Risk classification is the process by which insurers group applicants with similar risk characteristics into classes that determine premiums, benefits, and underwriting requirements. In life insurance, risk classification considers factors such as age, gender where allowed, smoking status, build, medical history, family history, lifestyle, and avocations. Classes often range from preferred plus and preferred to standard and various substandard levels. Effective risk classification allows insurers to price coverage fairly and competitively, ensuring that higher-risk individuals pay more than lower-risk individuals while still providing access to coverage across a wide spectrum of health and lifestyle profiles.

Underwriters apply risk classification guidelines using underwriting manuals, lab results, and medical records to assign each applicant to an appropriate rate class. Advisors discuss risk classification with clients when explaining why premiums differ between people of the same age or why certain conditions lead to ratings. Marketing materials often highlight preferred underwriting programs and criteria. Regulators and actuaries monitor risk classification practices to ensure they are actuarially justified and non-discriminatory. Understanding risk classification helps advisors manage client expectations, gather relevant underwriting information, and position cases with carriers whose guidelines best fit a client's profile.