What are Standard and Preferred Rates?

Standard rates are the norm in insurance policies, designed to cover an average risk profile. These rates are calculated based on typical factors such as age, health, lifestyle, and occupational risks. Standard rates are offered to individuals who meet the average criteria set by the insurance company without significant deviations that might increase risk.

Preferred rates, on the other hand, are offered to individuals who pose a lower risk than the average policyholder. These rates are usually lower and are available to those who meet specific stringent criteria. Factors influencing preferred rates include excellent health, a clean medical history, a non-hazardous occupation, and a healthy lifestyle, among others.

Criteria for Preferred Rates

The criteria for qualifying for preferred rates can vary widely between insurance companies but generally include:

• Health: Excellent health with no pre-existing conditions.

• Family Medical History: No significant family history of chronic or genetic diseases.

• Non-smoker Status: Typically, non-smokers or those who have not used tobacco products for a certain number of years.

• Lifestyle: Engaging in regular physical activity with no high-risk hobbies.

• Age: Age can also be a factor, with younger applicants often more likely to receive preferred rates.

How Rates Are Determined

Insurance companies use actuarial tables and statistical data to determine the risk associated with insuring an individual. The lower the risk, the lower the premium. Standard rates are calculated based on average risk, while preferred rates require a lower probability of claim, thus reducing the premium.

Impact on Premiums

Preferred rates can significantly impact the premiums that policyholders pay. For instance, in life insurance, preferred rates can be 20-30% lower than standard rates. This difference can result in substantial savings over the lifetime of an insurance policy.

How to Qualify for Preferred Rates

To qualify for preferred rates, potential policyholders should:

• Maintain a healthy lifestyle, including a balanced diet and regular exercise.

• Avoid smoking and excessive alcohol consumption.

• Manage chronic conditions effectively.

• Choose a profession that does not involve high risks.

Conclusion

For Canadian consumers, understanding the difference between standard and preferred rates is crucial when shopping for insurance. Evaluating one's eligibility for preferred rates can lead to significant savings and more favorable insurance terms. It's advisable to consult with insurance professionals who can provide personalized advice based on an individual’s specific circumstances and help navigate the complex landscape of insurance rates.

Preferred Underwriting Build Chart

Manulife

Empire Life

RBC

Manulife Vitality

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Marijuana use and Life Insurance

(Now a non-smoker)

Life insurance coverage is now available for marijuana users. Insurance companies treat cannabis use differently depending on frequency and presence of nicotine. Occasional users are considered non-smokers, while daily users may be approved based on individual circumstances. Contact our advisors for further details

Life insurance coverage is now accessible for individuals who use marijuana. Insurance companies handle cannabis usage in various ways, taking into account the frequency of use and the presence of nicotine. If you are an occasional user, you will be regarded as a non-smoker, which may have a positive impact on your insurance rates. However, if you use marijuana on a daily basis, approval for coverage will depend on your individual circumstances. It is important to note that each case is assessed on an individual basis. For more information regarding life insurance options for marijuana users, we recommend reaching out to our experienced advisors. They will be able to provide you with further details and guide you through the process.