What is An Insurance Risk Class?

Find out how insurance companies evaluate your application using risk classes

Searching for life insurance for the first time can easily get confusing. With so many different insurance providers and policy types out there, it’s easy to feel like you’re out of your depth. One of the many things people don't know about getting insurance is how their application is evaluated by the insurance company.

When you submit your insurance application for approval, the insurance company will look at a number of factors in order to assess whether or not you are a good candidate for an insurance policy. Additionally the insurance company will place you in what is called a risk class. The risk class determines how high risk of a policy holder you will be in the eyes of the insurance company. According to these risk classes, the insurance company will give you a matching quote for a life insurance policy.

In this article, we’re going to be going over how risk classes work, why insurance companies use them, and how you can get the best deal on life insurance. Let’s dive in!

What are Risk Classes and Why Are They Used?

Insurance companies use risk classes to group prospective policyholders into predetermined categories

Risk classes are how insurance companies underwrite policies.

When you submit an application to an insurance company, you will be placed in a risk class. Depending on your lifestyle, habits, job, and health status, the insurance company will place you into a category with other people who share similar characteristics. Based on your risk class, you will be given a quote accordingly based on how you are assessed by the insurance company. This process is one of the first steps in the underwriting process.

The underwriting process is how the insurance company calculates exactly how much to charge for a monthly premium based on the information you provided on your application. Many insurance companies will require you to undergo a medical exam to determine your risk class. However, there are options to qualify with no medical exam if you have unique health circumstances or want to get life insurance as quickly as possible.

The reason that insurance companies will place you into a risk class is because each life insurance policy poses a financial risk to the insurance company. Especially in cases of term life insurance, the amount you pay will be heavily based on your health status and your lifestyle factors. To put it simply, the insurance company assesses your life expectancy to determine the chances that they will have to payout the full policy amount. For example, someone who is  a young, healthy, non-smoker will pose a low risk to an insurance company and will likely pay a low monthly premium. On the other hand, someone who has a chronic illness or other health factors may pay a high premium or have their application rejected altogether.

What Are the Different Factors That Determine Risk Class?

If you haven’t previously learned about risk classes, you are probably curious as to what insurance companies are looking for

Window washing is an example of a high-risk job.

When you apply for an insurance policy, the insurance company will take a look at every element of your application to determine your risk class. For the majority of life insurance applications, you will be asked to provide:

  • Medical records including documentation related to mental health

  • Family history of chronic diseases

  • Information about any risky occupation or hobbies

  • Alcohol and tobacco use

In addition to providing this information, you will be required to undergo a medical exam. The medical exam is designed to identify any remaining factors that may have been missed on the application. As we mentioned, there are companies that provide life insurance with no medical exam needed. When you apply for insurance with no medical exam, in many cases you have a better chance of getting approved. Not to mention, you don’t have to go through the hassle of taking a medical exam, which is enough for many people to choose no medical exam life insurance.

Once the insurance company has all of the information they need to begin the underwriting process, they will begin placing you in a risk class. In the next section, we’re going to be taking a look at the different risk classes and what they mean for both policyholders and insurance companies. Let’s go!

What Are the Different Risk Classes and What Do They Mean?

Using these predetermined categories, insurance companies are able to give out life insurance quotes based on financial risk

There are 6 main categories of risk class.

As part of the underwriting process, your insurance company will place you in one of the following categories. Let’s find out what each category means and how it will affect your monthly insurance premium.

  1. Elite or Preferred Plus - This is the category for those in great health. That means no presence of any chronic illness or habits that could affect life expectancy. Often younger people are placed in the preferred plus risk class. 

  2. Preferred - Someone who is placed in the preferred category will pose a slightly higher risk than preferred plus. If you are placed in this category, you will still receive a well priced premium, but you may have some health factor like high blood pressure.

  3. Standard Plus -  Standard plus is still a good risk class, but you will end up paying more than the previous two risk classes. Factors that lead to a standard plus placement could include a high BMI in addition to high cholesterol and other types of illnesses.

  4. Standard - If you are placed in the standard risk class, it means that you are of average health status. You may have some complicating factors, but nothing of major concern. Sometimes a “standard” risk class rating can depend on your job, a risky hobby, or a history of chronic illness in the family.

  5. Substandard - If you receive a substandard rating, it means that the insurance company has evaluated you as having below average health. In this case, the insurance company believes they will be taking a high risk by insuring you. It is also possible that you have landed in the substandard category due to a very risky job or other behaviors. Examples of risky jobs include professions like mining, logging, or being a high-voltage electrician. People who are placed in the substandard risk class will end up paying far higher monthly premiums than other categories we’ve listed. 

  6. Smoker - People who use tobacco will be required to pay far higher premiums than those who do not use tobacco. Recently, insurance companies have begun categorizing using vapes in the same class as smoking cigarettes or using chewing tobacco. Since people who use tobacco products have their own sets of health concerns, they are placed in their own category.

Now that we know about the different risk classes and what they mean, let’s find out if you can change your life insurance risk class.

Is it Possible to Change My Insurance Risk Class?

It is possible to change your insurance risk class, but it will take some work

Some factors related to risk class can be changed and improve your monthly rate.

If you are unhappy with your insurance risk class, then there are steps you can take to get a better life insurance rate. However, these adjustments are not easy and will require reevaluation by the insurance company to change your risk class. Here are a few ways that people can better their insurance risk class over time:

  1. Losing weight - If you were placed in a risk class due to a high BMI, losing weight can improve your risk class. You will have to undergo a medical exam or provide up to date medical records in order to alter your risk class.

  2. Changing occupations - If you have a high-risk profession, a change in careers will improve your risk class.

  3. Quitting tobacco use -  The best thing you can do to get a good insurance rate is to quit smoking. In many cases, the insurance company will require proof that you have quit smoking for at least a year or two.

We hope you learned some valuable information about how insurance risk classes work so you have all the relevant information needed to submit your application. If you are placed in a high risk class, there are a few ways to make changes to get a better rate. In some cases—like chronic illness—there isn’t much you can do to change your risk class.

In order to get the best rate possible, we recommend applying for different types of policies to see which one offers the best deal. No matter your risk class, getting life insurance is important for financially protecting your loved ones after you’re gone.


  1. Life insurance is hard to wrap ones head around, thanks for all this useful information!

    Allie of