If a policy is "rated," what does this imply?

When a life insurance policy is referred to as "rated," it indicates that the policyholder is considered a higher risk than standard applicants. This higher risk status is typically due to factors such as pre-existing medical conditions, lifestyle choices like smoking, or occupational hazards that may increase the likelihood of claims being made against the policy. As a result of this elevated risk assessment, the insurer raises the premiums to compensate for the increased likelihood of a claim being filed.

This adjustment ensures that the insurance company can maintain its financial stability while still offering coverage to individuals who may not qualify for standard rates. The rating process is a means of aligning the cost of the insurance with the risk associated with the insured individual, thereby allowing the insurer to manage its underwriting effectively.