We have previously written blog posts and articles regarding the way that the risk classification changes your term life insurance or universal life insurance cost. For individuals considered high risk life insurance, a “table rating” is often placed that applies an extra premium to the policy’s cost. One of the less common, but sometimes more costly ways that life insurance companies can increase rates for high risk activities is by including a “flat extra” rating.
A flat extra rating is simple – the insurance company charges an extra dollar amount for every thousand dollars of coverage you purchase. For example, a flat extra of $5.00 per thousand dollars of coverage on a $1,000,000 policy would equal a charge of $5,000 per year on top of the base cost of the insurance (e.g. if the base cost was $2,000, the total cost would be $7,000).
Flat extra ratings are most commonly assigned for risky activities such as sky diving, scuba diving, aviation activities, drag racing, race car driving, and other dangerous hobbies or occupations . Every company has different underwriting guidelines, and while one may charge a flat extra of $7.50 per thousand of coverage, another may not have a flat extra at all. Some companies may apply the flat extra rating for the entire life of the policy, while others may limit the rating for a period of 3, 5, 10 years, etc.
The only way to know you are getting the best possible offer is to have an independent life insurance agent shop your background with multiple companies (usually 10-15 is a good comparison – anything more than that will usually be in the same ballpark).
TermInsuranceBrokers.com represents over 40 of the best life insurance companies and is happy to provide additional information for your specific situation.