Our key man insurance underwriting guide can provide the criteria insurance companies use to determine your health class.
Because each company has its own specific underwriting guidelines, the choice of insurance policies will be affected by the way each respective company evaluates your health. This guide will help you understand how to qualify for key man insurance from a medical standpoint. You should also consider reading the article, “Financially Underwriting Keyperson Insurance”.
Determining Your Health Class
This chart will help you identify which rate class you may obtain based on your specific health information. This is a general guide for insurance underwriting risk assessment only. Each company has its own underwriting guidelines.
| Category | Preferred Best Non-Smoker | Preferred Non- Smoker | Standard Plus Non-Smoker | Standard Non-Smoker |
| Physical / Mental Impairments and Medical History | NO history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. | NO history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. | Some minor history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. | Some minor history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. |
| Use of Tobacco or Nicotine Products | No use within last 60 months. | No use within last 36 months. | No use within last 12 months. | No use within last 12 months. |
| Blood Pressure | 140/80 or less. No current treatment. Prior treatment OK, if 2+ years | Current or past treatment OK. 145/90 | Current or past treatment OK. 152/90 | Current or past treatment OK. 156/92 |
| Cholesterols Readings and Ratio | May not exceed 220 or ratio of 5.0, with or without treatment. | May not exceed 250 or ratio of 6.0, with or without treatment | May not exceed 280 or ratio of 7.0, with or without treatment | May not exceed 300 or ratio of 8.0, with or without treatment |
| Cancer | Only some skin cancers | Only some skin cancers | Depends on type and date of onset | Depends on type and date of onset. |
| Family Medical History | No cardiovascular disease or cancer in either parent or siblings before age 60 | No cardiovascular or cancer death in either parent. | No cardiovascular or cancer death in both parents | No cardiovascular death in both parents. |
| Aviation | Commercial airline pilots accepted. Private pilots with exclusion. | Commercial airline pilots accepted. Private pilots with exclusion. | Commercial airline pilots accepted. Private pilots with exclusion or flat extra. | Commercial airline pilots accepted. Private pilots with exclusion or flat extra. |
| Hazardous Activities (Sky Diving, Hang Gliding, Rock Climbing, Scuba Diving, ect) | Available if no flat extra involved. | May include flat extra. | May include flat extra. | May include flat extra |
| Personal Driving History | No more than 2 moving violations in last 3 years and No DWI, DUI, reckless driving, or suspension in last 5 years. | No more than 2 moving violations in last 3 years and No DWI, DUI, reckless driving, or suspension in last 5 years. | No more than 3 moving violations in last 3 years and No DWI,DUI, reckless driving, or suspension in last 3 years. | No more than 3 moving violations in last 3 years and No DWI, DUI, reckless driving, or suspension in last 3 years. |
| Substance or Alcohol Abuse | No abuse. | No abuse. | No abuse in last 10 years. | No abuse in last 7 years. |
| Residency/Citizenship | US citizen, resident for 3 years, must hold permanent Visa or Green Card. | US citizen, resident for 3 years, must hold permanent Visa or Green Card. | US citizen, resident for 2 years, must hold permanent Visa or Green Card. | US citizen, resident for 2 years, must hold permanent Visa or Green Card. |
Height and Weight Chart (Male and Female)
The requirements for height and weight will vary among insurance companies. The chart below should be considered the maximum allowed to qualify for life insurance.
| Height | Best Class/ Preferred Plus | Preferred | Standard Plus | Standard |
| 5′ 0″ | 144 | 158 | 166 | 172 |
| 5′ 1″ | 148 | 163 | 172 | 178 |
| 5′ 2″ | 153 | 168 | 175 | 183 |
| 5′ 3″ | 158 | 174 | 182 | 190 |
| 5′ 4″ | 163 | 179 | 188 | 195 |
| 5′ 5″ | 168 | 185 | 194 | 202 |
| 5′ 6″ | 174 | 191 | 200 | 208 |
| 5′ 7″ | 179 | 197 | 206 | 215 |
| 5′ 8″ | 185 | 203 | 212 | 221 |
| 5′ 9″ | 190 | 209 | 219 | 228 |
| 5′ 10″ | 196 | 215 | 226 | 234 |
| 5′ 11″ | 201 | 221 | 231 | 241 |
| 6′ 0″ | 207 | 228 | 240 | 249 |
| 6′ 1″ | 213 | 234 | 245 | 255 |
| 6′ 2″ | 219 | 241 | 253 | 263 |
| 6′ 3″ | 225 | 247 | 259 | 269 |
| 6′ 4″ | 230 | 253 | 265 | 276 |
| 6′ 5″ | 237 | 260 | 272 | 283 |
| 6′ 6″ | 243 | 267 | 280 | 291 |
| 6′ 7″ | 249 | 274 | 287 | 299 |
Tobacco or Nicotine Use
All smokers and alternative tobacco users will pay more for life insurance due to the increased risk associated with tobacco use. Additionally, most insurers require that former tobacco users be “tobacco free” for at least 12 months (maybe longer) to qualify for preferred non-tobacco rates. However, there are opportunities for alternate tobacco users to obtain non-tobacco rates depending on the type and frequency of usage. Occasional cigar users may even qualify for preferred plus nonsmoker rates depending on the circumstances.
Determining your Health Class for Tobacco and Nicotine Users
This chart will help you identify which rate class you may obtain, based on your specific health information. This is a general guide for insurance underwriting risk assessment. Some alternate tobacco users (cigars, pipe, chewing tobacco, snuff) may qualify for non-tobacco rates.
| Category | Preferred Smoker | Standard Smoker |
| Physical / Mental Impairments and Medical History | NO ratable history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. | NO ratable history of heart, stroke, diabetes, cancer, respiratory, circulatory, anxiety, depression, sleep apnea, or any other internal problems. |
| Blood Pressure | Current or past treatment OK. 152/90 | Current or past treatment OK. 156/92 |
| Cholesterols Readings and Ratio | May not exceed 300 or ratio of 7.0, with or without treatment | May not exceed ratio of 8.0, with or without treatment |
| Cancer | Only some skin cancers | Depends on type and date of onset. |
| Family Medical History | No cardiovascular or cancer death in either parent. | No cardiovascular death in both parents. |
| Aviation | Commercial airline pilots accepted. Private pilots with exclusion or flat extra. | Commercial airline pilots accepted. Private pilots with exclusion or flat extra. |
| Hazardous Activities (i.e. Sky diving, Hang gliding, Rock climbing, Scuba diving etc) | May include flat extra. | May include flat extra |
| Personal Driving History | No more than 2 moving violations in last 3 years and No DWI, DUI, reckless driving, or suspension in last 5 years. | No more than 3 moving violations in last 3 years and No DWI, DUI, reckless driving, or suspension in last 3 years. |
| Substance or Alcohol Abuse | No abuse. | No abuse in last 7 years. |
| Residency/Citizenship | US citizen, resident for 3 years, must hold permanent Visa or Green Card. | US citizen, resident for 2 years, must hold permanent Visa or Green Card. |
An occasional cigar smoker may qualify for the top health class for key man life insurance.
Opportunities for Alternate Tobacco Users
Some non-cigarette tobacco users (cigars, pipes, chewing tobacco, snuff, nicotine patches, etc.) may qualify for non-tobacco rates depending on certain conditions. There are several life insurance companies that offer alternate tobacco users this special underwriting concession. You may be able to save as much as 50% off normal smoker rates.
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Common Health Impairments
The table below provides general guidelines for some of the most common health impairments and how each impairment relates to your underwriting class. Your underwriting class will be based on your current health, medical history, and additional underwriting information. Depending on the nature, severity, and treatment of your impairment, higher rates may apply. Underwriting requirements vary by company.
| Medical History | Best Class | Preferred | Standard |
| Alcohol / Drug Abuse Dependency History |  |
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| Arthritis (rheumatoid) | |
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| Asthma (requiring treatment within past 2 years) | |
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| Bronchitis (chronic) | |
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| Cancer (except certain basal cell skin types) | |
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| Cardiovascular / Heart Disease | |
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| Chronic Obstructive Pulmonary Disease | |
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| Crohn’s Disease | |
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| Depression (requiring treatment within past 2 years) | |
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| Diabetes (non-insulin dependent) | |
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| Diabetes (insulin dependent) | |
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| Emphysema | |
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| Epilepsy (seizures within past 5 years) | |
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| Gastric / Peptic Ulcers (requiring treatment within past 2 years) | |
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| Hyperlipidemia (treatment for elevated cholesterol/lipids) | |
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| Hypertension (High Blood Pressure) | |
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| Kidney / Liver Disease (chronic) | |
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| Melanoma | |
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| Mental Illness | |
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| Multiple Sclerosis | |
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| Stroke (including TIA) | |
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| Ulcerative Colitis | |
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| Vascular Disease | |
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Higher table class rates usually apply
Here are several other resources you may need in order to make certain you qualify for life insurance and understand how insurance underwriting risk assessment works.
Financial Underwriting Key Person Insurance
The amount of coverage available for key person insurance will be dependent upon the financial risk associated with the reason for buying the protection. Typical reasons for buying key person insurance include: key employee insurance, business loan indemnification, funding buy-sell agreements, key man risk for startups, and executive benefits. In each of these cases, the financial justification requirements are different. The general guidelines for underwriting key person insurance are described below:
1. Key Person Insurance
- Income including bonuses
- Niche experience of the key person
- Their contribution to earnings
- Education and prior work history
- Background of the company
- Company revenues, income and net worth
2. Business Loan Indemnification
- History of the business
- Reason for the loan
- Terms of the loan
- Collateral
- Company revenues, income and net worth
3. Funding Buy-Sell Agreements
- Ownership percentages
- Copies of the actual agreement
- Company valuation
- Company financial documentation
4. Key Man Risk for Startups
- Copy of pro forma/business plan
- Justification for FMV calculations/projections
- Bios on all key people, including prior experience and track record
- Point-in-time details on the startup’s operating plans
- Capsheet and company valuation
5. Executive Benefits
- Key executives income including bonuses
- Copy of the plan documents
- How the benefits were determined
- Company financial documentation
Regardless of how much insurance is applied for, whether key man life insurance or disability coverage, or requested by the business, an insurance company will approve a key man insurance policy based on their interpretation of the true risk exposure. Providing the detailed financial information above allows the insurance company to accurately assess the facts and make the best insurance offer.
