December 1, 2022

Insurance companies have to weigh a lot of factors when they insure insurance policies. They must analyze all the factors specific to a particular case to determine the ultimate risk they face by issuing the policy, which in turn determines the insurance premiums for policyholders.

To make this process easier and more objective, insurance companies have created so-called risk classes.

Risk classes are groups of companies or individuals who have similar characteristics. Each type of insurance policy will use different risk classes during the underwriting process for new policies to identify risks and determine the premium for the policyholder.

Individuals or companies identified as having lower risk will pay a lower monthly premium for their insurance policy. Those with higher risk will pay a higher premium.

In life insurance, one of these risk classes is called Substandard. This risk category is determined by a number of factors, which will be discussed below.

Define the category of substandard risk

The substandard life insurance risk category, by definition, is the lowest category of risk assigned to individuals who are identified as insurable. This category of individuals is considered to be the most dangerous for insurance companies or, in other words, most likely to die during the life insurance plan term.

This risk class often pays the highest monthly premiums for their life insurance plans, and may also be limited in the specific policies they have available to purchase.

A lower level life insurance risk category is sometimes referred to as a schedule rated plan because of the additional monthly fee, or “schedule grading,” they may have to pay as a result of being in that risk category.

While each insurer will have its own set of rules that qualifies individuals to comply with the substandard risk category, there are general guidelines that most insurers will follow.


Body mass index, or BMI, is a standardized measure of body fat when compared to its weight and height. There are standard BMI charts for both adult females and males created by the Centers for Disease Control and Prevention.

A person’s BMI determines whether their healthy weight is determined based solely on their height – not other factors such as age, environment or family history. Overweight individuals may have difficulty finding affordable life insurance rates.

BMI categories are:

  • Underweight: less than 18.5
  • Normal weight: 18.5-24.9
  • Weight gain: 25-29.9
  • Obesity: 30 or more

sex and age

Men and women have different life expectancies and different risk factors for developing the disease.

Men are considered more at risk from life insurance policies because they usually die younger, tend to have more risky jobs, and live riskier lifestyles (more on that later). In fact, women generally live nearly five years longer than men, on average.

A person’s age is also a clear determinant of the risk category. The younger an individual is, the lower the rating they will receive as part of their risk rating.

family history

An individual’s family history plays a role in determining the life insurance risk category. People with a long family history of certain genetic diseases are considered more dangerous under the terms of life insurance.

If one or more members of your immediate family have died of certain diseases such as heart disease or Alzheimer’s, you will be more likely to develop that disease as well. That’s why insurance companies will analyze your family’s medical history, as it can be indicative of your future health.


If you have a hazardous business, you will be considered more vulnerable to life insurance policies. This can include jobs such as construction, mining, and truck driving.

Hazardous jobs can lead to accidents that result in life insurance benefits being paid to beneficiaries. This is why people with more risky jobs – either because of the job itself or the surrounding environment – will be more likely to fall into the substandard life insurance risk category.


One of the final risk categories life insurance companies weigh is an individual’s lifestyle. This includes whether they smoke, drink alcohol, or have a substance abuse problem. All of these factors increase the likelihood of a person dying before life expectancy.

If people engage in certain hobbies or other behaviors, they may find themselves in a substandard life insurance risk category. This includes snorkeling, skydiving, or riding a motorbike.

Can an individual change the risk category?

When an insurance company issues a life insurance policy, the covered individual will pay a certain monthly premium based on their risk class. It is normal for people who fall into the low-risk category of life insurance to pay the highest monthly premiums.

But, just because a person falls into this risk category at the beginning of the insurance policy does not mean that they have to stay there for the life of the policy. People can improve their health, and thus improve their insurance risk category.

Some insurance companies will allow people to be re-evaluated at certain points during the life of a life insurance policy. After another medical evaluation, they could resolve to fall into a “better” risk category than a substandard risk category, which could lower their monthly premiums.

If an individual stops smoking or loses a significant amount of weight, for example, they can improve their health outlook enough that they “graduate” from the low-risk life insurance risk category to standard or better.

Unfortunately, there are some risk factors that will be out of an individual’s control, such as the health condition they inherited from a family member. However, it is always a good idea to improve your health as much as possible, even if you may not be able to qualify for a lower life insurance premium.

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