All life insurance products are priced so that no matter what age a person is when they buy, everyone in the same underwriting class pays the same price.

Here’s how to explain that to clients.

Q. What’s an underwriting class?

A. Think of smokers: they’re categorized into subsets by how often they smoke; how many times a day they smoke; and what they smoke (e.g., cigarettes, cigars, pipes or marijuana).

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Q. Am I subsidizing anyone when I pay my premiums?

A. No. Life insurance is designed to pool risk, and each pool member pays his or her fair share. An applicant’s share is based on the assessment of:

  • Age
  • Gender
  • Health (current and historical)
  • Lifestyle (e.g., use of drugs and alcohol, criminal infractions like speeding tickets)
  • Family health history
  • Whether applicant plays dangerous sports
  • Hobbies
  • Occupation
  • Travel patterns (e.g. to war torn countries or countries on the prohibited list)

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Q. How do I know someone won’t sneak into the pool?

A. The insurance company has the right to refuse to allow a person into the pool if her risk factors are deemed too high. The life insurance pool comes with a guarantee to pay, provided the conditions of the contract are met.

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Q. What jobs might increase my premiums?

A. These include, but are not limited to, fisher, logger, garbage and recycling collector, airline and private pilot, steel worker and bartender.

Helena Smeenk Pritchard has over 36 years of experience in the insurance industry and is the Principal of Helena Smeenk Pritchard & Associates, a leader in “Insurance Know-How” training. Helena publishes a weekly free ‘Did You Know’ newsletter on her site.