For clients considering life, critical illness or disability insurance, rated insurance policies can significantly increase the cost of insurance. This, in turn, can negatively impact the overall financial viability of the insurance concept.
The savings by reducing the amount of any extra premiums can be huge – especially for older clients seeking larger amounts of insurance.
The following chart illustrates the annual premium savings can be achieved by reducing an underwriting rating by just 25 percent on both life and CI policies:
| Universal Life – $1,000,000 |
Age |
No Rating |
25% Rating |
50% Rating |
| 55 | $25,000 | $31,000 | $37,000 | |
| 60 | $33,000 | $41,500 | $50,000 | |
| 65 | $44,000 | $55,000 | $66,000 | |
| Critical Illness T75 – $500,000 |
||||
| 45 | $12,500 | $15,600 | $18,700 | |
| 50 | $17,500 | $22,000 | $26,300 | |
| 55 | $25,000 | $31,500 | $38,000 |
For example, a 55 year-old client applying for $1,000,000 of Universal Life coverage saves $6,000 per year on the cost of insurance for every 25 percent of extra rating they can prevent. Over the course of just a 15-year period, that amounts to $90,000 in cumulative savings.