers before making a formal applications.

Wanda J
Wanda J

Can I get preferred rates if I have elevated Blood Pressure. It’s under very good control with medications and my weight is pretty good

LSM Insurance
LSM Insurance

Preferred rates can be up to 30% +/- less than Non Preferred rates.

Each company sets its own preferred rate guidelines which is reviewed by an underwriter.

Some insurance companies have multiple preferred rate classification. Regards,

Maurice
Maurice

What is the differrence in rates between Preferred and Not Preferred

Who decides?

LSM Insurance
LSM Insurance

Your application is reviewed by an underwriter at the insurance company who determines if you qualify. Your application will either be approved at preferred rates, standard rates, a rated policy (a surplus premium is charged) or declined

Talia
Talia

Who determines if I qualify?

LSM Insurance
LSM Insurance

If you have diabities it is very unlikely you will qualify for preferred rates.

If the diabetes is well controlled you may qualify for standard rates. If the diabetes is not well controlled or you are insulin dependent you would either be rated (charged a surplus premium from approximately 50% to 300%) or declined.

Younger diabetics are more likely to be rated or declined that older diabetics.

jallanaelry
jallanaelry

If I have diabetes well controlled can I still qualify for preferered rates? Thks