Extra Flat Rate Calculation: Life Insurance Explained

A flat extra charge, or flat extra premium, is an additional cost that is added to a life insurance policy to mitigate the risk of insuring someone who is deemed high-risk. This could be due to a serious illness, dangerous hobbies, or a risky job. The flat extra premium is usually expressed as a dollar amount per $1,000 of coverage. For example, if you have a flat extra premium of $5 per $1,000 of coverage and you're buying a $500,000 policy, you would pay an extra $2,500 annually. Flat extra premiums can be short-term, lasting between one and five years, or they can be applied for the entire life of the policy.

Flat extra charge calculation

A flat extra charge, also known as a flat extra premium, is an additional cost on top of the standard premium of a life insurance policy. This extra charge is applied in the event of adverse risk factors, such as a serious illness, dangerous hobbies, or a risky occupation. The flat extra charge is used to offset potential future financial losses for the insurance company.

The flat extra charge is usually indicated as a rate per $1,000 of coverage and can be added to the policy for a short time or the entire duration of the policy. For example, if an individual has a flat extra premium of $5 per $1,000 of coverage and purchases a $500,000 policy, they would pay an extra $2,500 annually to cover the flat extra charge.

The formula to calculate the flat extra charge is as follows:

> (Face Amount/$1000 x Flat Extra Rate = Expense Charge Per Year)

For instance, a $100,000 life insurance policy with a flat extra rate of $6 per thousand for three years would be calculated as follows:

> $100,000/$1000 x $6 = $600 yearly expense added to the standard life insurance rate.

It is important to note that flat extra charges can be temporary or permanent. Temporary flat extras are typically applied when there is a medical risk factor, such as a cancer diagnosis, and are charged for a specified number of years before being removed. On the other hand, permanent flat extras are applied when there is an occupational or avocational risk and remain in place for as long as the policy is active.

Flat extra for high-risk individuals

Flat extras are additional charges on top of standard life insurance rates. They are applied when an individual is deemed high-risk due to medical conditions, occupation, or avocation. This extra charge is calculated per $1000 of coverage and can be either temporary or permanent.

For instance, if an individual has a hazardous hobby like skydiving or a risky occupation like racing cars, they may be subject to a flat extra. The flat extra charge is used to offset the potential financial losses of insuring someone with a higher risk of mortality.

The flat extra charge is calculated as follows:

Face Amount/$1000 x Flat Extra Rate = Expense Charge Per Year)

For example, a $100,000 life insurance policy with a flat extra of $6 per thousand for three years would result in an additional $600 yearly expense.

It is important to note that flat extra charges vary across insurance companies, and some companies may not have any flat extra charges at all. Additionally, flat extras may be temporary, lasting for a set period, or permanent, lasting for the entire duration of the policy.

To ensure that individuals get the best possible offer, it is recommended to work with an independent insurance agent who can shop their background with multiple companies and find the most optimal rate.

Temporary vs permanent flat extra

A flat extra premium is an additional charge on top of the standard premium for a life insurance policy. This extra charge is applied per $1,000 of coverage. For example, if your flat extra premium is $2.50 per thousand and you are buying a $100,000 policy, your additional cost would be $250 per year. This extra cost can be added to your policy for the entire duration or for a shorter period, such as 3 or 5 years. The shorter period of time would be a temporary flat extra.

A flat extra charge is applied when insurance companies identify an elevated risk and need to offset potential future financial losses. This risk could be due to a medical condition, occupation, or avocation. For example, a cancer diagnosis or engaging in dangerous activities like skydiving or racing. Most flat extras for medical conditions are temporary, while those for occupations or avocations are usually permanent.

Temporary flat extras are applied when there is a risk factor, such as a cancer diagnosis, and the amount is charged for a specified number of years and then removed. They are typically used for medical conditions and last for a set period, after which they are automatically discontinued. Most temporary flat extras are temporary, lasting five years or less.

Permanent flat extras, on the other hand, are applied when there is an occupational or avocational risk. These are typically used for high-risk occupations or avocations and last for as long as the policyholder has the life insurance policy. For example, astronauts, professional race car drivers, and boat racers receive permanent flat extras due to the high risk associated with their occupations.

Flat extra for dangerous hobbies

Life insurance companies assess the risk of insuring an individual and place them into different risk classes based on their health and lifestyle. Flat extra premiums are additional charges on top of the normal premium that is charged per $1,000 of coverage. These extra premiums are added when insurance companies identify an elevated risk to offset potential future financial losses.

Flat extra premiums are calculated using the following formula:

> Face Amount/$1000 x Flat Extra Rate = Expense Charge Per Year

For example, a $100,000 life insurance policy with a flat extra of $6 per thousand for three years is calculated as follows:

> $100,000/$1000 x $6 = $600 yearly expense added to the standard life insurance rate.

Flat extra premiums are often applied to individuals with certain medical conditions or those who engage in dangerous hobbies. These hobbies are referred to as "avocations" in the industry and include activities such as:

• Scuba diving
• Mountain climbing
• Skydiving
• Hang gliding
• Paragliding
• Racing
• Aviation
• Surfing
• Snow sports
• Dirt biking

The frequency of participation, level of experience, and specific circumstances of these activities are taken into consideration when determining the flat extra premium. For example, scuba divers who frequently dive to depths greater than 100 feet or mountain climbers who climb to extreme heights are more likely to be charged a flat extra premium. Similarly, individuals who participate in racing or aviation as a hobby may be subject to higher flat extra premiums depending on the speed, type of vehicle, and frequency of their races or flights.

It is important to note that not all life insurance companies view dangerous hobbies in the same light. Some companies may be more lenient with certain activities, while others may deny coverage altogether. As such, it is beneficial to work with an independent insurance agent or broker who can help find the most optimal rates for high-risk situations.

Flat extra for serious illness

A flat extra premium is an additional charge on top of the regular premium of a life insurance policy. This extra charge is added when a risk is higher than a "standard" health class risk. Flat extras are used for medical and non-medical risks, and they are added to offset potential future financial losses.

Flat extras are calculated per $1,000 of coverage. For example, if your flat extra premium is $2.50 per thousand, and you are buying a $100,000 policy, your additional cost would be $250 per year. This cost could be added to your policy for the entire duration or for a shorter period, such as 3 or 5 years.

Serious illnesses that may result in a flat extra premium include cancer in remission, heart problems, kidney issues, and other chronic health concerns. Common health issues like high blood pressure or high cholesterol usually don't result in flat extras because they can be treated with medication.

Flat extras for serious illnesses are typically temporary, lasting 5 years or less. During this time, you may be able to reduce your flat extra expense by re-shopping the market each year. As time passes, you may become less of a risk to life insurers, and they may offer you a lower flat extra rate or one that lasts for a shorter time.

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