When Is the Flat Extra Premium Used?

Understanding the Flat Extra Premium

A flat extra premium is an additional charge applied to the standard cost of a life insurance policy. It accounts for a heightened risk an applicant presents, falling outside typical underwriting classifications, and serves as a financial safeguard for the insurer.

This additional charge is a fixed dollar amount per $1,000 of coverage, adding a predictable fee to the policy’s annual cost (e.g., $5 per $1,000). Unlike a “table rating” (a percentage increase for health conditions), a flat extra addresses specific, identifiable risks, often temporary or tied to certain activities. Insurers use this method when the risk is quantifiable but not severe enough for policy denial or a complex percentage adjustment.

Situations Requiring a Flat Extra Premium

Insurers apply flat extra premiums for certain medical conditions that present an elevated, manageable risk. This includes individuals with a history of cancer, especially those in remission (e.g., breast, prostate, colon, melanoma, thyroid cancer). For such histories, the flat extra often applies for a set number of years, typically 2 to 10, covering the period of higher risk.

Hazardous occupations frequently trigger a flat extra premium. Jobs like commercial fishermen, miners, loggers, structural steel workers, and offshore oil rig workers carry inherent dangers that increase mortality risk. While police officers and firefighters generally do not incur a flat extra, certain military and special forces roles might. The flat extra amount varies based on the perceived risk of specific duties.

Dangerous hobbies are another common reason for a flat extra premium. Activities like scuba diving (especially deep dives), skydiving, rock climbing, hang-gliding, paragliding, and auto racing carry a measurable, elevated risk of injury or death. Insurers often require detailed questionnaires about these activities (certifications, frequency, safety precautions) to determine the appropriate flat extra. Providing truthful information is important for proper coverage.

Foreign travel or residency in certain regions can also lead to a flat extra premium. If an individual plans to live or travel extensively in countries with higher mortality rates due to political instability, less developed medical infrastructure, or prevalence of certain diseases, insurers may impose an additional charge. Insurers classify countries by risk factors to determine if a flat extra is necessary to cover increased exposure, ensuring the policy reflects the risk.

How Flat Extra Premiums Are Applied

Once an insurer determines a flat extra premium is necessary, it is added directly to the policy’s base premium. The calculation is straightforward: the fixed dollar amount is multiplied by the number of thousands of dollars in coverage. For instance, a $250,000 policy with a $2.50 flat extra per $1,000 would incur an additional $625 annually. This cost is then incorporated into the overall premium payment.

The duration of a flat extra depends on the elevated risk. For medical conditions, it is often temporary (e.g., 2-10 years) until the risk subsides. For hazardous occupations or dangerous hobbies, it may be permanent, remaining for the policy’s life as long as the activity continues. If the high-risk activity ceases, the flat extra may be removed.