If you’ve been told that a flat extra expense is going to be part of your life insurance policy, you need to read this article because…
We’re going to show you how to get the best rate possible if flat extras are involved.
Flat Extra Overview
Flat extra charges are added during life insurance underwriting for certain medical issues, some jobs, and some avocations.
The flat extra is indicated as a rate per $1,000 of coverage and may be temporary or permanent.
Flat Extra Life Insurance Calculator
If you would like to know the math formula for flat extras, here it is.
(Life Insurance Face Amount/$1000 x Flat Extra Rate = Flat Extra Charge Per Year)
Example – A $100,000 life insurance policy with a flat extra rate of $6 per thousand for 3 years is calculated as follows:
$100,000/$1000 x $6 = $600 Flat Extra Charge per year
The following chart tells you how much extra you will pay per year for life insurance when a flat extra is added.
| Life Insurance | $2.50 Flat | $5.00 Flat | $7.50 Flat | $10.00 Flat |
| $100,000 | $250 | $500 | $750 | $1000 |
| $250,000 | $625 | $1250 | $1875 | $2500 |
| $500,000 | $1250 | $2500 | $3750 | $5000 |
| $750,000 | $1875 | $3750 | $5625 | $7500 |
| $1,000,000 | $2500 | $5000 | $7500 | $10000 |
Flat Extra Questions
The following are the most common questions you should ask about any flat extra charges.
- Why is the flat extra being added to my policy?
- What is the flat extra charge per thousand dollars of coverage?
- Is the flat extra temporary or permanent?
- If temporary, how many years will the flat extra last?
- If permanent, does the flat extra remain when the level term period ends?
- Are there any other expenses such as a table rating being added to the policy?
- Were other life insurers charging a flat extra?
- If yes, what are the flat extra details from other companies?
There may be tremendous differences in price from company to company, so make sure you know what all of the best companies are indicating before you accept a policy with one company.
Medical Flat Extras
Medical flat extras are common for cancer survivors, people with HIV, and those who have been treated for alcohol and/or drug abuse.
Most medical flat extras are temporary, lasting 5 years or less.
It’s important to have us shop the marketplace for you as the amount of the flat extra and the duration of time it lasts will vary by the life insurance company.
Even more important is that you should re-shop each year.
Many times with cancer histories, our client wants life insurance soon after treatment has ended.
We’ll shop life insurance companies for offers, and many will come back with a flat extra lasting 5 years for example.
When we re-shop the market the next year, we may find you a different company offering a flat extra for 3 years.
Occupation Flat Extras
While most occupations will not require a flat extra expense, some jobs carry risks above and beyond your normal desk job.
Most life insurers have occupation classes depending on the type of job you have.
The occupation class assigned to your job determines the amount of the flat extra assigned during underwriting.
Occupations such as police or fire are not typically charged a flat extra.
Industries such as commercial fishing, loggers, miners may receive an occupation class rating on the lower end, while as astronauts, professional race car drivers, boat racers receive the most expensive flat extra ratings.
Military forces, including special forces, typically receive ratings somewhere in the middle.
Avocation Flat Extras
Avocations cover adventure sports activities such as scuba diving, private aviation, rock and mountain climbing, skydiving and motorized racing.
A big factor in determining your avocation flat extra is your level of experience.
Underwriters look to see if you are operating at your level of proficiency, or are you the type who is pushing the boundaries of your technical experience.
There is been a tightening of underwriting guidelines for private pilots over the past few years as it seems more and more pilots with minimal experience are flying planes.
With life insurance for scuba divers, 100′ depth seems to be the magic number…Life insurers understand that you may dive deeper for a certification dive, but if you are consistently diving to greater depths than 100′, a flat extra may be added.
Cave and shipwreck divers are rated in many cases.
Life Insurance Policy Exclusions
Some life insurance companies allow you to exclude certain activities from coverage as a way to reduce the flat extra expense.
We don’t recommend this for most people unless it’s a situation where your retired from that activity years ago with no intention to participate again.
And unless you want to hear it from the judge, you probably don’t want to exclude your current activities from the policy if this is life insurance for a divorce case.
Do All Life Insurers Charge the Same Flat Extra?
Definitely not! When we discuss your case with you, we’ll shop out to companies for underwriting feedback first.
Some life insurers may deny life insurance to you rather than assign a flat. The price range and duration for flat extras may vary significantly from company to company.
In some cases, we may have 5 companies indicate that they will charge a flat extra and one company may indicate no flat is needed.
Can I reduce a Flat Extra?
With flat extras, it pays to re-shop your life insurance each year as we may be able to get a company in the future to issue your life insurance policy without a flat extra.
For some life insurance cases, we may even be able to use the original paramedical exam, saving you from a repeat exam.
This is especially true if you’ve had cancer. In the early years after treatment has been completed, flat extras may be assigned for a longer duration, but a year later may see a flat extra equal to half the original.
Table Rating vs Flat Extra
Table rates and flat extras are used by life insurance companies to assess an additional premium when your risk to the life insurer is greater than average risk.
When comparing flat extras vs table ratings, here’s what you need to know:
- Table ratings are used for medical risks
- Flat extras are used for both medical risks and non-medical risks
- Most flat extras are temporary while most table ratings are permanent.
Flat Extra Conclusion
Flat extras are expensive. When we work with you, we’ll tell you what each company is charging you for their flat extra.
If a flat extra is part of your underwriting, we can also look at an accidental death insurance policy as part of your overall insurance plan.
In addition, we’ll shop your coverage each year if we think there will be better opportunities to minimize or eliminate the flat extra.
